Do Daily Price Limits Act as Magnets? The Case of Treasury Bond Futures

This article examines price behavior in the U.S. Treasury bond futures market in the mornings after large overnight price moves, using data from 1980 to 1987. The article tests whether price behavior is affected by proximity to a price limit, and whether the effect is a magnet effect or a calming effect. In that period, the price tends to reverse direction after the morning open, and the reversal appears to reflect a calming effect of the price being close to the limit. An alternative hypothesis—that morning price behavior reflects the overnight price change rather than proximity to the price limit per se—is also tested, and does not perform as well in explaining price behavior.     

Value, a Way Out of Uncertainties: A Physical Model for Ethics and Freedoms

Value analysis establishes a way to practice functional analysis which enables to think all matter as sets of functions. The study of the correlations between the phases of activation of these functions leads to consider the aggregation of correlated activation functions as an attractor in a configuration space. This point of view allows figuring out general behaviors reducing the conceptual gap between microeconomics and macroeconomics. Then, based on a characterization of complex adaptive systems in terms of functional attractors, the theory links together value and physical magnitudes, like work or energy and action. The evolution of these systems is studied from the viewpoints of learning or of voluntary and involuntary interactions with others described in the ultimate way by the strategies, or operators, of which they make use. Three kinds of uncertainties are emphasized among which the uncertainty between the structure and the business outlook of a system is recreated through an analogy between physics and economics. The rationality of the complex functional systems economics is based on value and on market or environment awareness. Equilibria establish potential of agents or players whose profiles are built through the equivalence between a time-dependent payoff at equilibrium and the regular value of the corresponding attractor. The law of supply and demand is naturally founded on unbiased profiles of agents and can be a means of uncertainty reduction and of growth. Freedoms are opportunities to grow, when they result in confidence, and to bear risks in decision-making through an innovative process.     

Migrants' Home Town Associations and Local Development in Mali

We explore the impact of migrants' Home Town Associations (HTAs) on the provision of public goods in Mali. We combine an original dataset on all the HTAs created by Malian migrants in France from 1981 with census data on public goods in all Malian villages since 1976, and we run double‐difference estimations to compare villages with and without an HTA, before and after the creation of the HTAs. We find robust evidence that the provision of schools, health centers, and, to a lesser extent, water amenities has increased significantly faster in villages targeted by an HTA between 1987 and 2009 than in control villages.     

Markov switching in disaggregate unemployment rates

We develop a dynamic factor model with Markov switching to examine secular and business cycle fluctuations in the U.S. unemployment rates. We extract the common dynamics amongst unemployment rates disaggregated for 7 age groups. The framework allows analysis of the contribution of demographic factors to secular changes in unemployment rates. In addition, it allows examination of the separate contribution of changes due to asymmetric business cycle fluctuations. We find strong evidence in favor of the common factor and of the switching between high and low unemployment rate regimes. We also find that demographic adjustments can account for a great deal of secular changes in the unemployment rates, particularly the abrupt increase in the 1970s and 1980s and the subsequent decrease in the last 18 years. First Version Received: December 2000/Final Version Received: June 2001     

Global developments in the competition for land from biofuels

The potential global demand for biofuels and the implications of this for land use and its interaction with food agriculture is reviewed. It is expected that biofuels will form an important element of global transport energy mix (in the order of 20–30% of total requirement) over the next 40 years and beyond. Over this time, there will be a transition from so called first generation biofuels, based on commodity agricultural crops with food/feed uses, to advanced biofuels, sometimes called second and third generation biofuels, based primarily upon lignocellulosic feedstocks. It remains unclear whether these advanced biofuels, based on lignocellulosic materials, will entirely replace first generation or if second generation will be supplemental to first generation. This expansion in biofuels will be coupled to a substantial increase in alternative fuels (electricity, hydrogen, biogas and natural gas) and modal shifts. Biofuel production from agricultural commodity crops that exhibit strong sustainability criteria will remain important (e.g. sugarcane) with supportive and competitive aspects for food security.Land requirement projections estimated for a range of potential biofuel development trajectories range widely and are inherently uncertain. Under the most active scenario that delivers substantive greenhouse gas reductions in transport by 2050 (relative to 2005 levels), approximately 100 Mha of additional land is projected. In the ‘business-as-usual’ scenario, in which transport energy demand rises by 80% by 2050 from present levels, a land use requirement of 650 Mha is projected.Significant potential exists for producing biofuels that possess high productivity and sustainability profiles through continued research, development and demonstration. Policy and regulation at a global level, that focuses biofuel development on these goals in ways that are synergistic with food agriculture, will simultaneously help to decarbonise transport and maintain a diverse and financially robust agricultural (and forestry) sector.     

International Financial Aggregation and Index Number Theory: A Chronological Half-century Empirical Overview

This paper comprises a survey of a half century of research on international monetary aggregate data. We argue that since monetary assets began yielding interest, the simple sum monetary aggregates have had no foundations in economic theory and have sequentially produced one source of misunderstanding after another. The bad data produced by simple sum aggregation have contaminated research in monetary economics, have resulted in needless “paradoxes,” and have produced decades of misunderstandings in international monetary economics research and policy. While better data, based correctly on index number theory and aggregation theory, now exist, the official central bank data most commonly used have not improved in most parts of the world. While aggregation theoretic monetary aggregates exist for internal use at the European Central Bank, the Bank of Japan, and many other central banks throughout the world, the only central banks that currently make aggregation theoretic monetary aggregates available to the public are the Bank of England and the St. Louis Federal Reserve Bank. No other area of economics has been so seriously damaged by data unrelated to valid index number and aggregation theory. In this paper we chronologically review the past research in this area and connect the data errors with the resulting policy and inference errors. Future research on monetary aggregation and policy can most advantageously focus on extensions to exchange rate risk and its implications for multilateral aggregation over monetary asset portfolios containing assets denominated in more than one currency. The relevant theory for multilateral aggregation with exchange rate risk has been derived by Barnett (J Econom 136(2):457–482, 2007) and Barnett and Wu (Ann Finance 1:35–50, 2005).

Aid, Volatility, and Growth Again: When Aid Volatility Matters and When it Does Not

In previous papers the authors have argued that aid is likely to mitigate the negative effects of external shocks on economic growth (i.e. that aid is more effective in countries which are more vulnerable to external shocks). Recently an important debate has emerged about the possible negative effects of aid volatility itself. However, the cushioning effect of aid may involve some volatility in aid flows, which then is not necessarily negative for growth. In this paper the authors examine to what extent the time profile of aid disbursements may contribute to an increase or a decrease of aid effectiveness. They first show that aid, even if volatile, is not clearly as pro-cyclical as is often argued, and, even if pro-cyclical, is not necessarily destabilizing. They measure aid volatility by several methods and assess pro-cyclicality of aid with respect to exports, thus departing from previous literature, which usually assess pro-cyclicality of aid with respect to national income or fiscal receipts. The stabilizing/destabilizing nature of aid is measured by the difference in the volatility of exports and the volatility of the aid plus export flows. Then, in order to take into account the diversity of shocks to which aid can respond, they consider the effect of aid on income volatility and again find that aid is making growth more stable, while its volatility reduces this effect. They finally show through growth regressions that the higher effectiveness of aid in vulnerable countries is to a large extent due to its stabilizing effect.     

Volatility widens inequality. Could aid and remittances help?

Review of World Economics - We analyse the relationship between income volatility and inequality and the conditional role played by aid and remittances. Using a panel of 142 countries for the...     

The effect of negative online customer reviews on brand equity and purchase intention of consumer electronics in South Africa

This study investigated the effect that negative online customer reviews have on brand equity and purchase intention. This research examined the influence of negative electronic word of mouth (eWOM) on brand equity, as influenced by customer review quality, product involvement and source credibility. A 3 (high quality review versus low quality review versus no review) × 2 (high product involvement versus low product involvement) factorial experiment with 236 respondents was conducted. The results revealed that the presence of negative eWOM has a significant detrimental effect on brand equity and purchase intention. Furthermore, the effect of negative online customer reviews is more detrimental to the brand equity of a high involvement product than a low involvement product. The results also revealed that high quality reviews are more influential than low quality reviews with respect to brand equity, and the difference between the levels of eWOM source credibility has no significant effect on brand equity.