Segmented asset markets and optimal exchange rate regimes

This paper revisits the issue of the optimal exchange rate regime in a flexible price environment. The key innovation is that we analyze this question in the context of environments where only a fraction of agents participate in asset market transactions (i.e., asset markets are segmented). Under this friction alternative exchange rate regimes have different implications for real allocations in the economy. In the context of this environment we show that flexible exchange rates are optimal under monetary shocks and fixed exchange rates are optimal under real shocks.     

Effects of age, need for cognition, and affective intensity on advertising effectiveness

This paper explores how individual characteristics of age, need for cognition (NFC), and affective intensity (AI) interact with each other and with advertising appeal frames (i.e., rational, positive-emotional, negative-emotional) to influence ad attitudes, involvement, and recall. The mixed design study reveals that younger adults recall emotional messages, especially negative ones, better than rational ones, but recall does not differ for older adults across appeal frames. Older adults prefer rational and positive messages to negative-emotional messages but ad attitudes do not differ among younger adults across appeal frames. Finally, age interacts with AI, but not NFC, to influence ad responsiveness. Both age and AI influence ad attitudes such that older adults exhibit the most positive ad attitudes across all appeal frames.     

High‐Performance Product Management: The Impact of Structure,Process, Competencies,and Role Definition*

Product management is one of the most important functions in marketing. Yet the product management literature has focused largely on creating successful products and has relatively little to say about creating effective product management organizations. This paper focuses on the organizational determinants of high‐performance product management at three levels: (1) the product manager as an individual; (2) the marketing processes related to product management; and (3) the organization structure and role definition. The paper identifies several key factors that potentially impact product management performance. A set of qualitative interviews is conducted to develop hypotheses related to constructs that may drive product management performance. These hypotheses are used to develop a causal model for product management performance that includes constructs related to roles and responsibilities, organization structure, and marketing processes related to product management. An empirical survey of 198 product managers from a variety of industries is conducted to test the causal model. The results of the causal model suggest that performance of a product management organization is driven by structural barriers in the organization, the quality of marketing processes, roles and responsibilities, and knowledge and competencies. The findings suggest that structural boundaries and interfaces are the biggest impediment to effective product management, followed by clarity of roles and responsibilities. The research highlights the importance of organization structure and effective human resource practices in improving product management performance.     

Interpartner Legitimacy in the Alliance Development Process*

abstract We propose a framework to understand interpartner legitimacy in strategic alliances. Interpartner legitimacy is the mutual acknowledgment by the alliance partners that their actions are proper in the developmental processes of the alliance. We argue that interpartner legitimacy is needed for cooperation to achieve alliance objectives. We propose three types of interpartner legitimacy – pragmatic, moral, and cognitive legitimacy – and discuss the dynamics of these three types in the formation, operation, and outcome stages of alliance development. Further, we discuss the salience of interpartner legitimacy in different alliance types. Finally, we derive propositions for further research, and discuss strategies that alliance managers can adopt to develop interpartner legitimacy.     

The impact of cognitive age on Internet use of the elderly: an introduction to the public policy implications

Despite the growth of the Internet, one area that has not really been discussed is the elderly's use of the Internet. Given the rapid growth of this population as well as the potential the Internet holds for them, it is a subject worth consideration. However, seniors cannot be defined simply by their chronological age, but by their cognitive age. This paper discusses the impact of cognitive age of a national random sample of American elderly consumers on their Internet use. The results suggest that those seniors with a younger cognitive age use the Internet more than those seniors with an older cognitive age. Additionally, seniors with a younger cognitive age have more social contact off‐line (but not online) than those seniors with an older cognitive age. Finally, in terms of demographic variables, chronological age is positively associated with cognitive age and women report a younger cognitive age than men. These results suggest that for policy makers interested in increasing the participation of seniors, they can utilize the Internet to reach those who are younger in terms of cognitive age; however, they will not be able to reach all seniors in this manner and they need to utilize the Internet as a complementing media to their traditional communication sources.     

Managing micropolitical risk: A cross‐sector examination

This article stresses the need for today's multinational firms to adopt their own political risk‐assessment and risk‐mitigation strategies. A comparative study of the energy, financial, and automobile sectors illustrates the need for all companies in these sectors to undertake comprehensive risk‐assessment strategies. Risk‐assessment models established by leading multinationals like British Petroleum, Bank of America, and General Motors are examined as examples that other companies in these sectors can build upon. The consistent micropolitical risk variables then lead to a proposed practical framework for examining sector‐specific micropolitical risk. © 2006 Wiley Periodicals, Inc.     

Exchange rate expectations and foreign direct investment flows

Exchange Rate Expectations and Foreign Direct Investment Flows. — Theories about exchange rate expectations are difficult to check empirically. We study FDI data to find indirect evidence on the formation of exchange rate expectations by foreign direct investors. Using panel data techniques on exchange rate movements and FDI flows from the United States to 20 OECD countries we find that skewness of devaluations has a robust positive impact on FDI flows while average devaluation and its volatility do not. We view this evidence as consistent with the hypothesis that relatively large exchange rate movements generate mean-reverting long-run expectations. This finding is consistent with survey-based evidence on exchange rate expectations.     

Modelling the dynamics of Bitcoin and Litecoin: GARCH versus stochastic volatility models

We examine and compare a large number of generalized autoregressive conditional heteroskedastic (GARCH) and stochastic volatility (SV) models using series of Bitcoin and Litecoin price returns to assess the model fit for dynamics of these cryptocurrency price returns series. The various models examined include the standard GARCH(1,1) and SV with an AR(1) log-volatility process, as well as more flexible models with jumps, volatility in mean, leverage effects, t-distributed and moving average innovations. We report that the best model for Bitcoin is SV-t while it is GARCH-t for Litecoin. Overall, the t-class of models performs better than other classes for both cryptocurrencies. For Bitcoin, the SV models consistently outperform the GARCH models and the same holds true for Litecoin in most cases. Finally, the comparison of GARCH models with GARCH-GJR models reveals that the leverage effect is not significant for cryptocurrencies, suggesting that these do not behave like stock prices.     

Temporary stabilization with capital controls

This paper studies both positive and normative aspects of quantity-based capital controls in a small open economy undergoing a temporary inflation stabilization plan. In the model, capital controls are implemented by choosing two policy variables: a ceiling on the private sector debt and a terminal date for removing controls; the date on which controls trigger and hence its duration are endogenously determined. Equilibrium dynamics are characterized for all feasible range of debt ceilings and durations. Temporary controls that end with the collapse of the stabilization plan are shown to mitigate consumption boom-bust cycles and dominate allocations under perfect capital mobility, thus providing a “second-best” rationale for employing them. For controls that are prolonged beyond the collapse of the stabilization plan, equilibria exist even when the debt ceiling is above the debt that accumulates under perfect capital mobility. Here, if the ceiling is sufficiently low, controls mitigate consumption cycles. Conversely, a sufficiently high ceiling amplifies consumption cycles. For prolonged controls, there is a critical value of debt ceiling below (above) which the welfare is higher (lower) relative to the perfect capital mobility case. Finally, for a given debt ceiling, prolonged controls rank lower in welfare than those that end with the stabilization plan. We would like to thank two anonymous referees and the editor whose suggestions have helped us improve the paper substantially. The usual disclaimer applies.