THE EFFICIENCY OF THE INTERNATIONAL MONEY MARKETS: A REPLY

In their original article, McInish and Puglisi (1982) examine the weak form efficiency of nineteen international money market instruments using a runs test. Taylor asserts that on theoretical grounds other tests would have been better. McInish and Puglisi argue that their tests were satisfactory and that until empirical evidence is offered the economic significance of Taylor's claims is uncertain (at best).     

Scenario building for Metropolitan Tunis

Application of interactive and collaborative approach for futures studies provides a challenge even in countries that enjoy a considerable amount of personal freedom. What happens when such an approach is applied to countries where the political, social and cultural situation is different? This paper presents the case study of Metropolitan Tunis where a modified version of ‘future workshop’ was applied. This method, that enjoined the stakeholders to use their imagination and fantasy in an interactive way, proved quite successful.     

Does democracy affect taxation and government spending? Evidence from developing countries

Focusing on developing countries in three geographical areas (South-East Asia, Latin America and European Union), we explore the relation between political variables and tax revenue, public spending and their structure. We build a new dataset for the 1990–2005 period with fiscal, political and socio-economic variables. Since democracy is a complex and multidimensional concept, we measure it using two variables, the political strength of democratic institutions, and the protection of civil liberties. We perform three sets of estimates: (i) cross-country pooled OLS regressions with region fixed effects, (ii) country fixed effects regressions and (iii) region specific regressions with country fixed effects. While the first model delivers some significant correlations between political variables and tax items, when controlling for country fixed effects we find that tax revenue and tax composition are in general not significantly correlated with the strength of democratic institutions and the protection of civil liberties. The only exceptions are indirect, trade and property taxes. A similar result applies to public spending, with the exception of defense expenditure. Overall, our findings cast some doubt on the exact public policy channels through which political institutions affect economic development.     

THE EFFICIENCY OF THE INTERNATIONAL MONEY MARKETS

In markets which are efficient in the weak form, investors are not able to use the information contained in historical yields to earn excess returns. Using a rum test, this paper examines the weak form efficiency of a number of international money markets. While most of the markets examined were found to be efficient in the weak form, the study was not able to confirm the weak form efficiency of the markets for three-month German DM bank deposits, Swiss Ffr. bank deposits, French Ffr. bank deposits, and six-month Eurodollar CDs.     

AN EXAMINATION OF FEDERAL AGENCY DEBT PRICING PRACTICES

Debt issuance procedures for federally sponsored agency securities differ considerably from the methods used by the U.S. Treasury and most corporate and municipal debt issuers. This paper examines the debt issuing procedures of the three major federally sponsored agencies and the efficiency with which the fiscal agents for those agencies price new debt issues. The conclusions from the analysis are: (1) fiscal agents for the major federally sponsored agencies are extremely adept at estimating the equilibrium competitive yields for new debt issues; (2) pricing errors on new issues are generally due to factors beyond a fiscal agent's control, such as the volatility of debt market conditions; and (3) the debt pricing practices for federally sponsored agency securities are efficient and effective.     

The Relevance of AAS 29 to the Australian Public Sector: A Cause for Doubt?

In December 1993, the AARF issued Australian Accounting Standard AAS 29, Financial Reporting by Government Departments . The Standard requires all Australian government departments (GDs) to adopt comprehensive accrual financial reporting no later than 30 December 1996. Given the magnitude and potential financial cost of these reforms, the claimed benefits of AAS 29 justify empirical investigation and scrutiny. The purpose of the present study was to test underlying rationales of AAS 29 by reference to ratings and opinions of 172 federal and state GDs in Australia. The key rationale of AAS 29 is that accrual-based financial reports will be relevant to the economic decision making of GDs and their external users. While the empirical results presented in this paper are confined to the internal viewpoints of senior GD officials and representatives, they cast into doubt the relevance of AAS 29 in the Australian public sector.     

Using a dual system of reasoning in small businesses: Entrepreneurial decisions and subjective risk intelligence

This study aims at introducing subjective risk intelligence (SRI) in the context of small businesses to analyze how both rationality and intuition may influence the entrepreneurial decision-making process, particularly in affecting firms’ financial equilibrium.

SRI aggregates four dimensions: two positive attitudes (imaginative capability and problem-solving self-efficacy) and two detrimental ones (emotional stress vulnerability and negative attitude towards uncertainty). In particular, we argue that imaginative capability and emotional stress vulnerability refer to Kahneman’s System 1 (the intuitive), while problem-solving self-efficacy and negative attitude towards uncertainty appertain to System 2 (the rational).

We conducted an empirical investigation collecting data from an ad hoc survey administered to owners and managers of small businesses and their balance sheets over 2013–2017. After testing the proposed constructs’ reliability, we tested the influence that both Systems 1 and 2 have on SMEs’ financial structure through a pooled OLS regression estimator.

Results show that the intuitive and the rational components of risk intelligence affect entrepreneurs’ decision-making differently. The rational component seems to stimulate the entrepreneurial orientation to risk tolerance. The intuitive component limits the entrepreneurial propensity to take financial risks due to the desire for stability attached to this cognitive process. Accordingly, we highlight the importance of enhancing a balance between the two systems of thinking. Practical implications suggest that entrepreneurs with a dominant attitude towards problem-solving self-efficacy, or a positive attitude towards uncertainty, should invest in developing imaginative capabilities or emotional control, and vice versa.