Who upholds the surging gold price? The role of the central bank worldwide

Who upholds the surging gold price? Conventional wisdom suggests that the depreciation of the exchange rate, inflation and economic turmoil are the suspects. Nonetheless, while these factors cease, why does the gold price still stay around hikes? The gold market belongs to a global arena. Different from other commodities, its participants include the national central banks worldwide. However, surprisingly, the role played by these tremendous market participants’ gold holdings on the gold price has been ignored in past empirical works. This research focuses on central banks’ gold holdings to explore who upholds the surging gold price. Several interesting outcomes are derived. First, our empirical evidence shows an inverse phenomenon relative to news reports from the mass media that the gold holdings of central banks worldwide in fact continuously descend. Second, the mainstream countries of the world have not played a main role in the rising trend of the gold price in the recent decade; instead, newly emerging industrialized countries’ central banks’ gold holdings show their significant power in explaining causality to gold price fluctuations. Third, the reason for the persistent gold buying behaviour of emerging economies may be because the increase in the gold price delivers a kind of short squeeze effect to the central banks of emerging countries.     

Evidence on the effect of ‘Claw-Back’ provisions on IPO share allocation and underpricing in Hong Kong

The article examines share allocation practices of over 300 initial public offerings (IPOs) in Hong Kong during the years immediately following the enacting of a ‘Claw-Back’ provision for IPO share reallocation. The examination of exhaustive micro-level data reveals that small (uninformed, retail) investors earn higher initial returns than large investors. Before the enacting of the ‘Claw-Back’ provision, small investors were unfavourably treated in relation to large investors. The pattern now prevailing in the proportion of shares allocated to small and large investors also differs from that observed previously. When attempting to isolate the determinants of IPO underpricing in Hong Kong, the article also shows that both the ‘informed demand’ hypothesis and the signalling effect of underwriters’ reputation are significant determinants of underpricing. Such result, not visible when pooled OLS regressions are used, becomes apparent through the use of a system of simultaneous equations.     

Does money have a role in the inflation process? Evidence from Australia

Inflation, defined as a sustained increase in the price level, is considered a monetary phenomenon, as it can be explained within the framework of money‐demand and money‐supply relationships. In the extant literature, money growth is shown to remain causally related to inflation across countries and over time, irrespective of the exchange rate regime and stability of the money‐demand function. Nevertheless, emerging literature suggests a diminishing role of money in the conduct of monetary policy for price stability, especially under inflation targeting. Monetary policy in Australia under inflation targeting since 1993 is an example of policy that denies a relationship between money growth and inflation. The proposition that money does not matter insofar as inflation is concerned seems odd in both theory and the best‐practice monetary policy for price stability. This paper uses annual data for the period 1970–2017 and quarterly data for the period 1970Q1–2015Q1. It deploys both the Johansen cointegration approach and the autoregressive distributed lag (ARDL) cointegration approach to investigate for Australia whether money, real output, prices and the exchange rate (non‐stationary variables) maintain the long‐run price‐level relationship that the classical monetary theory suggests in the presence of such stationary variables as the domestic and foreign interest rates. As expected, the empirical findings for Australia are consistent with the classical long‐run price‐level relationship between money, real output, prices and the exchange rate. The error‐correction model of inflation confirms the presence of a cointegral relationship among these variables; it also provides strong evidence of a short‐run causal relationship between money supply growth and inflation. On the basis of a priori theoretical predictions and empirical findings, the paper draws the conclusion that the monetary aggregate and its growth rate matter insofar as inflation is concerned, irrespective of the strategy of monetary policy for price stability.     

The Monetary Reform of Hong Kong and Its Enlightenment for Mainland China

The monetary system of Hong Kong has experienced several reforms, now it can effectively control the money supply and restrain inflation. The reform of monetary system is very meaningful for mainland China, as mainland China also wants to restrain inflation. The focus of this article is to analyze the process of monetary system＇s reform of Hong Kong, and the development of money supply system. The conclusion is that central bank of mainland China should learn from Hong Kong＇s experience and carry out more reasonable monetary reform.     

The new economy of nature：can carbon pay for nature conservation？ The case of the Hong Kong Country Parks

The Country Parks of Hong Kong occupy 40%of the total landmass of Hong Kong,and consists of vast areas of secondary woodlands,scrublands,grasslands,and reservoirs.That vegetation-and the soil underneathsubtract carbon from the atmosphere,which has a market value.The aim of this paper is to estimate the value of that carbon,to assess whether that value would be sufficient to pay for the upkeep of the Country Parks,and to compare that value to the costs of alternative ways to reduce atmospheric carbon dioxide.To do this,we compare the land cover of 1978,1991,1997 and 2004 using remote sensing,and identify the three predominant land covers（woodlands,scrublands,grasslands） .We then estimate the amount and value of the carbon sequestered by the vegetation and soil of the Country Parks,and compare it to the budget available to the Agriculture,Fisheries and Conservation Department to run the Country Parks（HK$234 million in 2009/2010） .We extrapolate our results over 50 years,from 1978 to 2028.We conclude that by 2028 the carbon sequestered would be valued over HK$800 million,but the value of the additional carbon subtracted yearly would only cover approximately 7%of the total budget needed to run the Country Parks.We also conclude that because of the large budget allocated to the Country Parks,alternative methods of carbon sequestration-represented by the EU ETS price of carbon-are much cheaper.     

How justified is abandoning money in the conduct of monetary policy in Australia on the grounds of instability in the money‐demand function?

The role of money in the design and conduct of monetary policy has reemerged as an important issue in both advanced and developing economies, especially since the 2007 global financial crisis. A growing body of recent literature suggests that the causal relationship between money supply growth and inflation remains intact across countries and over time and that this relation is not conditional on the stability of the money‐demand function or whether money is endogenous or exogenous. Moreover, critical for a rule‐based monetary policy is the presence of a long‐run stable money‐demand function, rather than a short‐run money‐demand model that may exhibit instability for many reasons, including problems with estimating a money‐demand model with high‐frequency data. Provided that a stable money‐demand function exists, it could be useful to establish long‐run equilibrium relations among money, output, prices, and exchange rates, as the classical monetary theory suggests. Within this analytical framework, this paper addresses the question of whether money has any role in the conduct of monetary policy in Australia. The conventional wisdom is that the money‐demand function in Australia has been unstable since the mid‐1980s due to financial deregulation and reforms; this led to a change in the strategy of monetary policy for price stability in the form of inflation targeting that ignores money insofar as inflation and its control are concerned. This paper reports empirical findings for Australia, obtained from a longer quarterly data series over the period 1960Q1–2015Q1, which suggest that instability in the narrow‐money‐demand function in Australia was primarily due to the exclusion of variables which have become important in the deregulated environment since the 1980s. These findings are confirmed by an expanded form of the narrow‐money‐demand function that was found stable over the past two decades, although it experienced multiple structural breaks over the study period. The paper draws the conclusion that abandoning the monetary aggregate as an instrument of monetary policy in Australia, under a rule‐based monetary policy such as inflation targeting, cannot be justified by instability in the money‐demand function or even by lack of a causal link between money supply growth and inflation.     

Can ecolabels survive in the long run?: The role of initial conditions

This paper analyzes the interaction between three environmental strategies within a population of firms: brown, green, and certified green strategies. We first present a restricted version of an evolutionary game where only brown and green strategies are possible. Next, the model is extended to allow green firms to certify their environmental strategies by joining an ecolabel. Our analysis shows that when it survives, the ecolabel tends to fully replace other uncertified environmental initiatives and to increase the proportion of firms implementing voluntary abatement. Nevertheless, the long-run survival of the ecolabel is not a necessary outcome of the model, although it can be facilitated via policies that reduce abatement or certification costs, increase consumer's environmental concerns or improve the credibility of the certifier, whereas it may be reduced by green-wash news about the sector. An ecolabel's survival may also depend on how and when it is launched. In those common situations where the model has two stable equilibria, initial conditions play a key role in determining the ecolabel's survival. Specifically important determinants are the degree of adoption of voluntary abatement when the ecolabel is launched and the amount and composition of firms that participate in the creation of the ecolabel.     

The impact of hiring top workers on productivity: what is the role of absorptive capacity?

We examine the heterogeneous productivity impacts of hiring top workers on small and medium-sized enterprises, exploiting matched employer–employee panel data and employing within-firm as well as matching and difference-in-difference estimators. The results provide robust evidence that the productivity impact is stronger for firms with higher absorptive capacity. Technological laggards within an industry benefit more strongly from hiring top workers if their workforce is more well-educated.     

Why Doesn’t the Hong Kong Government Sell More Public Land?

Why doesn’t the Hong Kong government sell more of its enormous land holding to lower the city’s high housing price and increase the residents’ small living space? We answer the question in an overlapping generations framework. We show that while a rapid and complete privatization of government land is efficient in the absence of externalities; it is made politically difficult by a compensation gap, when the losses of current property owners are greater than the government revenue from land sales. We argue that the cross-country diversity of government land ownership owes to historical incidents in some countries (such as the U.S. in the 19th century) that allowed disposal of government land without filling the compensation gap and the absence of such incidents in others (such as Hong Kong).     

Why should Southern economies stay in the Euro Zone? The role of labor markets

We assume a world of two countries in a fixed exchange rate system. These countries differ in the features of their labor markets. The home country is characterized by a dual labor market, with formal and informal sectors. In the foreign country, a nominal wage rigidity exists. In this context, the situation of the labor markets in each country is not optimal owing to a misallocation of workers between sectors in the domestic economy and unemployment in the foreign economy. We show that a devaluation of domestic currency implies a fall in production in each country and deterioration of labor markets in both countries.     

Who has terror angst? Perceptions of the effects of terror on the world economy

We examine sources of biased terror perceptions. In particular, we investigate how international experts of the IFO World Economic Survey assess the effect of terror on the world economy and the economy of their own country. The results show that respondents from terror-stricken countries have more favourable views on the effect of terror on the word economy (but not on their own countries). Male respondents and those from democratic and richer countries are likewise more optimistic.     

The changing role of science in the innovation process: From Queen to Cinderella?

An overview of how the role of science in relation to innovation has been defined over the past five decades is given, showing a change from a linear to a chain-linked model of interpretation. A third analytical grid, leading to a new model is proposed, summarizing the current research on the nature of economically useful knowledge, the diversity of intervening players in learning and the outcomes of innovation. While the chain-linked view surpassed the linear model by emphasising that science is part of the process but not necessarily the initiating step, we need today to explicitly acknowledge the multi-player dimension of innovation and the wider institutional setting where distinct forms of learning take place. The reason is simple: almost all high added value products embody elements of scientific knowledge. But science is only one of a plurality of other sources of knowledge that induce innovation-based growth. More attention should also be given to understanding markets and organisations.     

The role of the German Historical School in the development of Mises’s thought

Hülsmann (2007) and Hayek ([1922] 1981) have argued that Mises’s first book The Development of the Relationship between Lords of Manor and Peasants in Galicia, 1772–1848 (1902) is written in the tradition of the German Historical School. Historicist contemporaries of Mises also considered his first academic work a continuation of the Knapp-Grünberg tradition (Kaser Jahrbuch für Gesetzgebung, Verwaltung und Volkswirtschaft im Deutschen Reich, 28(1), 374–79, 1904; Wimbersky, 1906). We argue that von Mises (1902) does not represent the younger German Historical School. First, Mises provides a rationalization of the history rather than ethical and cultural explanation of historical events. Second, he does not support the Knapp-Grünberg argument about the historical development of serfdom under a Slavic rule. Finally, von Mises (1902) does not adhere to the ideology of the Historical School regarding the virtues of the Prussian bureaucracy.     

Caught in the Web? Addictive behavior in cyberspace and the role of goal-orientation

New online 3-D virtual worlds are complex and differ significantly from each other. In this study we examine whether the type of virtual world is likely to make a difference on how addictive behavior develops and its subsequent outcomes. We examine the effect of goal-orientation on the degree to which cognitive absorption within the virtual world results in addiction and in the impact of addiction on continuance and purchasing intentions. Using surveys conducted in World of Warcraft (goal-oriented) and Second Life (experience-oriented) virtual worlds and analysis via ANOVA, we find that while cognitive absorption contributes to the development of addiction, which subsequently leads to increased continuance and spending intentions in goal-oriented virtual worlds, none of these relationships hold in the case of the experience-oriented world. Goal-oriented virtual worlds provide a problematic conduit for addictive behavior and marketing manipulation and the authors believe that they would benefit from further attention by policy-makers. Experience-oriented virtual worlds do not appear to provide the same dangers and would appear to be more healthy avenues for marketing-consumer engagement.     

Intergenerational Educational Mobility in Hong Kong: Are Immigrants More Mobile than Natives?

We characterize intergenerational educational mobility by the percentage of children who have more schooling than their parents, and the change in the relative probability of the children attending university across their parents’ schooling levels. In Hong Kong, immigrant children are very upward mobile; their percentage of upward mobility has caught up with that of the children of the Hong Kong‐born parents. Hong Kong‐born children of immigrant parents are also more mobile than the children of Hong Kong born parents. Even though parental educational background remains important for university attendance, immigrant children experience higher mobility than Hong Kong‐born children in terms of access to university education.