A note on spurious significance in regressions involving <Emphasis Type="BoldItalic">I</Emphasis>(0) and <Emphasis Type="BoldItalic">I</Emphasis>(1) variables

We demonstrate that t ratios (the F statistic) for I(1) regressors in a model with an I(0) dependent variable will generally be oversized. This indicates that spurious significance occurs in a situation where it was not previously identified. We also compare the asymptotic rejection rates of t ratios for various combinations of I(1) and I(0) variables in the two-variable linear regression model. These rejection rates systematically increase with the degree of autocorrelation, yielding spurious significance, when both variables are either positively or negatively autocorrelated. In contrast, when one variable is negatively autocorrelated and the other is positively autocorrelated the rejection rates systematically fall and are undersized.     

Endowment Differences and the Composition of Intra‐Industry Trade

The empirical relationship between differences in endowments and different types of trade is investigated in this paper. Although net trade (NT) and vertical intra‐industry trade (IIT) are both broadly viewed as reflecting endowment differences, we suggest that there will be systematic differences in the way their shares of trade adjust as endowment differences become larger. Empirical evidence for European Union trade with its 52 major trading partners confirms this. The share of horizontal IIT (net trade) decreases (increases) for all increases in absolute endowment differences, but the share of vertical IIT can both increase and decrease with increases in endowment differences.     

Dark Fiber Valuation

Valuation of dark fiber has recently generated controversy, sparked particularly by the large sums booked for swaps of dark fiber between companies. One of the issues raised is valuation: i.e., what is the value of an asset that generates no revenue now and may do so at some unknown point in the future but only after investment, in an uncertain business climate, and where prices are dropping? The picture is further complicated because the result of investing to bring the asset to market (i.e. lighting the fiber) changes the supply and demand conditions of the market itself and hence invalidates price predictions. A realistic and consistent valuation methodology is necessary for increasingly cautious companies, auditors, and investors. In this paper we describe such a valuation methodology for dark fibre based on real options. Publicly available bandwidth price services start to make this practical by providing market price information. For dark fibre valuation the real option to be valued are the lighting decisions. We specifically include the effect on the market of adding new capacity by using the price-elasticity of demand within the stochastic price process itself, conditional on lighting decisions. Prices are generally volatile and decreasing with time. The evolution of lighting costs and maintenance are included in the valuation. The real options technique used here is novel in that it combines economic and market factors explicitly with mathematical finance to arrive at a valuation and optimal decisions. We found that the optimal lighting riming and capacity decisions to depend on many of the factors included in the analysis with no simple triggers: the details really matter.     

Elite Compacts in Africa: The Role of Area‐based Management in the New Governmentality of the Durban City‐region

Through reflection on the practical post‐apartheid (re)alignment of competing rationalities across the Greater Durban urban region, this essay teases out the interface between traditional and modern settlement management systems, and explores how governance cleavages are being renegotiated and mediated. It is suggested that, in building an integrated method of operating across the fragmented city‐regional scale and navigating the competing interests involved, the practice of African urbanism is being defined. Without making any claims for what may or may not be uniquely African city‐regional dynamics at the boundaries of tradition and modernity, what is clear from the Durban case is that both conventional city‐regional literature and new city‐regional ideas have glossed over the complexity of finding solutions to tensions between poor communities, urban managers, elected local authorities and the traditional rural elites of the functional city‐regions of Africa.     

Maori and Tourism: A Relationship of History,Constitutions and Rites

This paper describes developments in Maori tourism. It argues that such developments cannot be understood without reference to a socio-political and ethical context of the history and ethical structures of Maori. It draws attention to Maori as an indigenous people as defined by the conventions on such peoples as adopted by the United Nations, and the recognition of ownership of cultural symbols. Maori claims of ownership of the symbols and practices adopted by tourist operators are thus sanctioned by international and national rights, but are equally tempered by Maori notions of hospitality to guests. However, Maori notions of gifts require respect and proper usage of gifts, and it is with this accord that Maori become involved with tourism. Furthermore, economic realities mean that Maori tourist operations will tend to be at an individual or extended family level, and hence the recognition of Maori ownership may be said to be more important. However, a further complicating issue is that Maori society is traditionally a tribal society; the Maori tourist 'gaze' is thus fractured by this consideration.     

Declining Protection in Developing Countries: Fact or Fiction?

This paper explores whether and to what extent evident trade reform, falling average tariffs and rising exports in recent decades overstate the extent to which protectionism has declined in developing countries, especially low‐income developing countries. It identifies remaining significant protection, especially of final manufactured goods; this being associated with the presence of peak tariffs, escalating tariff structures by stage of production and replacement of old forms of non‐tariff protection with new instruments of non‐tariff protection. It also identifies significant protection arising from high international trade costs induced by inefficiencies in transportation, ports and customs, and from the growth of exports to preference‐receiving, export markets.     

Maori-based Tourism in Rotorua: Perceptions of Place by Domestic Visitors

This paper reports findings from a survey of 763 Auckland residents. The research examined attitudes towards the resort town of Rotorua as a short-break destination with specific reference to the role that Maori culture plays in the formation of perceptions of Rotorua. The Te Arawa Maori people have been closely associated with tourism for over 140 years and this is recognised by the domestic market. However, the Maori component of Rotorua is found not to be an attraction. Rather, tourists are drawn to other facets of the product. While this is evidence for the fact that Rotorua is a multi-use product in tourism, given the role that travel is supposed to play in bridging gaps between cultures, tourism seems to be failing in this respect. It is suggested that an emphasis upon 'traditional authenticities' aimed at certain overseas segments misses the contemporary vibrant nature of Maori music and dance performance that might in fact have a wider appeal, including the domestic tourism market.     

Ratings assignments: Lessons from international banks

This paper estimates ordered logit models for bank ratings which include a country index to capture country-specific variation. The empirical findings support the hypothesis that the individual international bank ratings assigned by Fitch Ratings are underpinned by fundamental quantitative financial analyses. Also, there is strong evidence of a country effect. Our model is shown to provide accurate predictions of bank ratings for the period prior to the 2007–2008 banking crisis based upon publicly available information. However, our results also suggest that quantitative models are unlikely to predict ratings with complete accuracy. Furthermore, we find that both quantitative models and rating agencies are likely to produce highly inaccurate predictions of ratings during periods of financial instability.