Emerging market sovereign bond spreads: Estimation and back-testing

We estimate sovereign bond spreads of 28 emerging economies over the period January 1998–December 2011 and test the ability of the model in generating accurate in-sample predictions for bond spreads. The impact and significance of explanatory variables on spreads vary across regions and periods. During crisis times, good macroeconomic indicators are helpful in containing spreads, but less than in non-crisis times, possibly reflecting the impact of extra-economic forces on spreads when a financial crisis occurs. For some economies, in-sample predictions of the monthly changes in spreads obtained with rolling regression routines are more accurate than those obtained with random guessing.     

The role of sovereign credit ratings in fiscal discipline

This paper investigates several aspects of the relationship between sovereign credit ratings and fiscal discipline. The analysis of over one thousand country–year observations for 93 countries during the 1999–2010 period reveals that a country's debt level is likely to increase with higher ratings, confirming the existence of pro-cyclicality and path dependence of ratings. In addition, the study finds no evidence to support the theory of Political Business Cycle, which implies that political ambitions may lead to fiscal worsening following a rating upgrade. The study findings further demonstrate that institutional quality is an important factor in the ratings–fiscal discipline nexus.     

Speculative attacks in emerging markets: The role of macroeconomic fundamentals

The recent currency crises in several emerging markets have touched off a debate about their causes. Whereas some blame fickle speculators for triggering speculative attacks virtually at random, others argue that the typical currency crisis is attributable to myopic economic policies. This paper examines common patterns of a large number of balance-of-payments crises focusing on a comprehensive sample of 26 emerging markets. Following a consistent categorising of events in the foreign exchange markets, it analyses the behaviour of a set of relatively easily accessible variables prior to speculative attacks. Applying univariate as well as multivariate statistical methods, it gives support to the view that in the past countries were not hit randomly by attacks on their currencies. The views expressed in this paper are those of the author and do not necessarily reflect those of the Deutsche Bundesbank. Earlier drafts of this paper were presented at the 73^rd Annual Conference of the Western Economic Association International, Lake Tahoe, in June 1998, at a Workshop of the Austrian National Bank, in July 1998, and at the ZEI Summer School on International Macroeconomics, Bad Honnef, in August 1998. The author would like to thank the participants of these meetings, and Michael Dueker, Jürgen von Hagen, Pu Shen, Andrew Rose and his colleagues for helpful comments and suggestions.     

“Rules of thumb” for sovereign debt crises

This paper investigates the economic and political conditions that are associated to the occurrence of a sovereign debt crisis. We use a new statistical approach (Classification and Regression Tree) that allows us to derive a collection of “rules of thumb” that help identify the typical characteristics of defaulters. We find that not all crises are equal: they differ depending on whether the government faces insolvency, illiquidity, or various macroeconomic risks. We also characterize the set of fundamentals that can be associated with a relatively “risk-free” zone. This classification is important for discussing appropriate policy options to prevent crises and improve response time and prediction.     

The creditworthiness and international payment ability of sovereign states

At the beginning of the 1990s debt accumulation has become persistent and the growth-cum-debt models which previously guided international lending offer no solution to the problem. The following article argues that major deficiencies in the methods used until now to assess the creditworthiness of debtor countries have exacerbated the debt problem and suggests an alternative approach.     

The influence of firm-specific and country-specific advantages in the internationalization of emerging market firms: Evidence from Turkey

This paper examines the role of institutional factors that enable firm- and country-specific drivers of emerging market (EM) firms’ internationalization based on case-based research conducted in one EM, Turkey. Findings indicate that 10 major factors comprised of firm-specific and country-specific advantages drove the focal case study firms abroad: the firm-specific factors ranged from financial and operations supremacy; excellence in value chain activities; inexpensive human resources; rapid learning capabilities in production and technology development; and adaptability to foreign markets; while the country-specific factors included home-government policies supporting internationalization; logistical advantages arising from geographical position; adaptability capabilities resulting from former survival through institutional voids; strong social ties formed through networks; and availability of low cost resources. These findings are discussed and future research questions are offered.     

The carry trade and fundamentals: Nothing to fear but FEER itself

Risky arbitraging based on interest rate differentials between two countries is typically referred to as a carry trade. Up until the recent global financial crisis, these trades generated years of persistent positive returns, which were hard to reconcile with standard pricing kernels. In 2008 these trades blew up, which seemed to weaken the case for a puzzle relating to predictable currency returns. But the rise and fall of this puzzle in the academic literature has only been concerned with naïve carry trades based on yield signals alone. We show, however, that some simple and more realistic fundamentals-augmented trading strategies would have generated strong and sustained positive profits that endured through the turmoil.     

Eastern Europe: The new enterpreneurial frontier

American entrepreneurs must dive into the Eastern European market-place now, not wait until the economies there stabilize. The recipe for success in Eastern Europe: an ongoing presence in the major markets that adds to the understanding of the economic cultures of these new democracies and some prudent assistance from Uncle Sam.     

The competitive impact of service process improvement: Examining customers’ waiting experiences in retail markets

In this paper, we investigate the impact of a service process improvement in front-end retail operations on the waiting experiences of shared customers, that is, those customers who patronize a retailer as well as its competitors. Our findings from two studies—a field study and a controlled laboratory experiment—suggest that while customers’ waiting time perceptions are independent across competing firms, their waiting time satisfaction is interdependent. As a result, the impact of a retailer's service improvement initiative that reduces waiting times is not merely local to the retailer but propagates to its competitors through its shared customers. Specifically, such an improvement not only raises shared customers’ satisfaction with the focal retailer, it also concurrently lowers their satisfaction with the retailer's competitors. By implication, current approaches that assess the impact of a service process improvement by just measuring the difference in customer satisfaction before and after the improvement may be underestimating the true impact of such improvements.     

The role of the IMF and the World Bank in the former Eastern Bloc countries

Although the main responsibility for carrying out economic reforms in the countries of Central and Eastern Europe lies with these countries themselves, the transformation of the Soviet-style economic system into a market economy must be made easier by support from abroad. In this the International Monetary Fund and the World Bank will play an important part.     

Commentary: the role of age in consumer’s retrieval and evaluation of consumption experiences

Si, K., & Dai, X. Marketing Letters (2022), have introduced an intriguing and potentially useful construct to the marketing literature: memory-search frame. Our commentary centers on Si and Dai’s study 3. This study focuses on the possible moderating effect of age on the typical length of consumers’ memory-search frame. Its results imply that older consumers have longer memory-search frames compared to younger consumers. However, these correlation-based results are not strong evidence. We briefly review past research that is inconsistent with these results and pose additional questions to the authors that they might pursue in future research.

     

Creativity in buyer–seller relationships: The role of governance

This research proposes a framework for relating governance mechanisms (power, contracts, and trust) to the generation of creative approaches to business activities in buyer–seller relationships. The framework is tested with a survey of 262 purchasing agents. The results indicate that trust and contract affect the three facilitators of inter-organizational creativity: (1) knowledge-sharing routines (resources), (2) learning orientation (motivation), and (3) managerial support and open-mindedness (managerial practices). Also, the effects of trust and contract on the creativity in buyer–seller relationships are fully mediated by the above three facilitators. In particular, trust plays a more influential role in stimulating creativity. While power is not significantly associated with any of the facilitators, its overall effect on creativity is negative.     

The provision of information on consumer rights: British experiences

In 1973, the British Government created the official post of Director General of Fair Trading with, inter alia, the power to produce and distribute information and advice to consumers in the United Kingdom. This paper describes how the Office of Fair Trading set out to perform this function, using a variety of media, and the lessons learnt about the consumer's reaction to and absorption of consumer advice material. It finally forecasts the likely trends in demand for consumer information material.

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Die Bereitstellung von Informationen über Verbraucherrechte: Britische Erfahrungen

Zusammenfassung Die britische Regierung schuf 1973 die Position eines Generalbevollmächtigten für Handelsund Wettbewerbsfragen, die u.a. auch die Kompetenz erhielt, Verbraucherinformationen zu erarbeiten und bereitzuhalten und Verbraucherberatung durchzuführen.Der Beitrag berichtet, wie und mithilfe welcher Medien diese Aufgaben erfüllt werden, und über die Erfahrungen, die mit der Reaktion der Verbraucher und deren Akzeptanz der Beratungsmaterialien gemacht wurden. Abschließende Überlegungen befassen sich mit zukünftigen Entwicklungen der Nachfrage nach Informationsmaterialien.

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John Perry is the Chief Information Officer at the Office of Fair Trading, Field House, Bream's Buildings, London EC4A 1PR, England.     

The Social Dimension of Organizations: Recent experiences with Great Place to Work<Superscript>®</Superscript> assessment practices

This paper elaborates on conceptual, empirical and practical arguments why corporations need to focus on their social dimensions, in order to further enhance organizational performance. The paper starts with an introduction on the general trend towards inclusiveness and connectedness. It then elaborates on the phase-wise development of cultures and organizational structures. Managing corporate improvement by building cultures of trust is the central focus of this contribution. By showing the cultural dimensions of Great Places to Work and their workplace practices, worthwhile experiences leading to organizational improvement and superior financial performance are demonstrated.     

The Relationship between task complexity and information search: The role of self‐efficacy

Prior research suggests the complexity of a product choice task is inversely related to the extent of consumers' external information search. The resource‐matching perspective holds that cognitive effort (e.g., external information search) is greatest when available cognitive resources (e.g., as determined by self‐efficacy) match the cognitive demands of a task (e.g., perceived task complexity). Within a brand‐choice context, the relationship between self‐efficacy and extent of information search appears nonmonotonic. In support of the resource‐matching perspective, consumers conduct the most extensive information search when their self‐efficacy matches perceived task difficulty. © 2007 Wiley Periodicals, Inc.