Real Exchange Rates and the Balance of Trade: Does the J-curve Effect Really Hold?

Open Economies Review - In this paper, we re-examine the relationship between trade flows, real effective exchange rates, and incomes by using the bilateral trade flows of 33 countries that form...     

Research on Indicating System and Methods of the Quality Evaluation of Leading Cadres

With the application of the Gray System and Philosophical Mathematic theories and methods, the indicating system and methods of evaluating qualities of leading cadres have been established, and moreover the methods of calculating the weight of experts of each level and the applications of the model are presented.     

Is Violation of the Random Walk Assumption an Exception or a Rule in Capital Markets?

Both the efficient market hypothesis and modern portfolio theory rest on the assumptions of the Gaussian probability distribution and independence of consecutive returns. This paper provides a brief excursion into the history of capital market research. A measure of long-range dependence (Hurst exponent) was applied to daily returns of selected stock indices and individual firms. The Hurst exponent was estimated using rescaled range analysis. The estimates are based on an unusually large sample of empirical-time series from capital markets. This method distinguishes whether the data-generating process follows random walk or exhibits antipersistent or persistent behavior. Both the efficient market hypothesis and modern portfolio theory assume that the data-generating process has no memory, i.e. follows Brownian motion. The random walk process is characterized by a Hurst exponent value of 0.5. Values greater than 0.5 and less than 1 indicate a persistence of local trends. Values between 0 and 0.5 indicate a process that reverts to the mean more often than a random process (mean-reverting process). The results indicated that the series of daily returns exhibit predominantly persistent or antipersistent behavior. Therefore, Brownian motion cannot be perceived as the norm for describing stock market behavior. These findings challenge the assumption of a random walk in stock prices, valuation models and assessment of risk.

     

Effect of grandchildren on the happiness of grandparents: Does the grandparent's child's gender matter?

Using a representative sample from Japan and a difference-in-differences strategy, we investigate whether the effect of having grandchildren on the happiness of grandparents varies with the gender of their (own) single child. In line with our expectations, we find that maternal grandmothers have more to lose or less to gain from having grandchildren than paternal grandmothers. In contrast, grandfathers’ changes in happiness do not depend on their own child's gender. This result is explained by the fact that grandmothers are more likely to be involved in childrearing when their daughter has a child.     

Status and mortality: Is there a Whitehall effect in the United States?

The influential Whitehall studies found that top-ranking civil servants in Britain experienced lower mortality than civil servants below them in the organizational hierarchy due to differential exposure to workplace stress. I test for a Whitehall effect in the United States using a 1930 cohort of white-collar employees at a leading firm – General Electric (GE). All had access to a corporate health and welfare program during a critical period associated with the health transition. I measure status using position in the managerial hierarchy, attendance at prestigious management training camps and promotions, none of which is associated with a Whitehall-like rank-mortality gradient. Instead, senior managers and executives experienced a 3–5-year decrease in lifespan relative to those in lower levels, with the largest mortality penalty experienced by individuals in the second level of the hierarchy. I discuss generalizability and potential explanations for this reversal of the Whitehall phenomenon using additional data on the status and lifespan of top business executives and US senators.     

Modifications of the Balassa–Samuelson Model: The Effects of Balanced Growth and Capital Accumulation

In this paper modified versions of the Balassa–Samuelson model are developed. We stress the effects of balanced productivity growth and capital accumulation, which is often ignored or not fully understood in existing studies. Our theoretical analysis shows that these effects and the differential productivity growth effect can be presented in a unified framework. Empirical estimates using 1970–1990 sectoral data for the OECD show that our modified models are more suited to the data than the commonly used Balassa–Samuelson model. J. Japan. Int. Econ., March 2002, 16(1) pp. 31–49. Faculty of Economics, Nagasaki University, 4-2-1 Katafuchi, Nagasaki 850-8506, Japan. © 2002 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: F36; F41; F43.     

Japan’s quantitative monetary easing policy: Effect on the level and volatility of yield spreads

We examine the effects on the level and volatility of yield spreads of the Quantitative Monetary Easing Policy (QMEP) of the Bank of Japan (BoJ) implemented from March 19, 2001 to March 9, 2006. We adopt an Exponential Generalized Autoregressive Conditional Heteroskedasticity (EGARCH) model to analyze daily data for the five year duration of QMEP. The purpose of QMEP was to reduce short-term interest rate expectations with the goal of bringing down long term interest rates to stimulate the economy. Under QMEP, the operational target of monetary policy was taken as the current account balances (CABs) of financial institutions held at the BoJ. In support of QMEP effectiveness, we find that the policy to raise CABs was indeed associated with a decrease in yield spreads across all maturities. At the same time, the policy may have increased the volatility of yield spreads at short and medium time horizons, perhaps due to unevern demand for government security issues that nevertheless left confidence in the future of low interest rates intact. Preserving liquidity at or above the CABs target range was found to decrease yield spreads.     

Is there a trade-off between the employment and wages of unskilled African South Africans?

The possible trade-off between employment and wages has characterised most of South Africa’s labour market debates, particularly with regards to decent wages versus unemployment. In this article we explore the relationship between labour market earnings and the level of employment among African birth cohorts using labour force data from 1997 to 2011. We find that the association between an increase in the proportion of unskilled employed in a birth cohort and earnings is mediated by the sector of employment. While some sectors exhibit the expected negative association, there is a robust positive relationship between the first two quartiles of the earnings distribution within birth cohorts and the proportion of the birth cohort who are employed in unskilled occupations in the manufacturing and trade sectors. Because a range of market forces determine this relationship, further research is needed to unpack the reasons for such varied outcomes in order to better inform the debates on labour market interventions like the proposed National Minimum Wage and to appreciate the potential impact of such policy interventions on wages and employment.     

Voluntary disclosure of intellectual capital items in?roadshows and investor conferences: an empirical analysis of DAX30-companies

We analyze firms’ voluntary disclosure of intellectual capital in a setting of presentations to analysts and investors. Firms use presentations to analysts and investors as an additional means of reporting. Due to lesser restrictions of this kind of reporting and also due to the private channel disclosure setting of such presentations, firms are able to highlight certain issues which they think to be important for interpretation and forecasting of firm success. In such a setting we can assess the benefit-cost relation underlying these disclosure decisions. The sample consists of German DAX30 firms, which are analyzed for the years 2001, 2003, 2005, and 2007, resulting in a total of 271 observations. We calculate quantitative and qualitative disclosure indices and also analyze whether time, industry and type of presentation influence intellectual capital disclosure. Findings show that customer capital, human capital, and process capital are reported more often than other intellectual capital categories. Industry and type of presentation are strongly related to disclosure indices. There is also a weak significant relation between time and disclosure index. Overall, firms tend to prefer qualitative voluntary disclosure of intellectual capital and only carefully disclose quantitative data. This suggests that the benefit-cost relation of quantitative reporting is negative.     

On the Impact of Foreign Aid in Education on Growth: How Relevant Is the Heterogeneity of Aid Flows and the Heterogeneity of Aid Recipients?

This paper examines whether foreign aid in education has a significant effect on growth. We take into consideration the heterogeneous nature of aid as well as the heterogeneity of aid recipients—we disaggregate the aid data into primary, secondary, and higher education, and run separate regressions for low income and middle income countries. We find that the effect of aid varies by income as well as by the type of aid. Thus our results underscore the importance of the heterogeneity of aid flows as well as the heterogeneity of recipient countries when analyzing the effect of aid on growth. JEL no. F34, F35, I20, O19     

New Evidence on Trade and FDI: how Large is the Euro Effect?

In this paper we analyse the effect that the euro has had on trade using a gravity model for 28 countries and covering the period 1990–2013. Our gravity specification includes time-varying fixed effects, correcting any possible bias that may arise from multilateral resistance variables or unobserved time-varying heterogeneity. Additionally, we explore the potential complementarity or substitution relationship between FDI and trade by including FDI inward and outward stocks in the specification. The time period in the dataset covers the creation and evolution of the European Monetary Union (EMU), starting from the introduction of notes and coins and including the recent economic crisis. Overall, our results show a positive effect of the EMU on trade and reveal the existence of a complementary relationship between trade and FDI.     

Is the Middle East an Optimum Currency Area? A Comparison of Costs and Benefits

This paper examines the macroeconomic costs and benefits of adopting a common currency for 13 Middle Eastern countries. Economic theory suggests that the main benefit is enhanced price stability, while the main cost is higher business-cycle volatility if the member country’s output is not sufficiently correlated with the area’s, as a whole. Using data from 1980–2005, the paper finds that the estimated cost and benefit measures exhibit substantial variability across the countries and are sometimes positively correlated. Moreover, focusing on the results for the last decade, it seems that many Middle Eastern countries (such as Bahrain, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Syria and United Arab Emirates) have achieved remarkable convergence both in business-cycle synchronization and inflation outcomes.

Effect of personality traits on smallholders’ land renting behavior: Theory and evidence from the North China Plain

This study investigates the effect of smallholders’ personality traits on their land rental market decisions. We develop a conceptual framework and show that these internal factors could affect smallholders’ land rental market participation beyond institutional and socio-demographic factors. Our empirical analysis is based on a survey of 2119 rural households collected in the North China Plain. We find that smallholders with a higher level of openness are more active in participating in the farmland rental market. Moreover, internal locus of control plays a significant role in explaining smallholders’ land renting behavior. We further show that need for achievement mediates the link between internal locus of control and smallholder’s intention to rent land, indicating that fostering a higher level of internal locus of control—and subsequently achievement desire—could play an important role in promoting smallholders’ land-renting behavior. More generally, our results imply that taking rural smallholders’ personality traits into account in designing land rental policies may increase the effectiveness of policies aimed at promoting land rental market participation among smallholders and incubating crop farm scale enlargement in rural China.     

Further evidence on the international business cycle and the ERM: is there a European business cycle?

Successful exchange rate regimes impose policy disciplines thatare likely to lead to conformity in the business cycles of theparticipating countries. This conjecture is borne out in thepaper by the evidence in it that the business cycle affiliationof ERM member countries has shifted from the United States toGermany since the formation of the ERM. This effect is bolsteredby the growing links in trade between the EU countries. TheUnited Kingdom is conspicuous among the latter in that its businesscycle affiliation did not change in the period covered by thestudy.     

Is there a Pareto solution to the misaligned incentives and competing objectives of water grabbing in the Lao PDR?

‘Water grabbing’ in the Mekong River has been accelerating at a feverish pace. The stakes have never been greater. Talks between international socio‐environment groups, public–private dam partners, and Mekong countries are increasingly fractious and dysfunctional. The departure of the multilateral agencies, such as the World Bank and Asian Development Bank, from large‐scale infrastructure funding has allowed the private sector access to investment opportunities in hydropower, and as a result facilitated the promise of rapid hydropower growth in the Lao PDR. The antagonism of international social and environmental groups towards these dams is due primarily to the transboundary impacts of multiple constructions and modifications to the Mekong. We posit that the dilemma in the negotiations over the Mekong dams in Lao can be best understood from the perspective of misaligned incentives‐objectives. We examine the major stakeholders involved in contractual negotiations and group parties according to their aligned incentives‐objectives. We employ a criteria trade‐off framework to show that if talks take place over two rounds under particular rules, compromises of objectives and trading of incentives are possible. We stipulate that a Pareto‐optimal solution is indeed possible—if a non‐partisan, authoritative agent with retributory powers to design and enforce corrective incentives for all stakeholders takes part in both negotiation rounds.     

Indonesia's Ascent on the Technology Ladder: Capital Stock and Total Factor Productivity in Indonesian Manufacturing, 1975–95

This paper presents new capital stock estimates for mium and large-scale manufacturing in Indonesia using the Perpetual Inventory Method. Capital stock grew gradually during 1975–88, at an annual rate of 7.6%, then boomed during 1989–95 at 13.6% per annum. Growth accounting shows that 60% of the rapid growth of manufacturing output during the period 1975–95 was due to capital input growth, 18% to labour input growth and the remaining 22% to total factor productivity (TFP) growth. There is no evidence of a shift of factor inputs towards more efficient industries. TFP growth averaged 3% annually in 1975–95. Performance varied greatly across industries, but the policy changes that have taken effect since 1986 have definitely been beneficial for all industries. Put in an international perspective, however, Indonesia's TFP levels show no signs of catch-up with the world frontier.     

Private and public sectors in Russian large-scale business: Dynamics of the ratio in the “long 2000s”

This paper represents the first part of studies of the change in the role of the state in Russian large-scale business in 2000–2013. An analysis of major transactions and decisions related to the privatization, nationalization, and consolidation of state-owned assets is used as a basic instrument. The dynamics of the ratio between the private and public sectors is considered from the viewpoint of leading economic branches and sectors; hypotheses are formulated about the system of motives, which the state is guided by. (The second part of the study will consider the same processes from the viewpoint of major actual players, their goals, strategies, acquisitions, and losses.)