“Buy-back” in international trade: A rationale

Conclusion When a technology proprietor cannot exploit his advantage by means of ownership of a production facility abroad, a sales contract with “buy-back provisions” may, in fact, be a trade-enhancing resolution to a situation of information-asymmetry between buyer and seller. The important implication is that not all forms of countertrade can be summarily dismissed as inefficient. Just as foreign direct investment can be seen to be a response to environmental or market imperfections, “buy-back” may be a way to deal with institutional or regulatory obstacles such as the prohibition of foreign ownership.     

Static hedging and model risk for barrier options

The article investigates how sensitive different dynamic and static hedge strategies for barrier options are to model risk. It is found that using plain‐vanilla options to hedge offers considerable improvements over usual Δ hedges. Further, it is shown that the hedge portfolios involving options are relatively more sensitive to model risk, but that the degree of misspecification sensitivity is robust across commonly used models. © 2006 Wiley Periodicals, Inc. Jrl Fut Mark 26:449–463, 2006     

Efficiency and the production function

Journal of Economics -     

Regional integration in East Asia. From market-driven regionalisation to institutionalised regionalism?

Conclusions The analyses have shown that ESACs unprecedented emergence in world trade and capital transactions has been accompanied by a growing share of intra-area transactions. At least for the goods sector, the evidence is clear. Intra-area transactions grew faster than those to the rest of world, and the latter rose faster than world trade. Given this “double growth” performance, there was no trade diversion in the static zero sum meaning. Driving forces of fast growing intra-area transactions were basically internal conditions, such as “natural” trading partnership (geographical and cultural proximity, size, and complementarity in resource endowment and production structure), rising income levels fostering intra-industry trade, the economic opening of China, and unilateral liberalisation of trade and capital transactions on a non-discriminatory basis. It cannot be denied that external factors as protectionism and recession in non-Asian OECD countries have also contributed to this performance. Yet, it seems safe to assume that even without the US and European recession in the early eighties and early nineties and without the spread on non-tariff barriers, intraarea transactions would have received sufficient fuels from the internal factors to grow more rapidly than transactions with the rest of the world.¹⁷ Furthermore, a base effect of a low initial level of intra-area trade cannot be neglected.     

The new challenge in Eastern Europe: Investment and restructuring

The reform programmes of most Eastern European countries have liberalized prices and taken on the task of macroeconomic stabilization, but the formation and implementation of structural policies has largely been neglected so far. What steps should the governments of Eastern Europe take to encourage the necessary restructuring of their economies and to attract the urgently needed foreign investment?