Simulation driven inferences for multiply imputed longitudinal datasets*

In this article, we demonstrate by simulations that rich imputation models for incomplete longitudinal datasets produce more calibrated estimates in terms of reduced bias and higher coverage rates without duly deflating the efficiency. We argue that the use of supplementary variables that are thought to be potential causes or correlates of missingness or outcomes in the imputation process may lead to better inferential results in comparison to simpler imputation models. The liberal use of these variables is recommended as opposed to the conservative strategy.     

Monetary policy and credit cards: Evidence from a small open economy

This paper uses a unique monthly data set that covers the overall credit card usage in a small-open economy, Turkey, to investigate a possible credit channel of monetary policy transmission through credit cards. A reduced-form vector autoregression analysis is employed, where the forecast error variance decompositions are calculated for three-year windows over the period 2002–2009. It is shown that, during the recent financial crisis that has started in 2007, the monetary policy of Turkey has shifted toward focusing on output volatility and interest rate smoothing through setting short-term interest rates, while the inflation rate has been mostly affected by exchange rate movements and inflation inertia. Credit card usage has an increasing effect on inflation rates through time, requiring more policy emphasis on the credit channel through credit cards. When the effects of the credit view and the money view are compared, the former seems to be more effective on the real side of the economy, independent of the level of inflation.     

The inflation and inflation uncertainty relationship for Turkey: a dynamic framework

This article assesses the interaction between inflation and inflation uncertainty in a dynamic framework for Turkey by using monthly data for the time period 1984–2009. The bulk of previous studies investigating the link between inflation and inflation uncertainty employ Autoregressive Conditional Heteroskedasticity (ARCH)-type models, which consider inflation uncertainty as a predetermined function of innovations to inflation specification. The stochastic volatility in mean (SVM) models that we use allow for gathering innovations to inflation uncertainty and assess the effect of inflation volatility shocks on inflation over time. When we assess the interaction between inflation and its volatility, the empirical findings indicate that response of inflation to inflation volatility is positive and statistically significant. However, the response of inflation volatility to inflation is negative but not statistically significant.     

Mismeasurement of Distance Effects: The Role of Internal Location of Production

The estimated effects of distance in empirical international trade regressions are unrealistically high. Using state‐and‐sector level US exports data, this paper shows analytically and proves empirically that ignoring the internal location of production (of international exports), which leads to the overestimation of distance effects by about twofold, is a possible explanation. This overestimation is mostly attributed to the mismeasurement of the distance elasticity of trade costs when internal locations of production are ignored. A corrective distance index is proposed to avoid such mismeasurements and is shown to work well for the median sector. The results are robust to the consideration of alternative estimation methodologies and data sets.     

Metaphors and the Application of a Corporate Code of Ethics

This article researches how a corporate code of ethics (CCE) implemented in local government X has influenced the behavior of its employees, middle managers, and managers. Metaphors from the existing and desired CCE elicited by these three groups provided information on how to improve the effectiveness of the CCE. This method proved to be very fruitful. It appeared that continuous systematic attention needed to be paid to the CCE after the CCE had been implemented, particularly by management. Initiatives from management to start discussions about relevant questions of integrity appeared to be also necessary to make the topic a “normal” topic which employees were no longer afraid to discuss. In this way, the possibility could be created to develop collectively a “practical” frame of reference concerning relevant questions of integrity that would help employees to make decisions in difficult situations during their work in the future.     

Inflation,financial development,and growth: A trilateral analysis

A large body of evidence links financial development to economic growth, yet the channels through which inflation affects this relationship and its stability have been less thoroughly explored. We take an econometric and graphical approach to examining these channels, and find that higher levels of financial development, combined with low-inflation, are related to higher rates of economic growth, especially in lower income countries, but that financial development loses much of its explanatory power in the presence of high-inflation. In particular, small increases in the price level seem able to wipe out relatively large growth effects of financial deepening when the annual rate of inflation lies between 4% and 19%, whereas the operation of the finance–growth link is less affected by inflation rates above this range. Growth is generally much lower, however, in such high-inflation settings where financial development is typically repressed.     

An investigation of long memory in various measures of stock market volatility, using wavelets and aggregate series

Using methods based on wavelets and aggregate series, long memory in the absolute daily returns, squared daily returns, and log squared daily returns of the S&P 500 Index are investigated. First, we estimate the long memory parameter in each series using a method based on the discrete wavelet transform. For each series, the variance method and the absolute value method based on aggregate series are then employed to investigate long memory. Our findings suggest that these methods provide evidence of long memory in the volatility of the S&P 500 Index. Our esteemed colleague, Robert DiSario, passed away on December 31, 2005.     

Political Business Cycles and Endogenous Elections

Empirical research of political business cycles (PBCs) may suffer from endogeneity bias when incumbent governments have discretion to call for an early election. Using an instrumental variable (IV) routine on data from Japan and the U.K., we find strong evidence to support the notion that election timing is a function of the economy rather than the macroeconomy being driven by elections as assumed in PBC. In single-equation regressions, no evidence of political cycles are found, but Hausman tests suggest elections are endogenous in our regressions. A monetary cycle in Japan and an inflation cycle in the U.K. are uncovered through IV estimation.     

Price dispersion across US districts of entry

Price dispersion of US imports are investigated across US districts of entry. Markups explain about 31% of price dispersion, while marginal costs of production explain about 69%; effects of trade costs, for which we have actual data, are almost none.