Commentary: Internationalization of the world's securities markets: Economic causes and regulatory consequences

Commentary: Internationalization of the world's securities markets: Economic causes and regulatory consequences     

Forecasting the PSBR Outside Government: The IFS Perspective

Expectations regarding the future state of the public finances are vital for public policy formation. The UK experience has been that forecast of the PSBR have been beset with problems since the mid-1980s. Independent assessments of the accuracy and plausibility of public finance forecasts are an important check on government forecasts and serve to increase public debate over government finance issues. We examine the success of various possible methods available to those outside government. JEL classification: E6, H1, H6.     

Forecasting European stock volatility: The role of the UK

This study investigates the lead–lag relationships of volatility among European stock markets. Using weakly realized variance measures, we examine volatility spillover dynamics between the UK and other major stock markets in Europe, thereby identifying a long-run leading role for the UK market portfolio. Lagged UK volatility can significantly predict volatilities in non-UK countries, whereas lagged non-UK volatility has a limited association with UK volatility. Moreover, pairwise Granger causality estimations, predictive regression specifications, and out-of-sample validations reveal that volatility shocks in the UK are gradually reflected in market fluctuations across Europe with varying market-specific delays. Our findings support the limited attention explanation for the volatility predictability of the lagged UK equity index.     

Consumption and Wage Inequality in the US: The Dynamics of the Last Three Decades

In this paper, we look at the evolution of consumption and wage inequality from 1980 to 2016 in the US. We use data from the Consumer Expenditure Survey (CEX) and the Current Population Survey (CPS) to look at differences in consumption and wages across groups in the population defined by educational attainment of the household head and year-of-birth cohort. We show that the results obtained by Attanasio and Davis (1996) for non-durable consumption still hold in more recent decades. In addition to non-durable consumption and services, we look at inequality measured in terms of expenditure on and stock of vehicles. The advantages of looking at these measures are that information on cars is typically measured more accurately than other components of expenditure and consumers are more likely to react by adjusting their stock of vehicles on the basis of long-term expectations about their economic prospects.     

The ecological transparency of the information society

A de-linking of pollution from economic growth and de-materialisation can probably be seen as the most important single characteristic of sustainable development. With regard to this, ecological transparency means understanding all human activities, processes and patterns that have an impact on the potential for sustainable development. Closely linked with this is the idea that the ecological footprint of the information society should be concerned with the environmental implications of its generations, applications and the disposability of information and communication technologies (ICTs). This paper aims at developing scenarios, and a set of criteria, plus indicators as tools for identifying various environmental impacts inherent in the information society. Furthermore, it aims for the successful unification of the positive factors of the information society with ecologically sustainable development. It is concluded that policy plans for the information society would benefit from the enhanced level of ecological transparency the information society can provide, as presented via the indicators mentioned later in the text. Further, it is suggested that prerequisites should be created for evaluating the implications of the information society and for the application of related information society technologies. Such an approach could be labelled an Information Society Assessment.     

Enemies within and enemies without: The besieged self in Pakistani textbooks

In the process of state formation and nation building, states organize the production, organization and distribution of social knowledge to construct national collective memory. The tendency is even more pronounced in newly independent states that struggle to build new identities by discarding earlier belongings. When new states are formed by amalgamating diverse regional entities into a single and centralized one, the earlier, older and differentiated identities are expected to be discarded in favour of the new homogenized one. In cases where the new state is carved out of an existing one, the national remembering on each side is divergent—the Parent state mourns the loss and remembers the event as wound in the body politic, and the emerging state celebrates its creation with a sense of pride and triumph achieved through suffering and pain. Competing and rival tales of the partition are then woven in the creation of national memory. This is done by relying heavily on the identity forming subjects such as history (sense of time), civics (a sense of power), and geography (a sense of space), together known as social studies. An important requirement of all states, but particularly new ones, is the construction, elaboration and frequent invocation of ‘enemies’ across and within national borders. Without enemies lurking everywhere, and as the moral opposites of the self, the Self is hard to define and consolidate. The sense of threat and fear that enemies help evoke, enables the fractured and differentiated self to merge and solidify into a defensive oneness. The state of Pakistan, in this context, is an interesting, but hardly an exceptional case. Designing education for a post-national world becomes a critical task.     

Regions and French society: Three scenarios of the future

This paper is a translated version of the résumé, “Territoires et société”, of the report presented to the Budapest UN ECE seminar on long-term perspectives for human settlements development.     

Research society: science and technology for the ages

This paper imagines a US society that is obsessed with survival over the very long-term, not just over the next decade or two but over very long-time spans measured in the thousands and millions of years. Given that Americans tend to be achievement-oriented, it is plausible that they could become enthralled with this ultimate challenge. It is folly to argue that a fundamental change in the focus of the national psyche from consumerism to longer-term pursuits will happen anytime soon but the paper suggests that dissatisfaction with consumerism, growing environmentalism, increasingly felt limits of non-renewable resources, the increasing extinction of species, and a tiredness with global power politics as usual and its seemingly inexplicable violence and terrorism can someday lead to archetypal change in our society. In anticipation of this change, this paper presents a roadmap of how we could get from here, consumerism, to there, focused on the journey of life through time and space. The paper also outlines threats that humans must address to maintain the journey of earth-life through time and space; and presents a broad range of activities designed to meet the threats and capitalize on important opportunities. Finally, the paper explores how society would be transformed to meet the challenges and what sectors of today’s economy could be expected to contribute workers to a bourgeoning science and technology workforce and concludes with a few remarks about the future to come.     

The roles of accounting in organizations and society

The paper seeks to contrast the roles that have been claimed on behalf of accounting with the ways in which accounting functions in practice. It starts by examining the context in which rationales for practice are articulated and the adequacy of such claims. Thereafter consideration is given to how accounting is implicated in both organizational and social practice. The paper concludes with a discussion of the implications for accounting research.     

Change and discontinuity: Forecasting for the 1980s

This outline of forecasting takes a very broad view—covering many of the diverse approaches now available—so that attention can be paid to the role of forecasting in discovering and analysing alternatives, as well as to its established role in prediction. The philosophy of forecasting and the differing methodological approaches are discussed, highlighting particularly the problem of continuity and discontinuity in change, and the concepts of the cultural barrier and the paradigm shift. The author, applying the idea of discontinuity in social change (the paradigm shift), examines some possibilities for the 1980s. He argues that in the field of social forecasting, which is now becoming an important element in all other types of forecasting, the forecaster's capability to foresee broad changes in values is crucial, since such changes will themselves lead to further developments throughout society. Forecasting is now reaching the stage where its methods and philosophy allow us to assess potential hazards, and to preset, rather than react, to them.     

Forecasting state- and MSA-level housing returns of the US: The role of mortgage default risks

We analyze the ability of an index of mortgage default risks (MDRI) for 43 states and 20 metropolitan statistical areas (MSA) of the US derived from Google search queries, in predicting (in- and out-of-sample) housing returns of the corresponding states and MSAs, based on various panel data and time-series approaches. In general, our results tend to prefer the panel data model based on common correlated effects estimation. We highlight that growth in MDRI negatively impacts housing returns within-sample, with predictive gains primarily concentrated beyond a year. These results are robust to alternative out-of-sample periods and econometric frameworks. Given the role of house prices as a leading indicators, our results are of value to policymakers, especially at the longer-run.     

Building a knowledge-based society: The case of South East Europe

Dangers, threats and challenges facing South East European countries are analyzed in the context of the salient features of the contemporary world and of the development program of the European Union (EU). This analysis leads to the conclusion that building a knowledge-based society is an imperative for each country. A roadmap of tasks to be done during the next few decades is outlined.     

The culpability of accounting practice in promoting slavery in the British Empire and antebellum United States

The paper considers the culpability of accounting users and practitioners in the practice of slavery in the British Empire and antebellum U.S. from the perspectives of virtue in accounting; 18th and 19th century political opinion on humanity, justice and property rights; and finally accounting's potential to support emancipation in society rather than repression. Through the eyes of contemporaries it shows that accounting can be condemned as morally unjust in its support of slavery for its alienation of the intrinsic property rights of individuals. However, the role of accounting was not entirely negative. On the one hand, it attempted to align the objectives of the agents with the health and safety of the slaves in order to conserve life and preserve the value of the inventory. On the other, it facilitated emancipation in the lead up to freedom, and through the compensation process that was intended to align the objectives of the owners with those of the abolition movement. The manner in which accounting was utilised by both supporters and opponents of slavery illustrates its potential as an agent of social change.     

Rethinking the central institutions of modern society: science and business

A significant part of this issue of Futures is given over to the following presentation by Willis Harman, and a series of responses from prominent futurists—a colloquium, if you like. Harman's paper, written prior to the UN Conference on Environment and Development (UNCED) in June 1992, develops further his argument, made in Global Mind Change and other works. Harman argues that the origins of our current problems lie in the belief system supporting our economic structure. The symptoms will only be healed if our worldview changes. All six respondents find merit in Harman's paper, although not all accept his diagnosis or recommendations.     

Forecasting stock market returns: The sum of the parts is more than the whole

We propose forecasting separately the three components of stock market returns—the dividend–price ratio, earnings growth, and price–earnings ratio growth—the sum-of-the-parts (SOP) method. Our method exploits the different time series persistence of the components and obtains out-of-sample R-squares (compared with the historical mean) of more than 1.3% with monthly data and 13.4% with yearly data. This compares with typically negative R-squares obtained in a similar experiment with predictive regressions. The performance of the SOP method comes mainly from the dividend–price ratio and earnings growth components, and the robustness of the method is due to its low estimation error. An investor who timed the market using our method would have had a Sharpe ratio gain of 0.3.