Forecaster Rationality and Expectation Formation in Foreign Exchange Markets: Do Emerging Countries Differ from Industrialized Economies?

ABSTRACT

This paper uses the Consensus Economic Forecast poll to investigate how forecasters in the foreign exchange market form expectations and whether the expectation formation process differs between industrialized and emerging countries. In order to explain the expectation formation of forecasters in countries and country groups, we analyze around 50,000 forecasts for 22 OECD member currencies. We find that differences between the way forecasters in industrialized countries and emerging countries form exchange rate expectations. However, we show that one important difference is due to a difference in forecasting behavior of emerging countries. Controlling for this feature lets the forecasting behavior in emerging countries resemble more the ones found for industrialized countries, but not for all forecast horizons.     

What Prevents Firms from Advancing in their Environmental Strategy?

The aim of this paper is to analyze the determinants of the strategic environmental behavior of firms and, more specifically, the external and internal barriers that limit and sometimes even prevent the environmental adaptation. The analysis focuses on a sample of industrial firms that have at least three workers and that are located in Aragón, a region situated in the northeast of Spain. In order to achieve this objective, first the theoretical literature on the topic is reviewed. Subsequently, from the firms which were sampled, the existence of an underlying structure among the totality of barriers is studied. Finally, this structure is analyzed in order to determine if it has any influence on the degree of proactivity of the firm’s environmental strategy.

Markets,Morality and Climate Change: What,if Anything,is Wrong with Emissions Trading?

This article explores whether emissions trading is morally defensible To do so it examines three different kinds of moral consideration Which might be used to judge emissions trading. The first kind makes what I term an ‘ethical’ objection, and holds that utilising market instruments to combat climate change is inherently objectionable. I examine three versions if this ‘ethical’ argument but find none persuasive. The remainder of the article considers two additional moral considerations, both of which appeal to principles of justice. Drawing on these it argues that emissions trading can be morally defensible but only it it meets these two demanding moral criteria. First, the costs of emissions trading should be shared equitably. The paper examines what this might mean and criticises the leading account of what constitutes a just distribution of emissions Second, emissions trading must make an appropriate contribution to climate mitigation. A number of ways in which current emissions trading schemes signally fail to meet this second criterion are then noted. The article concludes that emissions trading schemes could in principle be morally defensible but only if new schemes are introduced or existing schemes are radically redesigned in line with the principles outlined in the article.     

Competition and Industrial Organisation in Transition Markets: What Can We Derive from Empirical Studies?

Competition is the basic concept for both industrial organisation theory and institutional economics. Transition economies, including Russia, are natural laboratories allowing us to trace the emergence of competition, the influence of competition on the conduct of market participants, the relationship between competition and market structure and the institutional foundation of competition. This article provides a summary of the results of empirical studies in the above area. We try to explain some puzzles concerning the influence of competition on the conduct of Russian market participants and interpret the results in the framework of institutional and industrial economics. Overall, the results of empirical studies can be generalised as follows. Competition in Russian markets has been gaining momentum over the last 15 years. The results of empirical studies have confirmed the assumption that competition is an incentive for active restructuring of privatised enterprises. Many of the data collected are evidence in favour of the endogenous market structure approach. From the institutional viewpoint, the history of the evolution of Russia's transition economy shows interdependence between private property and competition: better protection of property rights is a precondition for the development of competition. At the same time, the model of corporate governance that allows the property rights of private owners to be protected in the Russian institutional environment restricts organisational diversity and therefore competition in Russian markets.     

Gendered Paths to Asset Accumulation? Markets,Savings, and Credit in Developing Countries

An extensive literature shows how property inheritance is biased against women in many developing countries, yet relatively little attention has been given to gender bias in other means of acquiring physical assets, such as the market. Using individual-level data from Ecuador, Ghana, and Karnataka, India, this study analyzes modes of acquisition and financing of housing, agricultural land, other real estate, and businesses. The findings show that women acquire fewer of their assets through the market than men, and that in asset markets, both men and women are more likely to use their own savings than to use credit. The study also analyzes current loans for asset acquisition and finds that, in general, women tend to be somewhat disadvantaged in securing formal bank loans. The results suggest that financial inclusion to promote more gender equal access to accumulation of assets should focus on both savings and credit, with priority to savings.     

What kind of state in our future? Fact and Conjecture in Vito Tanzi’s Government versus Markets

This is a review essay on Vito Tanzi’s Government versus Markets: The Changing Economic Role of the State. The bulk of this book looks backward on the relative growth of government from late in the 19th century until recent times when that growth seems to have stopped in many places. Tanzi also looks forward in speculating on possible qualitative changes in the character of state activity through substitution of regulation for taxation. Much wisdom is presented in these pages, and yet the book contains some significant conceptual shortcomings and lacunae due to its apparent embrace of the possibility of measurement without theory. All the same, the book poses significant challenges for scholarship in political economy and public economics.     

Power,Intergroup Conflicts and Social Stratification in the United States: What has the Global Crisis Taught us?

Abstract

Drawing on early sociological analyses of how power and intergroup conflicts can affect the development of modern economies, this paper investigates how the recent Global Crisis (GC) has affected the stratification of the US society. The paper argues that the consumerist society has reinforced the historical stratification of social identities with white men in high-paid, high-social status managerial and financial occupations at the top, and black women in low-paid, low-status service occupations at the bottom. This paper calls for a deconstruction of the neoliberal individual into a unique combination of identities in a stratified capitalist society in order to reveal how social stratification has evolved during the GC. The paper finally concludes on the importance of heterogeneous identities in reflecting the diversity of societal and economic interests in order to address the issues of financial stability and sustainability at the corporate and societal levels.     

What Drives the Historical Formation and Persistent Development of Territorial States?

The importance of the length of state history for understanding variations in income levels and growth rates across countries has received a lot of attention in the recent literature on long‐run comparative development. The literature, however, is silent about its origins. This paper explores the determinants of statehood by considering the potential roles of an early transition to fully‐fledged agricultural production, the adoption of state‐of‐the‐art military innovations, and the opportunity for economic interaction with the regional economic leader. The results demonstrate that only the association between economic interaction and the rise and development of the state is statistically robust.     

Do money and financial variables help forecasting output in emerging European Economies?

Whether including monetary aggregates and different financial variables into small scale BVAR models improves the accuracy of output forecasts is tested for three emerging European economies. Various specifications for the priors of the BVAR models are used. The results are found to vary with respect to prior specification, variables, as well as prediction horizon. The evidence is stronger when the forecasting accuracy is compared based on log predictive likelihood but weaker when the RMSEs are used. These results may constitute evidence against dismissing the monetary aggregates or financial variables as completely irrelevant.     

Neoliberalism in the Laboratory? Experimental Economics on Markets and their Limits

Experimental economics is now part of mainstream economics and is fast becoming one of its most influential methods. Drawing on the distinction between market and behavioural experimentation, this article assesses the compatibility of the most influential experimental research with the neoliberal understanding of the political and moral preconditions for markets to develop. A politically relevant asymmetry at the core of this research programme will be signalled: while issues of political economy are eschewed by market experimenters (for example, whose interests are favoured and whose groups have power in economic processes), topics of moral economy are recognised and dealt with by behavioural experimenters (for example, the interactions between economic institutions and individuals' motivations and moral make-up). It is argued that experimental research has thereby contributed to a depoliticised and moralised view of markets, one that tends to present markets as a civilising institution once their technical and moral failures are recognised and adequately dealt with.     

Facilitating Consumer Learning in Insurance Markets: What Are the Welfare Effects?

We model a monopoly insurance market in which consumers can learn their accident risks at a cost c . We then examine the welfare effects of a policy that reduces c . If c is sufficiently small (c  < c ^*), the optimal contract is such that the consumer gathers information. For c  < c ^*, both the insurer and the consumer benefit from a policy that reduces c further. For c   >  c ^*, marginally reducing c hurts the insurer and weakly benefits the consumer. Finally, a reduction in c that is successful, meaning that the consumer gathers information after the reduction but not before it, can hurt both parties.     

Who's in the Forbes Global 2000? The Role of Home Market,Multinational Firms and Economic Development

We investigate the determinants of the share of very large enterprises that a country has at the industry‐level at the industry‐level, using data from the Forbes Global 2000 across 48 countries and 16 industries in the period of 2004–2010. We find significant and positive evidence for three effects affecting such share: the home market effect (HME), multinational firm effect (MFE) and economic development effect (EDE). A further industry‐specific analysis of the HME suggests that the industry‐level degree of increasing returns to scale may only partly explain the effects being positive without them being different across industries.     

What is Socioeconomics? An Overview of Theories,Methods, and Themes in the Field

The term socioeconomics is widely used, even though it is often connoted to quite divergent understandings about what it actually describes. It sometimes appears as an umbrella term for a range of quite successful but diverse and occasionally antagonistic approaches that cannot easily be combined. Sometimes it is applied to rather specific scientific endeavors. This paper is not conceptual, i.e., it concludes with some moderate considerations about optional ways to advance a consolidation of socioeconomics only. In first instance, it is intended to provide some orientation in the diverse field and discusses distinctions that can be made between major theoretical and methodological currents, subject areas, and understandings of the purpose of socioeconomics.     

ITQs,Firm Dynamics and Wealth Distribution: Does Full Tradability Increase Inequality?

Concerns over the re-distributive effects of individual transferable quotas (ITQ’s) have led to restrictions on their tradability. We consider a general equilibrium model with firm dynamics to evaluate the redistributive impact of changing the tradability of ITQs. A change in tradability would happen, for example, if permits are allowed to be traded as a separate asset from ownership of an active firm. If the property right is associated with ownership of an active firm, the permit can be leased in each period but it is not possible to exit the industry and keep the right. However, allowing the permits to be traded as a separate asset has two effects. First, it leads to a greater concentration of production in the industry. Second, it directly converts a non-tradable asset into a tradable one, and this is equivalent to giving a lump sum transfer to all firms. The first effect implies a concentration in revenues, while the second implies a redistribution of wealth. We calibrate our model to match the observed increase in revenue inequality in the Northeast Multispecies (Groundfish) U.S. Fishery. We show that although observed revenue inequality—measured by the Gini coefficient—increases by 12 %, wealth inequality is reduced by 40 %.     

What happens during recessions, crunches and busts?

We provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles, for 21 OECD countries over the period 1960–2007. In particular, we analyse the implications of 122 recessions, 113 (28) credit contraction (crunch) episodes, 114 (28) episodes of house price declines (busts), 245 (61) episodes of equity price declines (busts), and their various overlaps in these countries, over the sample period. Our results indicate that the interactions between macroeconomic and financial variables can play a major role in determining the severity and duration of a recession. Specifically, we find evidence that recessions associated with credit crunches and house price busts tend to be deeper and longer than other recessions.
— Stijn Claessens, M. Ayhan Kose and Marco E. Terrones     

What Drove the Massive Hoarding of International Reserves in Emerging Economies? A Time‐varying Approach

Existing empirical models fail to explain the surge in the accumulation of foreign exchange reserves by emerging countries during the last decade. This paper provides an estimate of the demand for international reserves on a panel of emerging countries using a time‐varying panel smooth transition regression (TV‐PSTR) model to relax the assumption of coefficient stability in the relationship. Evidence is dound that the parameters are not constant. In addition, it is observed that the coefficients remained relatively stable until 2000 and then increased gradually and strongly thereafter. The specification provided here accounts for an acceleration that linear specifications fail to explain. Finally, it is found that mercantilist motives are the major driver of this acceleration.     

Changes in Employment and Hours,and Family Income Inequality in the United.States, 1969–1989

This paper estimates how much changes in employment and hours worked for family heads and spouses contributed to the rise in the family income inequality between 1969 and 1989. Change in labor market activity of family heads accounts for half of the increase in the income gap between the top and bottom 10th families. The effect of change in work effort on the income inequality is considerably weaker where four-fifths of families in the middle of income distribution are considered. This result is robust to changes in the selection of the population. The rise in the inequality of labor market activity occurred largely within families headed by prime-age men. The rise in the percentage of families headed by female and the decline in employment rate for older family heads are relatively minor factors. [J2, E2, N3]     

Failure to Expand? Socio-Technical Practices and Moral Judgement in Markets for Biodiversity Offsets

Markets have become an important form of governance in the neoliberal era. The ideology of markets as the most efficient form of organising economic activity has led to the expansion of their usage, both in terms of what is governed by the market, but also in terms of the spaces in which the practices of a given market apply. However, there have been important challenges to market expansion, particularly on political and ethical grounds. This paper analyses how the socio-technical practices of market expansion can be affected by political contestation and individual moral judgements. This is analysed in the context of two markets for biodiversity offsets, in the United States and England. In both cases, regulators attempted to devise and standardise calculative mechanisms and socio-technical practices that promoted the use and expansion of the market. However, these socio-technical market practices have struggled to cross and negotiate uneven political and social spaces, being subject to moral judgements and political contestation. The paper demonstrates how the socio-technical practices of market expansion are affected by social entanglements, highlighting how this creates limits to the expansion of the market as a form of governance.