Floating exchange rates and their problems for the developing countries

The following article deals with the reasons for the fierce resistance of the developing countries to the system of floating exchange rates which the industrialized countries are favouring at present. It examines the consequences of floating exchange rates for the foreign trade, indebtedness and reserves of the developing countries and their implications for the situation in their domestic economies as a whole.     

An Extension of Spatial Dependence Models for Estimating Short-Term Temperature Portfolio Risk

Temperature risk is any adverse financial outcome caused by temperature outcomes. The Chicago Mercantile Exchange lists a series of financial products that link payments to temperature outcomes, and these products can help buyers manage temperature risk. Financial institutions can also hold a portfolio of these products as counterparty to the buyers facing temperature risk. Here we take an actuarial perspective to measuring the risk by modeling the daily temperatures directly. These models are then used to simulate distributions of future temperature outcomes. The model for daily temperature is a spatial ARMA-EGARCH statistical model that incorporates dependence in both time and space, in addition to modeling the volatility. Simulations from this model are used to build up distributions of temperature outcomes, and we demonstrate how actuarial risk measures of the portfolio can then be estimated from these distributions.     

TTIP – Probleme und Chancen

The Transatlantic Trade and Investment Partnership is the most important trade policy decision that European leaders have faced in many years. The new generation of free trade agreements, including TTIP, aim at deep economic integration. Thus, they are essentially focused upon the removal or alignment of standards, regulations and administrative procedures that impede international trade and investment. Therefore, TTIP goes beyond the dimensions of traditional preferential trade agreements in the sense that it not only concerns tariffs and non tariff barriers to trade in goods, but it also concerns trade in services and the foreign investment environment. Regulatory cooperation under TTIP might thus well extend into core domains of public policy, including health and food safety or environmental regulation. Regulation, however, confers both benefits and costs to society. A proper assessment of TTIP must therefore also consider the benefits of regulation to society and must embed regulatory cooperation between the EU and US into a firm democratic framework. The potential of such an agreement is substantial, due to improved market access, regulatory cooperation and greater global reach, while the downside risk is limited. While some of the arguments critical of TTIP are justified, others seem rather excessive and seem intent on stirring up unnecessary anxiety among the population. An objective and constructive discussion is crucial to ensure that the needs of the population are heard during the negotiation process and that an agreement capable of achieving majority support can be concluded. The debate over TTIP has to consider not only the economic effects of increased trade but also the legal and political dimensions of the trade agreement.     

Ambidextrous work in smart city project alliances: unpacking the role of human resource management systems

Abstract

Organizations that are competing in dynamic global markets are increasingly adopting ambidextrous strategies where exploration and exploitation capabilities are combined simultaneously. However, ambidextrous work raises new challenges for human resource management (HRM). Based on 21 interviews with managers in seven multinational firms in Europe, we investigate how ambidextrous work in smart city work is supported through HRM systems. Our findings suggest a complex mix of three different HRM systems (one at corporate and two at project levels) designed to support ambidextrous exploratory and exploitation work. Specifically, corporate HRM systems focused on incentives and development of dual capabilities for smart city managers (SCMs). At project levels, interconnected explorative and exploitative HRM systems offered tailored managerial tools to support social integration and knowledge management between internal and external employees. Theoretical contributions, future research paths, and practical implications are addressed.     

Weather Derivative Risk Measures for Extreme Events

We consider pricing weather derivatives for use as protection against weather extremes by using max-stable processes to estimate risk measures. These derivatives are not currently traded on any open markets, but their use could help some institutions manage weather risks from extreme events. The central challenge is to model the dependence of payments, which increases the risk of holding multiple weather derivatives. The method described utilizes results from spatial statistics and extreme value theory to first model extremes in the weather as a max-stable process, and then simulate payments for a general collection of weather derivatives. As the joint likelihood function for max-stable processes is unavailable, we use two approaches: The first is based on the composite likelihood, and the second is based on approximate Bayesian computing (ABC). Both capture the spatial dependence of payments. To incorporate parameter uncertainty into the pricing model, we use bootstrapping with the composite likelihood approach, while the ABC method naturally incorporates parameter uncertainty. We show that the additional risk from the spatial dependence of payments can be quite substantial, and that the methods discussed can compute standard actuarial risk measures in both a frequentist and Bayesian setting.     

Prevalence and Persistence of High-Growth Entrepreneurship: Which Institutions Matter Most?

Journal of Industry, Competition and Trade - Which institutions encourage high-growth entrepreneurship to emerge and to be sustained? Building on institutional theory, this study exploits a sample...