ECB Foreign Exchange Intervention and the EURO: Institutional Framework,News, and Intervention

Using a unique intervention news data set, this paper investigates the impact of ECB intervention and intervention-related news (newswire reports) on the Euro exchange rate. A time-series study of news generated by ECB officials and market participants regarding intervention and the value of the Euro as well as an event study of firm reports of ECB intervention is conducted. Both studies find significant short-run effects on the Euro value, while only negative statements (official statements denying past intervention or ruling out future intervention) appear to have persistent effects.     

The economics of dying: A misapplication of tools

Conclusions Unlike McKenzie and Tullock, we do not know how personsshould treat their bodily organs or what is an ideal exit. That depends upon their utility goals, which are defined in output terms specific to the decision maker. We contend that the body is an input into the utility production process, and therefore, as with any input, it must be maintained and repaired at a level consistent with the output goals for maximization of utility. Thus, from this framework, it is quite consistent for a person to die with healthy organs without any thought of belief in reincarnation or the desire to bequeath one's bodily organs to others, or religious values. Self interest is all that must prevail.Also, the fact that there are interrelationships between the organs in the system, and at points these relationships take on fixed factor characteristics such that reduced levels of operation in one organ can create disorientation or coma or damage to other organs, means that the body cannot die as M-T suggest. Zero capacity for all organs at death is a technical impossibility as well as being inconsistent with the output goals of utility maximizers.     

Economische orde,economische politiek en sociale politiek

Naar aanleiding van een bundel opstellen van dr J. Zijlstra, Economische Orde en Economische Politiek, H. E. Stenfert Kroese N.V., Leiden 1956, 143 blz. en een bundel opstellen van dr G. M. J. Veldkamp, Economische Orde en Sociale Politiek, H. E. Stenfert Kroese N.V., Leiden 1957, 156 blz.     

Shocks and the Viability of a Fixed Exchange Rate Commitment

The incentive to renege on a commitment to a fixed exchange rate is shown to be state contingent. A fixed exchange rate policy is not viable under unusual circumstances, and the incentive to violate the commitment is larger in the case of contractionary shocks than in the case of expansionary shocks. The possibility that the exchange rate regime is changed in unusual circumstances has significant effects also under normal circumstances, implying systematic devaluation expectations, excessive real wages and (ex post) real rates of interest, lower output and loss of reserves, which in turn reduces the incentive to initiate a fixed exchange rate policy. Moreover, policyshifts may be contagious among countries.     

A chaotic model of the exchange rate: The role of fundamentalists and chartists

A monetary model of the exchange rate is constructed in which fundamentalists and chartists interact. It is shown that the non-linearity of this speculative dynamics leads to chaotic motion of the exchange rate. The model is also capable of generating some of the stylized facts of exchange rate dynamics.     

Recente geschriften van J.-Ch. Snoy en M. Camps over de europese economische samenwerking

Jean-Charles Baron Snoy et d'Oppuers: Les Etapes de la Coopération Européenne et les Négociations relatives à une Zone de Libre Echange, Chronique de Politique Etrangére, Institut Royal des Relations Internationales, Brussel, september-november '59 (54 blz. plus 155 blz. bijlagen) La Négociation Européenne dans une Nouvelle Phase, Revue Générale Belge, Brussel, februari 1960 (18 blz.) Towards a European Solution, Lloyds Bank Review, London, juli 1960 (17 blz.)Miriam Camps: The Free Trade Area Negotiations, Occasional Paper No. 2, publication of Political and Economic Planning (PEP), Londen, april 1959 (51 blz.) Division in Europe, Occasional Paper No. 8, publications of PEP, Londen, juni 1960 (66 blz.) Britain, the Six and American Policy, Foreign Affairs, an American Quarterly Review, oktober 1960 (11 blz.) Four Approaches to the European Problem, Occasional Paper No. 12, publication of PEP, Londen, maart 1961 (26 blz.)     

A causal model of the size distribution of family income

Summary Through the use of a simultaneous equations framework, NR examined the direct and indirect effects that selected socio-economic and demographic variables have upon the size distribution of family income. From this examination, NR correctly identified the birth rate as the single most important factor exacerbating family income inequality [p. 38]. However, in their examination they failed to note the intermediary importance that the rate of net in-migration has, not only in channeling this exacerbating influence, but also in channeling the influence that other variables have on family income inequality.     

Tax reform: Chasing the elusive dream

The paper provides a bird's-eye view of the long and arduous task of reforming the federal individual income tax. As a starting point for reviewing the major reforms, the authors evaluate Secretary Simon's criteria that underlie his contention that the tax system was badly in need of a thorough overhaul. Principles that should guide tax reforms are spelled out. Conflicts that arise with the application of these principles are highlighted. An examination of reform efforts in light of the principles and criteria set in the Treasury Department's Blue Prints for Tax Reform forms the basis for evaluating reforms enacted over the period 1978–2001. The review suggests that we are partway towards achieving the tax man's dream of equity, efficiency, and simplicity.The task of comprehensive reform is monumental in its dimension and far reaching in itspotential impact on our economic well-being.[William E. Simon, 1977, p. 11]     

Strategic Interaction in the Dutch Market for Consumer Magazines

Information goods such as newspapers and magazines have a number of distinct economic characteristics such as a high fixed cost – low marginal (variable) cost structure and the possibility to subsidize content through selling advertising space. We develop a simple one-shot duopoly model that analyses strategic interaction in a market with such features. We focus on the firms best responses and test the theoretical predictions of the model empirically by panel regression techniques using a balanced panel data set of 60 Dutch consumer magazines over the period 1991–1998. Our 3SLS estimation results confirm the prediction of our model that the Dutch market for consumer magazines is characterized by strategic complementarity between magazine and ad prices.     

Game equilibrium modelling

Summary Non-cooperative game theory has in recent years become one of the main tools in the social sciences and economics. It deals with decision problems of more than one (rational) player. The actions of those players result in outcomes that are the best that may have happened to a player, given the actions of the other players. This is precisely the content of the 'Nash equilibrium' concept. It would be nice when each game had a unique Nash equilibrium. Unfortunately, both non-existence and multiple equilibria occur. An important role in game theory is played by the information available to the players. Among the economic applications are: the Theory of Industrial Organisation, Bargaining and the Economic Theory of Information.Comments by Eric van Damme and Casper de Vries on an earlier draft of this paper have greatly improved the presentation. I have benefited from the comments of the editor and an anonymous referee ofDe Economist. For all omissions, all possible errors and the revealed views in this paper, I alone am responsible.     

Problemen van planning op middellange termijn,gezien uit het gezichtspunt van het bedrijfsleven

Voordracht gehouden op 7 november 1964 in het kader van een door de Nederlandse Economische Hoogeschool te Rotterdam georganiseerde post-doctorale leergang over het onderwerp Problemen met betrekking tot de planning op middellange termijn in Europa.     

Het Liquid Iteiskarakter Van Spaartegoeden

Summary Before 1964, the Netherlands Bank did not count savings balances at money-creating banks and savings banks as secondary liquid assets or secondary liquidity (that is, near-money). Secondary liquid assets comprise claims on the public authorities and money-creating institutions, so far as they are held by other than money-creating institutions, which can be converted in large amounts into money at relatively short term without much expense or great loss on the transaction, or which can be used at their par value to make payments in satisfaction of current tax assessments.However, towards the end of the 1950's it became apparent from the rising value of the velocity of circulation of savings balances at financial institutions that these assets were acquiring increased significance for current payments. In 1964, this phenomenon induced the Netherlands Bank to count a certain part of the savings balances — indicated as liquid savings balances — as secondary liquidity, whereas the remaining part (true savings balances) was not. The Bank did so for better being able to impute the responsibility for monetary disturbances to the various sectors of the economy.Savings balances acquiring increased significance for current payments is a result of increased competition among financial institutions for the savings of the households sector. This increased competition is due to the fact that the households feel the need of more services rendered by the financial institutions as their income rise. Nowadays those financial institutions whose balance sheets do not comprise an item Current Accounts permit households to use their savings balances for making current payments. On the other hand, there is a tendency towards creating new types of accounts that serve as current accounts for the households in particular. If this tendency is followed up, the liquid assets character of savings balances will grow weaker.Rede, uitgesproken bij de aanvaarding van het ambt van gewoon hoogleraar in de staathuishoudkunde aan de Nederlandse Economische Hogeschool te Rotterdam op 28 september 1967.     

Fundamentals,regime shifts,and dollar behavior in the 1980s

I provide an economic interpretation of the long swings of the dollar in the 1980s. I use the fully modified estimator method to analyze the long-run behavior of the dollar/sterling exchange rate over the period 1979–1989, detecting a structural shift in February–March 1985. In the 1979–1985 subperiod economic agents have reacted to a reduced set of fundamentals only, a finding that might corroborate the irrational behavior interpretation of the dollar upswing. In the 1985–1989 subperiod economic agents have associated the equilibrium value of the dollar with the behavior of a more balanced set of fundamentals.     

Charles Kindleberger: An Impressionist in a Minimalist World

Minimalist economists stubbornly resist Charles Kindlebergers characterization of investor expectations in a financial bubble as irrational. This paper seeks to resolve the controversy by imbedding Kindlebergers well-researched, impressionistic theory of financial crises into an expanded, but still-minimalist model of rational expectations. Introducing the concepts of malicious disinformation and rational overpromotion creates an informational environment in which it is time-consuming and costly to distinguish fact from fiction. Rationality still requires that expectations and market fundamentals move together over long periods of time, but dishonorable overpromoters can earn substantial profits in the interim.     

Purchasing Power Parity during Currency Crises: A Panel Unit Root Test under Structural Breaks

We investigate the stationarity of real exchange rates using a panel of Asian and South and Latin American countries by applying a new panel unit root test that is robust to structural breaks due to currency crises. It turns out that the long-run PPP relationship is relevant for the Asian countries, which experienced a flexible exchange rate, whereas for the South and Latin American countries, for which the exchange rate has been pegged to the U.S. dollar for a long time, the PPP relationship breaks down. In Asian countries PPP appears to hold before the 1997 crisis, which is not the case for the South and Latin American countries. This suggests that the Asian flu corresponds to a second-generation type of crises, whereas the 1995 Mexican tequila fits the first-generation models better. JEL no. C13, C33, E41     

Interpretation of error covariances with nonrandom data: An empirical illustration of returns to college education

Conclusion This paper reviews two models of selectivity and gives an interpretation of the covariance terms that are particular to self-selectivity models. While the second model examined in this paper has been discussed elsewhere, the estimates presented for the first model have not been discussed in previous papers. More importantly though, the paper proposes an hypothesis about the expected relationship between error covariances. According to this hypothesis, if all individuals who are faced with the choice between two regimes (1 and 2) choose the regime which yields a maximum value, then the expected relationship between covariances is ₁ < ₂ . If all individuals choose that regime which yields a minimum value, then the expected relationship between covariances is ₁ > ₂ . This relationship holds for a very general class of selectivity models, so long as individuals are choosing between regimes by comparing the expected value (to them) of each regime.This paper was written while I was working under the professional development program at CNA.     

Bijdrage tot de theorie van de commerciele prijspolitiek

Tweede lezing voor de Economische Faculteitsvereniging te Groningen, gehouden op 21 februari 1958. Zie voor de eerste lezing, Variaties op een thema van Böhm-Bawerk, De Economist, April 1957, blz. 292 e.v.     

Toegepaste welvaartseconomie en de marginale kostenregel

Enkele opmerkingen naar aanleiding van F. Hartog, Toegepaste welvaartseconomie, Stenfert Kroese N.V., Leiden 1964 216 blz     

Fiscal Rules in a Monetary Union: A Short-Run Analysis

This article challenges the conventional result according to which an instrument-independent central bank able to strictly commit to price stability makes fiscal constraints unnecessary. We present a model of a monetary union with heterogeneous members where the inefficient policy mix resulting from the lack of coordination between the common monetary policy and national fiscal policies incites the governments to appoint excessively liberal delegates to the central bank's board. We characterize the fiscal restraints necessary to restore the central bank's ability to deliver the most desirable degree of price stability. It appears that even country-specific and state-contingent restraints may be counterproductive for some member states.     

De Europese Economische Gemeenschap en de Minder Ontwikkelde Wereld Buiten de Geassocieerde Landen

Voordracht gehouden op 2 november 1963 te Amsterdam voor de postdoctorale leergang Externe economische betrekkingen van de E.E.G. De tekst is op enkele plaatsen bijgewerkt.