Modeling the Taiwan Stock Market and International Linkages

This paper analyzes the Taiwan stock market and examines its price and volatility linkages with those of the United States. In particular, it tests the hypothesis that the short-term volatility and price changes spill over from the developed markets, mainly the United States, to the emerging Taiwan stock market. The model and the test are built upon Engle's ARCH (autoregressive conditional heteroskedasticity) and Engle and Kroner's M-GARCH (multivariate generalized ARCH) models. The paper differs from previous studies on the Taiwan stock market in three respects. First, instead of using daily closing prices, it uses close-to-open and open-to-close returns to avoid the problem of overlapping samples. It carefully models the day-of-the-week effect in daily data to avoid misspecification of the model. Second, to circumvent the generated regressor problem arising from the two-step estimation procedure, it also employs the M-GARCH model where all parameters are estimated simultaneously. Third, the misspecification test is carried out on various kinds of asymmetric ARCH factors. A substantial volatility spillover effect is found from the US stock market to the Taiwan stock market, especially for the model using close-to-open returns. There is also evidence supporting a spillover effect in price changes. The findings can be explained by the recent gradual opening of the Taiwan stock market to foreign investors.     

Regulation of Insurance Markets

There have been major changes in the way European insurance markets are regulated, and there is still considerable debate about what the form and scope of regulation should be. This article examines the arguments for solvency regulation when consumers are fully informed of the insurer's insolvency risk. It is shown firms always provide enough capital to ensure solvency, unless there are restrictions on the composition of their asset portfolios. The conclusion holds even when competition means that only normal profits can be earned. This suggests that the role of regulation in insurance markets should be confined to providing consumers with information about the default risk of insurers.     

Market volatility and the demand for hedging in stock index futures

This study examines the relation between stock market volatility and the demand for hedging in S&P 500 stock index futures contracts. Open interest is used as a proxy for hedging demand. The analysis employs unique data that identify separately the open interest of large hedgers, large speculators, and smaller traders. Volatility estimates are decomposed into expected and unexpected components, to assess whether traders’ reactions to volatility depend upon its predictability. Results indicate that daily open interest for hedgers increases when unexpected volatility increases. Increases in unexpected volatility may cause hedgers to raise their estimates of future expected volatility, and hence increase their demand for hedging. Open interest of speculators is not related to expected volatility, and is only weakly related to unexpected volatility. The increase in the participation of hedgers in periods of higher volatility is significantly larger than the increase in the participation of speculators. The results suggest that increases in stock market volatility increase the demand for hedging. © 2000 John Wiley & Sons, Inc. Jrl Fut Mark 20: 105–125, 2000     

Bank regulation,property prices and early warning systems for banking crises in OECD countries

Early warning systems (EWS) for banking crises generally omit bank capital, bank liquidity and property prices. Most work on EWS has been for global samples dominated by emerging market crises where time series data on bank capital adequacy and property prices are typically absent. We estimate logit crisis models for OECD countries, finding strong effects from capital adequacy and liquidity ratios as well as property prices, and can exclude traditional variables. Higher capital adequacy and liquidity ratios have a marked effect on the crisis probabilities, implying long-run benefits to offset some of the costs that such regulations may impose.     

Alternatives to Paying Child Benefit to the Rich: Means-Testing or Higher Tax?

There appears to be a general movement away from universal child benefits and towards means-testing. In the present article we argue that instead of suppressing the labour supply of middle-income parents by withdrawing the transfer as a function of income, one should consider the alternative of financing a generous universal child benefit by increasing taxation of income. The implications of means-testing compared with a tax-financed universal alternative are discussed analytically in a piecewise linear schedule and by combining information from behavioural and non-behavioural micro-simulation models. Our results provide support for making child benefit universal instead of means-tested.     

NATO/US false-flag attacks in Europe

False flag operations are acts of deception carried out by government officials to blame other countries or political groups for an attack against the nation with the aim of stirring up a desire for retribution against the supposed perpetrator. Since the effectiveness of a false-flag operation depends on preventing the truth from becoming widely known, it is impossible to know how often such operations have been carried out. Nevertheless, some historical events have been revealed in time, so we can better understand how they operate. The focus here is on false-flag operations in Western Europe and Turkey, carried out as part of the Gladio program during the Cold War under the supervision of the CIA. In each case, the CIA persuaded NATO members to recruit right-wing operatives to engage in terrorist actions and then blame the resulting deaths on left-wing groups, mostly communists. In this way, the United States used deception and terror to prevent communists from gaining power in Europe after World War II.     

9/11, the power elite,and the U.S. think tanks that plan the future

Four think tanks with close ties to the highest levels of government have shaped American foreign policy for decades. They are the Council on Foreign Relations, the RAND Corporation, the Bilderberg Group, and the Trilateral Commission. With direct ties to government officials who have engaged in various covert operations, these organizations provide a space within which advocates of global control can share ideas and develop new policies. Among the groups that have bravely questioned the consensus-forming character of these think tanks are groups of people whose relatives died on 9/11. Because of their investigations into the government officials whose careers have blossomed as a result of 9/11, these ordinary citizens have become sharp critics of the expansionist ideology that was seemingly legitimized by 9/11.     

Land and small farmer resistance in authoritarian Egypt

This article examines small farmer resistance in Egypt. It situates contemporary struggles in the context of the uneven success of small farmers' historical resistance to land dispossession and neoliberal reform. Struggles over land are the prime driver of rural conflict and small farmers contest state strategies that reward local elites, land owners, and supporters of the military regime. There may not be a coherent social movement able to resist contemporary patterns of capital accumulation, but there are elements of resistance that edge forward an agenda for a “political conversation” about much-needed deep social reforms. The internationally-supported Sisi presidency has used violence to consolidate military power, making open revolt difficult. Nevertheless, small farmers link struggles over access to land with poor state provisioning of water and infrastructure as a means of building resistance.     

Pension,possible phaseout,and endogenous fertility in general equilibrium

The rich literature on Pay-As-You-Go (PAYG)-type pensions provides a notion that when pension return is dominated by the market return, generally it is impossible to phase pension out without hurting any generation. We show that PAYG pensions can indeed be phased out in a much richer framework where fertility is endogenous and general equilibrium effects are present. Interestingly, the factor that helps us to phase the pension out in a Pareto way is hidden in the structure of PAYG pension itself. Individualistic agents fail to recognize the benefits of their fertility decision on these programs and, therefore, end up in an allocation that is strictly dominated by the allocations that internalize this externality. Exploiting this positive externality, competitive economy can improve its allocations and can reach the planner's steady-state in finite time where each generation secures as much utility as in the competitive equilibrium. Clearly, it is possible to transition in a Pareto way to an economy either with no pension or with pensions whose return is not dominated by market return.