Nominal uncertainty,real uncertainty and macroeconomic performance in a time-varying asymmetric framework: Implications for monetary policy

This study examines the dynamic causal links and volatility spillovers of inflation, output growth and their uncertainties in four South Asian countries, namely, Pakistan, India, Bangladesh and Sri Lanka by utilizing asymmetric GARCH family models. Our empirical evidence supports a number of important conclusions. There is an overwhelming support for Friedman-Ball hypothesis of positive inflation-uncertainty trade-off for all countries excluding India and Sri Lanka. The Cukierman-Meltzer’s idea that inflation uncertainty generates inflation, hold for Bangladesh and Sri Lanka only and the Holland’s hypothesis of negative influence of inflation uncertainty on level inflation is supported by India only. The positive influence of output uncertainty on inflation (Devereux (1989) hypothesis) is supported by all countries excluding Bangladesh while nominal uncertainty (real uncertainty) has negative (positive) effect on output growth in Pakistan (Bangladesh). Output growth is reducing real uncertainty in all countries excluding Sri Lanka and nominal uncertainty in Pakistan only. There is significant negative relationship between inflation and output growth for Pakistan only while real uncertainty is positively (negatively) related with nominal uncertainty in India (Bangladesh). The estimated results are almost robust with the simultaneous estimation procedure for testing the main hypotheses. In general, there is asymmetric effect and persistence of the GARCH parameters for all countries. The study suggests that the concerned central banks should pay more attention to the effects of macroeconomic uncertainty and should focus their monetary policy strategy on stabilizing both output growth and inflation.     

From certainty to uncertainty: Thought, theory and action in a postmodern world

The progress of human thought in recent centuries has brought not only new knowledge but also new (and sometimes disturbing) questions that tug at the foundations of knowledge itself. The opening years of the twentieth century were marked by optimistic expectations of ever-increasing certainty and scientific and technological progress. Yet the century turned out to be an age of growing cracks in the facade of classical certainty, as relativity, quantum physics and chaos theory each deepened our understanding of the universe yet raised fundamental challenges to ideas about knowledge. Today, although reductionist and mechanistic ways of thinking still prevail in much contemporary thinking about economics, global security and environmental problems, we can nevertheless contemplate an “end of objectivity” in which we realize that we do not stand outside of the systems we study.     

Internal governance,legal institutions and bank loan contracting around the world

Using a sample of non-U.S. firms from 22 countries during 2003–2007, we examine the effect of firm-level governance on various features of loan contracting in the international loan market. We find that banks charge lower loan rates, offer larger and longer-maturity loans, and impose fewer restrictive covenants to better-governed firms. We also find that the favorable effect of firm-level governance on some loan contracting terms is stronger in countries with strong legal institutions than in countries with weak legal institutions. Our results suggest that banks view a borrower's internal governance as a factor that mitigates agency and information risk, and that country-level legal institutions and firm-level governance mechanisms complement each other in influencing loan contracting terms.     

The voluntary adoption of International Financial Reporting Standards and loan contracting around the world

Using a sample of non-U.S. borrowers from 40 countries during 1997 through 2005, this paper investigates the effect of the voluntary adoption of International Financial Reporting Standards (IFRS) on price and nonprice terms of loan contracts and loan ownership structure in the international loan market. Our results reveal the following. First, banks charge lower loan rates to IFRS adopters than to non-adopters. The difference in loan rates in excess of a benchmark rate between the two groups is about 20 basis points for all loans and nearly 31 basis points for London Interbank Offered Rate (LIBOR)-based loans. Second, banks impose more favorable nonprice terms on IFRS adopters, particularly less restrictive covenants. We also provide evidence suggesting that banks are more willing to extend credit to IFRS adopters through larger loans and longer maturities. Finally, IFRS adopters attract significantly more foreign lenders participating in loan syndicates than non-adopters.     

Costly contracting in a long‐term relationship

We examine a model of contracting where parties interact repeatedly and can contract at any point in time, but writing formal contracts is costly. A contract can describe the external environment and the parties' behavior in a more or less detailed way, and the cost of writing a contract is proportional to the amount of detail. We consider both formal (externally enforced) and informal (self‐enforcing) contracts. The presence of writing costs has important implications both for the optimal structure of formal contracts, particularly the tradeoff between contingent and spot contracting, and for the interaction between formal and informal contracting. Our model sheds light on these implications and generates a rich set of predictions about the determinants of the optimal mode of contracting.     

Information suppression in multi-agent contracting

This paper examines the principal??s preferences over reporting systems in multi-agent settings. In multi-agent settings, the principal??s contract offer depends on the credibility of the agents?? commitment not to collude on the terms of the contract. If the agents can credibly rule out collusion, then the principal prefers that the agents observe all performance measures and she prefers an accounting system that releases detailed instead of aggregated information. To the contrary, when the principal cannot preclude the agents from writing side contracts, it can be efficient to suppress certain information signals for contracting purposes. Specifically, restricting the information dissemination within organizations or releasing aggregated instead of detailed information are two efficient avenues to suppress information.     

The Cost of Nominal Rigidity in NNS Models

We present a model with Calvo wage and price setting, capital formation, and estimated rules for government spending and monetary policy. Our model captures many aspects of U.S. data, including the volatility that has been observed in various efficiency gaps. We estimate the cost of nominal rigidity—welfare under flexible wages and prices minus welfare with nominal rigidities—to be as much as 3% of consumption each period. Since there are interest rate rules that virtually eliminate this cost, our model suggests that—contrary to Lucas's (2003) assertion—there is considerable room for improvement in demand management policy.     

Transitions in a globalising world

The increasing complexity of our global society means that sustainable development cannot be addressed from a single perspective or scientific discipline. By using the concept of transitions, we examine current and future tensions between welfare, well-being and the environment, and focus on four major issues that are of global importance: two of our key natural resources, water and biodiversity; the health of human populations; and the developments related to global tourism. In our global assessment, we base ourselves on the most recent scenario efforts of the Intergovernmental Panel on Climate Change (IPCC). Future developments are explored along the lines of four development paths (scenario groups), defined along two dimensions (global versus regional dynamics and emphasising economic objectives versus environmental and equity objectives.     

深市上市公司股东及实际控制人分析

股东信息是上市公司信息的重要内容之一.本文通过分析深市公司股东总体分布特点、机构投资者状况、第一大股东(或实际控制人)性质和行业分布状况、股东变更等资料,发现目前深圳市场价值投资理念已经确立,股权结构亟待调整,实际控制人相关信息披露仍需进一步完善.     

The academy in a wired world

Global demands for tertiary education have been met by a variety of new intellectual entrepreneurs including virtual Megauniversities, corporate universities, and academic ‘brokers'. The coupling of this evolution with the emerging shift to third party evaluation of graduates based on competency, internationally, breaks the hegemony of the traditional post secondary educational institutions. The inter connectivity of the wired world must be seen not only as a link across space, but, more importantly, as a time bridge across generations. Only from this perspective can the tertiary institutions balance their ability to provide long half-life, core or value, knowledge against the more dynamic and changing short half-life knowledge. Traditional roles of academics will split organisationally with a few stellar researchers and lecturers and a majority of faculty becoming mentors. Structured linkages with K-12 institutions and parallel post secondary providers such as corporate universities will change both the structure of the institutions and the role of the ‘scholar' The static ivy covered walls have been breached and post secondary education will become a dynamic and evolving industry.     

Communities in a world of open systems

In the past, communities tended to be closed systems with relatively clear boundaries, stable memberships, and few linkages to other communities. We are now entering into an ‘age of open systems.' Mobility creates new communities and kinds of communities. The impacts of mobility are far less than those of information and communications technology. Cyberspace has become a new kind of social terrain, crowded with ‘virtual communities.' Television and radio create communities of people thinking and talking about the same things. Both mobility and the growth of communications networks reduce the predominance of geography as a force in shaping community. Many communities are much more fluid, and some are placeless. There are many different kinds of social groups and networks that people describe with the word ‘community.' Most people are multi-community individuals, with many memberships, and many kinds of memberships. Although the world's major religions still have some historic identification with specific regions, those geographic attachments are no longer as clear as they once were, and these religions are tending to become open systems. Some people prefer relatively closed social systems, while others flourish in freer environments. Choice is one of the most powerful forces in the lives of people being exposed to the forces of globalization. Community will continue to be a profound human need but will be redefined, perhaps many times over.     

Future cities in a warming world

More than half the global population are already urban, and the UN and other organisations expect this share to rise in future. However, some researchers argue that the future of cities is far from assured. Cities are not only responsible for 70% or more of the world's CO₂ emissions, but because of their dense concentration of physical assets and populations, are also more vulnerable than other areas to climate change. This paper attempts to resolve this controversy by first looking at how cities would fare in a world with average global surface temperatures 4 °C above pre-industrial levels. It then looks at possible responses, either by mitigation or adaptation, to the threat such increases would entail. Regardless of the mix of adaptation and mitigation cities adopt in response to climate change, the paper argues that peak urbanism will occur over the next few decades. This fall in the urban share of global population will be driven by the rise in biophysical hazards in cities if the response is mainly adaptation, and by the declining attraction of cities (and possibly the rising attraction of rural areas) if serious mitigation is implemented.     

Nominal and true cost of loan collateral

This paper explores costs and proceeds from loan collateral in the credit market with ex-ante asymmetric information when collateral value and the probability of project success fluctuate. A borrower is willing to pledge collateral if (i) its future value is correlated with the probability of project success, or (ii) its value fluctuates strongly, or (iii) it is funded with loan capital. When one of the conditions is satisfied, in contrast to Bester (1985), a high-risk borrower may be more willing to pledge collateral than a low-risk borrower. The paper is related to topical subprime crises and real estate collateral.     

The Changing Role of Nominal Government Bonds in Asset Allocation

The covariance between nominal bonds and stocks has varied considerably over recent decades and has even switched sign. It has been predominantly positive in periods such as the late 1970s and early 1980s when the economy has experienced supply shocks and the central bank has lacked credibility. It has been predominantly negative in periods such as the 2000s when investors have feared weak aggregate demand and deflation. Nominal bonds are attractive to short-term equity investors when these bonds are negatively correlated with stocks, as has been the case during the 2000s and especially during the downturn of 2007–2008. They are attractive to conservative long-term investors when long-term inflationary expectations are stable, for then these bonds are close substitutes for inflation-indexed bonds that are riskless in the long term.     

Nominal shocks in monopolistically competitive markets: An experiment

A market experiment examines the capacity of price and information frictions to explain real responses to nominal price shocks. Results indicate that both price and information frictions impede the response to a nominal shock, as predicted by the standard dynamic adjustment models. Observed adjustment delays, however, far exceed predicted levels. Results of a pair of subsequent treatments indicate that a combination of announcing the shock privately to all sellers (rather than publicly) and a failure of many sellers to best respond to their expectations explains the observed adjustment inertia.     

Coordination of fiscal policies in a world economy

This paper provides a simple counterexample to the standard belief that in a world economy in which all countries are small, strategic interactions between policymarkers are trivial and thus cooperative and non-cooperative government policies coincide. It is well known that this holds for tariff policies. However, this paper demonstrates the result does not apply to fiscal policy. In addition, the paper analyzes how optimally coordinated fiscal policies differ from non-cooperative policies. It finds that, relative to optimally coordinated levels, non-cooperative government spending can be too high or too low, depending on the sign of a transmission effect which captures the overall effect countries' actions have on each other.