Network Effects of Countries’ Exchange Rate Regime Choices: A Spatial Analysis

This paper studies two issues of countries’ exchange rate regime (ERR) choices: why countries peg and, if they peg, how they choose their anchor currency. Previous studies focus on the use of country-specific factors to explain countries’ exchange rate regime choices. However, though some papers found strong correlation between idiosyncratic factors and ERR choices, these factors cannot fully explain the contemporary movement of the choices. It is possible that large swings in regime choices are caused by network effects: a few countries change their ERR and other countries follow. If this snowball effect is true for countries’ decisions, we should be able to observe spatial autocorrelations among countries’ ERR choices. Using spatial analysis, we found that countries are likely to follow the ERRs of other countries, and countries’ ERRs are jointly determined by network effects and country-specific factors. The findings indicate that countries may achieve higher welfare by jointly choosing their ERRs with their major partners through cooperation and negotiation.     

Bridging the Gap between ‘Joe Sixpack’ and ‘Bill Gates’: On the Efficiency of Institutions for Redistribution

All democracies have implemented institutions that redistribute income from the rich to the poor. Economists tend to have strong views on how this redistribution should be organized, based on the two theorems of welfare economics. However, these views are mostly neglected. I argue that the reason for this neglect is likely to be that these institutions are constrained Pareto-efficient after a century of experimentation. If not, some political bargaining would lead to the implementation of the Pareto-improvement. Hence, economists should concentrate on an explanation of the constrained efficiency of existing institutions instead of on the design of drawing table grand reforms. This approach is applied to three institutions frequently observed in reality: minimum wages, education subsidies, and unemployment insurance. We show that these institutions for redistribution are likely to be constrained efficient. We analyze the impact of the constitutional environment on the implementation of efficient redistribution. Finally, we evaluate the causes for the observed cross-country variation in redistribution.     

Slow Pass-through Around the World: A New Import for Developing Countries?

Developing countries traditionally experience pass-through of exchange rate changes that is greater and more rapid than high-income countries experience. This is true equally of the determination of prices of imported goods, prices of local competitors’ products, and the general CPI. But developing countries in the 1990s experienced a rapid downward trend in the degree of pass-through and speed of adjustment, more so than did high-income countries. As a consequence, slow and incomplete pass-through is no longer exclusively a luxury of industrial countries. Using a new data set—prices of eight narrowly defined brand commodities, observed in 76 countries—we find empirical support for some of the factors that have been hypothesized in the literature, but not for others. Significant determinants of the pass-through coefficient include per capita incomes, bilateral distance, tariffs, country size, wages, long-term inflation, and long-term exchange rate variability. Some of these factors changed during the 1990s. Part (and only part) of the downward trend in pass-through to imported goods prices, and in turn to competitors’ prices and the CPI, can be explained by changes in the monetary environment—including a fall in long-term inflation. Real wages work to reduce pass-through to competitors’ prices and the CPI, confirming the hypothesized role of distribution and retail costs in pricing to market. Rising distribution costs, due perhaps to the Balassa-Samuelson-Baumol effect, could contribute to the decline in the pass-through coefficient in some developing countries.     

The Effects of the President’s Emergency Plan for AIDS Relief on the Economies and Domestic Politics of Focus Countries

President G.W. Bush’s Emergency Plan for AIDS Relief (PEPFAR) has been rated as one of the successful US aid interventions of recent decades. We investigate the impact of PEPFAR on economic development, democracy, and human rights by comparing focus countries that received PEPFAR with other countries that did not receive PEPFAR from 2003 to 2008. Moreover, we examine specific changes made within focus countries after the implementation of PEPFAR using Difference-in-Difference estimation. Our results show that PEPFAR did improve economic conditions in focus countries but had a limited impact on political conditions, that is, on democracy and human rights.     

The Collapse of the ‘New EMS’: An Interpretation

Existing theoretical models cannot explain the following features of the EMS and its crisis in 1992: its progressive hardening from 1987 onwards; the fact that credibility was shared the progressive deterioration of credibility after the first Danish referendum without changes in the economic fundamentals. This paper argues that the reason lies in the fact that the literature has not accounted for the changes in the perceived prospects of EMU. We show that an adjustable peg regime that incorporates these prospects can explain the three features listed above.     

‘A shelter is not a home’: Voices of homeless women in the City of Tshwane

ABSTRACT

In response to a request from the City of Tshwane that homelessness in the city be explored, a research team was established in 2014. The research was divided into four pillars: conceptual/theoretical perspectives of homelessness; narratives and experiences of homeless and former homeless people, particularly women; documentation of current practices to curb homelessness in the city; and policies that address homelessness in City of Tshwane. This article focuses on the second pillar. Individual interviews and one focus group interview with eight women were conducted. The results revealed four storylines: a shelter was halfway home; shelters had restrictive and protective regulations; reconnection programmes with families were required; and hope – as a matter of survival. Improving people’s economic status (not providing shelters) was the permanent solution to homelessness. Emphasis was on women’s right to equal status in housing issues which are guided by well-founded policies that are women friendly.     

The Determinants of the Secondary Market Price of Less Developed Countries’ Debt

A present-value model of less developed countries’ (LDC) debt is developed to understand the factors that affect the discount on the secondary market. LDC debt trades at a substantial discount on the secondary market. This paper investigates the determinants of the discount for a sample of 13 countries over a 9 year period. The findings show that debt–exports, foreign currency reserves–imports and total debt service to exports ratios are significant determinants of the secondary market prices of LDC debt. The discount is higher in countries where debt–exports ratios are higher and is lower for those with lower foreign currency reserves–imports ratios. Concentration of debt with money center banks has a positive and significant effect on the secondary market price of debt.

Fear and trust: How risk perceptions of avian influenza affect Chinese consumers’ demand for chicken

This article quantifies the impact of H7N9 bird flu on chicken demand and consumer willingness to pay (WTP) in China. We measure risk perception, fear and trust against actual reduction in consumption and stated change in WTP for safe chicken between 2012 and 2013. Through a survey conducted in each year on the same Chinese urban consumers, we found that the consumption of chicken never increased after the emergence of H7N9 in 2013, and WTP for safe chicken did not necessarily increase relative to generic risks associated with consuming chicken in 2012. Factors such as the fear of H7N9's spreading, the impact of distrust (especially the distrust in government) enhanced the deviation of consumption and WTP; and the sheer mentioning of H7N9 is more important and negative than whether it was associated with a risk-perception reducing or risk-perception elevating message given to consumers.     

Intoxicants and the invention of ‘consumption’

In 1600 the word ‘consumption’ was a term of medical pathology describing the ‘wasting, petrification of things’. By 1700 it was also a term of economic discourse: ‘In commodities, the value rises as its quantity is less and vent greater, which depends upon it being preferred in its consumption’. The article traces the emergence of this key category of economic analysis to debates over the economy in the 1620s and subsequent disputes over the excise tax, showing how ‘consumption’ was an early term in the developing lexicon of political economy. In so doing the article demonstrates the important role of ‘intoxicants’—that is, addictive and intoxicating commodities like alcohols and tobaccos—in shaping these early meanings and uses of ‘consumption’. It outlines the discursive importance of intoxicants, both as the foci for discussions of ‘superfluous’ and ‘necessary’ consumption and the target of legislation on consumption. It argues that while these discussions had an ideological dimension, or dimensions, they were also responses to material increases in the volume and diversity of intoxicants in early seventeenth-century England. By way of conclusion the article suggests the significance of the Low Countries as a point of reference for English writers, as well as a more capacious and semantically sensitive approach to changes in early modern consumption practices.     

Performance of Garch Models in Forecasting the Volatility of Exchange Rate for Developing Countries

This paper empirically investigates the performance of GARCH model in forecasting the volatility of exchange rate of some developing countries. We apply linear GARCH model and non-linear GARCH model. We fit these two models to some developing countries exchange rate index from January, 1998 to February, 2005. The return series of the developing countries＇ foreign exchange rate are leptokurtic, significantly skew, deviating from normality and volatile clustering as well. We find within-sample and out-of-sample evidence that conditional estimates of non-linear GARCH model outperform the conditional estimations of linear GARCH models. In our comparisons in most of the developing countries, the non-linear GARCH model produce better results than the linear GARCH model tor forecasting the volatility of exchange rate.     

Fuelling the urban economy: A comparative study of energy in the Low Countries, 1600–1850

What was the role of energy in shaping modern economies and fuelling the transition to sustained economic growth? In the historiography on the industrial revolution, the transition to fossil energy carriers plays a central role. Despite recent efforts to gather new empirical evidence, long-term comparative studies on energy transitions and their economic impact before and during the first industrial revolution remain rare. As a contribution to this literature, this article presents new quantitative data on energy consumption from the seventeenth to the nineteenth centuries in the Low Countries. To explore differences in the chronology and impact of energy transitions, we compare the total levels of energy consumption, the energy mix, and the prices of fuels between two cities in the northern and southern Low Countries: Leiden and Ghent. This analysis enables us to explore more clearly which factors played a key role in the interaction between energy, economic growth, and industrialisation. The transition towards a cheap-energy economy in Holland was associated with economic growth, but not with mechanisation. On the other hand, the rapid mechanisation process in Ghent was associated not with a cheap-energy economy (relative to that of Leiden), but more specifically with a cheap-coal economy.