Real financial market exchange rate volatility and portfolio flows

This paper studies the relationship between real financial market exchange rate volatility and US cross-border equity flows. We found strong evidence that causality goes from real financial market exchange rate volatility to equity flows. According to our results, real financial market exchange rate volatility negatively influences purchases of foreign equity. This finding is in line with the portfolio optimization theory. The impact of real financial market exchange rate volatility on sales of foreign equity is also negative. This result can be explained by the theory of behavioral finance which states that investors are reluctant to realize losses of their portfolios. This is why investors decrease sales of assets when riskiness of the assets increases. The impact of real financial market exchange rate on net purchases of foreign equity is positive. It follows from these results that sales of foreign equity decrease more strongly than purchases of foreign equity when riskiness of foreign assets increases.     

The effects of airline deregulation on shareholder wealth: Some additional evidence

This paper extends the prior research on the effects of deregulation on shareholders' wealth by measuring the market reaction to the events (i.e., information announcements) that led to the Airline Deregulation Act of 1978. The research design employs a model similar to that used by Beneish [1991]. This model conditions the return-generating function on the event (i.e., information) announcement and the market index. The empirical results reported in this paper indicate that the market favored airline deregulation. The favorable stock price reaction to airline deregulation could be explained in three ways. First, the market anticipated an increase in managerial efficiency and a reduction in managerial consumption of corporate resources in a competitive market structure. Second, the market did not impound the adverse consequences of deregulation as predicted by management because the market either did not perceive the manager's claim as a credible signal or the market was influenced more by the economic forecasts that predicted increased profitability under deregulation. Finally, there was evidence of increased industry profitability, increased productivity growth, and an expansion of the passenger base during the transition period (1976–78) when the Civil Aeronautics Board voluntarily began to relax regulatory controls. In this case, the paper concludes that the signing of the act merely made legitimate and extended the board's reform that began in 1975. That is, the signing of the deregulation act made these gains certain and permanent and this was received as a positive signal by the market.     

Real effects of common currencies in East Asia

Since the 1997 Asian currency crisis, new interest has emerged in the formation of a common currency area in East Asia. This paper provides estimates of trade and welfare effects of East Asian currency unions, using a micro-founded gravity model. Counter-factual experiments to assess the effects of various hypothetical currency arrangements for East Asia suggest that an East Asian currency union will double bilateral trade in the region, but the resulting welfare effects will be moderate. However, if Japan, a major trade partner for East Asia, is included in the union, welfare effects increase substantially. The evidence thus suggests that certain regional currency arrangements in East Asia will stimulate regional trade rigorously and can generate economically significant welfare gains.     

The deregulation of Japan's electricity industry

Japan's electricity industry is now in the process of regulatory reform. This industry consists of three sectors: generation, transmission, and distribution. The reform phases out the entry barrier in the first sector, while keeping the latter two as they were with a rate-of-return (ROR) regulation. To simulate this regulatory reform, we employ a computable general equilibrium model, which distinguishes these three sectors and is equipped with the ROR regulation and substitution among various energy sources. Our numerical simulations show a potential for significant welfare improvements and substitution among energy inputs even if the reform scope is limited.     

Economic and financial reporting effects of inventory tax allowances*

Abstract. This study documents management's reactions to an inventory tax allowance that is based on inventory levels at the beginning of the year. Such an allowance was permitted by the tax authorities in Canada and Israel. The study develops a theoretical model which shows that a rational management should increase the firm's inventory levels on the balance sheet date beyond what the normal ordering policy would indicate. Moreover, tax authorities, in failing to anticipate this behavior, may, ceteris paribus, overcompensate firms for inflation. Empirical evidence shows that firms do, indeed, alter their ordering policies so that they will hold larger inventories on the balance sheet date. The study also shows that the tax authorities overcompensated firms in Israel, but did not overcompensate firms in Canada. Résumé. Cette étude documente les réactions du management à un dégrèvement fiscal afférent aux stocks basé sur les niveaux des stocks au début de l'année. Un tel dégrèvement était permis par les autorités fiscales au Canada et en Israël. L'étude développe un modèle théorique qui montre qu'un management rationnel devrait augmenter les niveaux des stocks de la firme à la date du bilan, au-delà de ce que la politique normale d'approvisionnement pourrait indiquer. D'ailleurs, les autorités fiscales qui n'anticipent pas ce comportement peuvent ceteris paribus, sur-idemniser les firmes pour l'inflation. L'évidence empirique montre en effet, que les firmes modifient leurs politiques d'approvisionnement de façon à avoir de plus gros stocks à la date du bilan. L'étude montre aussi que les autorités fiscales ont sur-indemnisé les firmes en Israël, mais ne les ont pas sur-indemnisées au Canada.     

Conflict resolution and the deregulation of the South African transport sector

Transportation policy has achieved increasing recognition as a key variable influencing the development process in Southern Africa. The present paper explores the way in which the South African Transport Services have been forced to pursue two largely conflicting goals, namely to function as a commercial organisation while simultaneously obligated to further the economic and political objectives of public policy. It is argued that carefully planned deregulation provides a solution to the current impasse if certain preconditions for equal intermodal competition are established. The impact of such a policy of planned deregulation on industrial decentralisation and economic efficiency is examined, and an integrated approach is proposed to minimise any adverse effects on development.     

Kalimantan in the firing line: a note on the effects of the global financial crisis

This note examines the impact of the global financial crisis on Kalimantan's four provinces. Although growth in the region slowed dramatically with the onset of the crisis, only in the dominant province of East Kalimantan did overall growth turn (slightly) negative. There were strong negative effects on the agricultural, manufacturing and mining sectors, but these differed greatly across individual provinces. This study presents evidence on price trends for three key commodities – palm oil, rubber and gold – and discusses the effect on farmers of the steep falls in palm oil and rubber prices. Surprisingly, the crisis had remarkably little impact on open unemployment, and the ongoing decline in poverty was hardly interrupted (although this may simply have reflected the timing of the surveys used to measure poverty). The end of the crisis saw oil palm making a speedier recovery than rubber, with gold mining remaining the ‘safety net’ for poor farmers.     

从财务指标的选用看财务预警系统的有效性

财务风险管理是财务管理的一个重要组成部分,对其研究已经从定性研究发展到定性定量研究并重的阶段,主要通过建立财务预警系统来达到对财务风险进行控制和管理的目的,而财务指标的选用将直接影响到预警系统的有效性,文章将对此进行探讨。     

The impact of deregulation on employment discrimination in the trucking industry

Past studies of racial discrimination in the for-hire sector of the motor carrier industry find that deregulation is an effective tool for mitigating discrimination. These studies argue that regulation provides a refuge from competition that allows employers to discriminate and pass costs on to consumers. Thus, increased competition of deregulation allows less latitude to discriminate. This study reexamines the impact of deregulation on racial employment in the trucking industry. Specifically, micro-data are used to measure and decompose increased minority participation of for-hire drivers following deregulation. The findings of this paper concur that deregulation increased minority participation in the industry. However, the new findings suggest that only a fraction of this increase can be attributed to employers having less latitude to racially discriminate.     

Assessing the gains from deregulation in Japan's international telecommunications industry

The Japanese government terminated the monopoly of international telecommunications service by Kokusai Denshin Denwa (KDD) as part of the regulatory reform in telecommunications in 1985. Two new carriers entered the market in 1989. In defending its market share, KDD intensified cost reduction efforts and accepted lower profitability in order to carry out a series of sharp rate reductions. I have assessed the size of the net welfare gain associated with the deregulation. Deregulation brought about a 22.2% fall in KDD's unit cost for the eight-year period ending in 1992. Because this efficiency gain was fully passed along to telephone users in the form of lower rates, the corresponding increment of consumer surplus was of significant size, equivalent to 25.6% of total international telephone call revenues in 1992. (JEL L95, O53)     

Evaluate the impact of deregulation within the European Union on the airline operations

Since the first major breakthrough of regulation in June 1984 in Europe, many elements such as customer service level have been affected significantly in airline operation. This paper will represent how customer service level has been influenced in the management of airline operation, which will be focus on three scopes. Above all, the quality of customer service level become much more important than before related to the competitive advantage. Beside, due to the market change a lot, the passengers needs become a crucial factor for the measurement and improvement of customer service level. Finally, the improvement and diversification of product symbolize the dramatic changed of customer service level.     

Real and Monetary Determination of the Egyptian Real Exchange Rate

Abstract: The purpose of this paper is twofold. First, the question of whether the equilibrium condition of Purchasing Power Parity (PPP) holds is investigated using Egyptian data between 1970(1) to 1990(4). Second, the role played by real and monetary variables on the Egyptian real exchange rates appreciation is also analyzed. The results of this paper suggest that PPP does not hold and that monetary expansion, capital controls, the increase in government consumption and terms of trade deterioration played a key role in the growing Egyptian real exchange rate appreciation. Résumé: Cet article comporte deux volets. Il évalue d'abord l'importance dc la condition d'équilibre que constitue la parité du pouvoir d'achat (PPA), en utilisant les données égyptiennes des années 1970 (1) a 1990 (4). Il analyse ensuite l'influence des variables réellcs et monétaires sur l'appréciation des taux de change réels en Egypte. Les conclusions de cette double analyse font croire que la PPA n'est pas un factcur déterminant et que l'expansion monétaire, les mesures de régulation des capitaux, l'accroissement de la consommation publique et la détérioration des termes de l'échange ont joué un rôle clé dans l'appréciation du taux de change réel en Egypte.     

Real output effects of announced monetary policy in a small open economy

Zusammenfassung Produktionseffekte einer vorangekündigten Geldpolitik. — Diese Untersuchung zeigt, daΒ eine angekündigte expansive Geldpolitik in einer kleinen offenen Volkswirtschaft kontraktive kurzfristige Auswirkungen auf die Gleichgewichtsproduktion hat. Dieses Ergebnis beruht auf dem Vorhandensein gehandelter und nichtgehandelter Wertpapiere, auf einer vollst?ndigen Spezialisierung in der Produktion und auf einem Arbeitsangebot, das von der Kaufkraft der L?hne, die u. a. aus den Preisen inl?ndischer und importierter Erzeugnisse abgeleitet wird, abh?ngt. Eine monet?re Expansion aufgrund des Ankaufs von Wertpapieren durch die Zentralbank verschlechtert die heimischen Terms of Trade. Das vermindert das Arbeitsangebot bei jedem vom Preis inl?ndischer Produkte abh?ngigen Reallohn, l?Βt aber die Nachfrage nach Arbeit unver?ndert. Gleichgewichtsbesch?ftigung und-Produktion gehen zurück.

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Résumé Les effets de production d’une politique monétaire annoncée. — Cette analyse démontre que l’expansion monétaire annoncée a des effets restrictifs à court terme sur la production d’équilibre dans une petite économie ouverte. La nonneutralité s’appuie sur la présence des actifs financiers commerces et pas commerces, sur la spécialisation complète dans la production et sur une offre de travail qui dépend du pouvoir d’achat des salaires dérivé, d’une partie, des prix des biens locaux et importés. L’expansion monétaire, réalisée par des achats de l’actif commercé de la part de la banque centrale, aggrave les termes de l’échange locaux. Cela réduit l’offre de travail à chaque taux de salaire réel dérivé du prix des bien locaux et n’influence pas la demande de travail. L’emploi et la production d’équilibre diminuent.

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Resumen Efectos de producto reaies de una politica monetaria anunciada. — Este análisis demuestra que una expansion monetaria anunciada tiene efectos de corto plazo contractivos sobre el producto de equilibrio en una economfa pequena y abierta. La no neutralidad se debe a la presencia de activos financieros transables y no transables, compléta especializaci?n en la producción y, una oferta de trabajo, que dépende del poder de compra de los salarios por productos importados y producidos domésticamente. La expansion monetaria, definida como la compra del banco central de activos transables, détériora los términos del intercambio domésticos. Esto reduce la oferta de trabajo para cada salario real en términos del precio de bienes producidos domésticamente y déjà la demanda por trabajo inalterada. El empleo y producto de equilibrio caen.