The effect of circuit breakers on expected volatility: Tests using implied volatilities

Following the 1987 stock market crash, trading controls or circuit breakers were implemented in financial markets to moderate extreme volatility. However, the effectiveness of circuit breakers on the operation of these markets is disputed. While some argue that circuit breakers curb the effects of overreaction in markets and restore confidence, others argue that these trading interruptions merely delay price movements to later periods or to other markets. This paper examines the effect of changes in circuit breaker rules on the market's expectation of future volatility. The results have policy implications and suggest that the circuit breaker rule changes have no effect on expected volatility.     

RATIONAL EXPECTATIONS AND THE DYNAMIC ADJUSTMENT OF SECURITY ANALYSTS' FORECASTS TO NEW INFORMATION

We report the results of unbiasedness tests of security analysts' earnings forecasts. By examining how analysts incorporate new information into their updated earnings forecasts we can analyze directly the effect of new information on analysts' forecast revisions and evaluate whether these revised forecasts converge to rational expectations forecasts. The forecasts made by security analysts participating in the Institutional Brokers Estimate System (IBES) database are analyzed. Using standard statistical tests, we reject the simple form of the rational expectations hypothesis. However, by extending the standard tests used in previous studies, we obtain results that suggest that analysts' earnings forecasts conform to a dynamic form of rationality. The tendency of revised forecasts to converge stochastically toward the rational expectations forecast cautions against the rejection of more complicated forms of rationality.     

Hip‐hop Urbanism Old and New

The sustained connection between hip‐hop and urban identity stems in part from the origins of hip‐hop culture in post‐industrial American cities during the late twentieth century. But hip‐hop urbanism cannot be reduced to nostalgia or respect for previous traditions, as changing spatial demographics and the evolution of hip‐hop production and consumption force a disaggregation and reconsideration of ‘urban music’. Contemporary hip‐hop research in the United States must focus not only on the black and Latino communities responsible for hip‐hop's genesis, but on modern‐day race‐ and class‐based power dynamics, as well as on communities and social networks that are not typically considered urban. Ethnographers are especially well‐positioned to lead this field, thanks to methodological and theoretical tools that allow them to focus on smaller and emergent musical communities in flux.     

Good green mothers consuming their way through pregnancy: roles of environmental identities and information seeking in coping with the transition

We explore the consumption experiences of women who opt for an environmentally conscious approach to pregnancy. Our findings reveal that environmentally conscious mothers conduct extensive scientific research about the products that they purchase during pregnancy and the associated risks of using such products. They believe that their efforts to find and process such information make them experts on what is best for their babies’ health and proclaim some micromanaging powers in an uncontrollable environment. Alas, consumption decisions are simultaneously coupled with tensions between (1) needing to make informed choices and being overwhelmed with information; (2) feeling confident about seeking consumption information and lacking the confidence to share it; and (3) pursuing external expertise and resorting to internal instincts. Thus, although consumption is often perceived as a helpful coping mechanism when transitioning to new life roles, we find that it also contributes to the complexity of such transitional situations.     

Bargaining with imperfect enforcement

The game‐theoretic bargaining literature insists on a noncooperative bargaining procedure but implicitly assumes “cooperative” implementation of agreements. In reality, courts cannot implement agreements costlessly, and parties often prefer to use “noncooperative” implementation. We present a bargaining model which incorporates the idea that agreements may be enforced noncooperatively. We show that this has a substantial impact in limiting the inequality of agreements, and results in a nonmonotonicity of the discount rate. The model also explains why some parties may have incentives to deliberately write incomplete contracts as a way to enhance their bargaining power.     

The Political Economy of Energy Transitions: The Case of South Africa

This paper explores the political economy of energy transition in South Africa. An economic model based around a powerful ‘minerals-energy complex’ that has previously been able to provide domestic and foreign capital with cheap and plentiful coal-generated electricity is no longer economically or environmentally sustainable. The paper analyses the struggle over competing energy visions, infrastructures and political agendas in order to generate insights into the governance and financing of clean energy transitions in South Africa. It provides both a rich empirical account of key policy developments aimed at enabling such a transition and provides reflections on how best to theorise the contested politics of energy transitions.     

Co-Morbidity and Other Complexities Affecting Black Women’s Health

This paper presents some of the major health concerns that affect black women, and examines how various individual health problems co-exist and coincide to create complex health concerns for women. It posits the idea that to effectively address a Black woman’s health, her mental, emotional, social, economic and even spiritual health must be considered as well as her physical condition. The paper focuses largely on the information from individual health-related research presentations at “The Invisible Woman” conference held at Bennett College in March 18–19, 2011 in Greensboro, North Carolina. At this event, scholars presented new research on HIV, obesity and mental health—three areas of critical concern for African–American women—examining ways in which these conditions affect Black women. The paper also addresses the role of health care access and policy in addressing these and other health concerns among women and within the black community. The review of the literature highlights the importance of examining health—perhaps especially Black women’s health—from social, cultural, behavioral, environmental and economic perspectives. It also points out the continued need for research that includes women and people of color.     

Effect of emotional victim images in prosocial advertising: The moderating role of helping mode

Charities and marketers routinely incorporate images of recipients, for example victims of a flood or famine, in their prosocial advertising; however, previous literature suggests mixed results regarding the effectiveness of relying on sad versus happy images of victims. Recently, due to reactance to excessively traumatic marketing campaigns, happy victim images have been found to be more effective in eliciting prosocial behaviors. To extend this line of research, an experiment found that consumers are more willing to help when viewing advertisements featuring happy children over sad children. Moreover, helping mode moderates the relationship between victim image and helping intentions. The effect of a happy victim image is attenuated when consumers are asked to buy cause-related products rather than donate to charities. According to emotion regulation consumption theory, consumers mitigate the feeling of negative emotions by increasing their intention to buy cause-related products. Practically, the findings provide guidance on integrating victim images in prosocial advertising.     

Tourism,Consumption and Inequality in Central America

Much research in international political economy (IPE) has been criticised for focussing on large and powerful actors in post-industrial countries, to the neglect of sites, processes and actors in the global South. This article offers a corrective to this bias in two ways: by locating the analysis in two rural Central American communities; and by exploring the social relations of consumption in these communities. In doing this, I challenge assumptions about rural places being excluded from global processes and explore the complexities and contradictions of how such communities are inserted into global circuits of production and consumption. Drawing on extensive qualitative research, the article explores the ways in which capitalist development through tourism has reconstituted the political economy of consumption in terms of habits, attitudes and behaviour in these two communities. Using the community and the household as sites of analysis, I explore the complex ways in which inequalities have been reconfigured through changing relations of consumption. Certain kinds of social hierarchies, in particular traditional gendered power relations within the household, have been challenged. However, other inequalities – such as class, ethnicity and nationality – have been reinforced by these processes.     

Reputational contagion and optimal regulatory forbearance

Existing studies suggest that systemic crises may arise because banks either hold correlated assets, or are connected by interbank lending. This paper shows that common regulation is also a conduit for interbank contagion. One bank's failure may undermine confidence in the banking regulator's competence, and, hence, in other banks chartered by the same regulator. As a result, depositors withdraw funds from otherwise unconnected banks. The optimal regulatory response to this behavior can be privately to exhibit forbearance to a failing bank. We show that regulatory transparency improves confidence ex ante but impedes regulators' ability to stem panics ex post.