Do high interest rates defend currencies during speculative attacks?

Do high interest rates defend currencies during speculative attacks? Or do they have the perverse effect of increasing the probability of a devaluation of the currency under attack? Drawing on evidence from a large sample of speculative attacks in developed and developing economies, this paper argues that the answer to both questions is ‘no’. In particular, this paper documents a striking lack of any systematic association whatsoever between interest rates and the outcome of speculative attacks. The lack of clear empirical evidence on the effects of high interest rates during speculative attacks mirrors the theoretical ambiguities on this issue.     

Seasonality and Markov switching in an unobserved component time series model

It is generally acknowledged that the growth rate of output, the seasonal pattern, and the business cycle are best estimated simultaneously. To achieve this, we develop an unobserved component time series model for seasonally unadjusted US GDP. Our model incorporates a Markov switching regime to produce periods of expansion and recession, both of which are characterized by different underlying growth rates. Although both growth rates are time-varying, they are assumed to be cointegrated. The analysis is Bayesian, which fully accounts for all sources of uncertainty. Comparison with results from a similar model for seasonally adjusted data indicates that the seasonal adjustment of the data significantly alters several aspects of the full model. First Version Received: January 2001/Final Version Received: February 2002 Send offprint requests to: Rob Luginbuhl?Correspondence to: Rob Luginbuhl     

Value-in-context in crowdfunding ecosystems: how context frames value co-creation

The aim of this paper is to analyse the phenomenon of crowdfunding and determine whether it can be considered a service ecosystem, where the context frames innovation through value co-creation. A qualitative, multiple case study approach is used to analyse three platforms and six initiatives in the Spanish arts sector. The findings reveal that crowdfunding can be considered an ecosystem where value-in-context frames seven types of value co-creation, offering a contribution both to ecosystem theory and to the field of co-creation.     

Social Interaction and Beer Consumption

The aim of this article is to describe young consumers’ attitudes and conduct regarding beer consumption, analyzing the consumer as an individual (addressing internal factors) and in a collective (external factors). The research was designed in Brazil involving 52 participants, divided into 16 focus groups, and the respective data was transcribed and analyzed. The findings show three distinct types of consumers were identified. The authors termed these the Inductor, the Induced, and the Sophisticated. The article details how each type of consumer can be distinguished through different attitudes and factors. The results suggest that, rather than thinking of beer consumption as an individual item, beer consumption should be thought of as different types, involving different behavior, attitudes, and social interaction. The article demonstrates originality and value to put forward the notion that beer consumption should not be defined as an individual item. The framework offered in this article will assist future researchers to consider consumption of different types and brands of beer, based on social interaction.     

Productivity differences and the dynamic effects of labor movements

Barriers to labor mobility across countries coexist with substantial differences in living standards largely attributable to productivity differences. A growth model with endogenous labor movements is used to assess the effects on output, capital accumulation and welfare of removing barriers to labor mobility. The model is parameterized so that it is consistent with evidence on historical labor movements, and is applied to two cases: the enlargement of the European Union and the (hypothetical) creation of a common labor market in the North America. The main finding is that there are large resulting gains in terms of output and welfare.     

The Acid Rain Differential Game

This paper considers an acid rain differential game. Countries emit sulphur which is partly transferred to other countries. Depositions above critical loads ultimately destroy the soil. Countries face a trade-off between the costs of emission reductions and the damage to the soil due to the depletion of the acid buffers. Because of the transboundary externalities the outcome will depend on whether the countries cooperate or not. This paper presents the cooperative outcome and the open-loop and Markov-perfect Nash equilibria of the acid rain differential game. It will be shown that the depositions always converge to the critical loads but the steady-state levels of the buffer stocks differ. The theory is used to analyse the acid rain differential game for sulphur between Great Britain and Ireland. Finally, some results are given for the whole of Europe.