Contribution of telecommunications to rural economic development: variations on a theme?

The main contention of this paper is that the contribution that telecommunications can make to rural economic development will vary appreciably from one area to another, depending on the presence or absence of a range of other features of the rural area environment. An attempt to analyse variations in local telecommunications potential in the case of Scotland is reported upon. We also presents local area case studies in order to demonstrate the differing ways in which telecommunications is becoming central to the functioning of the rural economy. In so doing, it is argued that ‘the rural economy’ stereotype is belied by the evidence of rural areas’ integration into national and even global communications networks. The paper finally considers the considerable variability in the nature of the supply of telecommunications services to rural areas, and predicts some negative consequences for more remote rural areas in the shift occurring from a universally-provided integrated network to market-driven specialized network.     

THE TWO FUNDAMENTAL THEOREMS OF ASSET PRICING FOR A CLASS OF CONTINUOUS‐TIME FINANCIAL MARKETS

The paper is concerned with the first and the second fundamental theorems of asset pricing in the case of nonexploding financial markets, in which the excess‐returns from risky securities represent continuous semimartingales with absolutely continuous predictable characteristics. For such markets, the notions of “arbitrage” and “completeness” are characterized as properties of the distribution law of the excess‐returns. It is shown that any form of arbitrage is tantamount to guaranteed arbitrage, which leads to a somewhat stronger version of the first fundamental theorem. New proofs of the first and the second fundamental theorems, which rely exclusively on methods from stochastic analysis, are established.     

Adult Literacy Surveys in Australia

In 1996 and 2006, Australia conducted the International Adult Literacy Survey and the Adult Literacy and Lifeskills Survey to measure literacy (and numeracy) competencies. Good literacy skills are increasingly essential for individuals to participate in contemporary society and the modern economy. These surveys also collected background information, enabling an examination of the factors that influence literacy and of how literacy may affect individual opportunities and outcomes. The time series of adult literacy surveys will be enhanced when the 2011–12 Programme for the International Assessment of Adult Competencies is published in 2013.     

Economic Democracy: Solution or New Challenge ∗

Abstract Kaleckians and partisans of the capital monopoly approach have argued that additional outlays on unproductive labor increase economic activity under three conditions: investment is sensitive to realized rates of capacity utilization; savings out of wages and salaries are assumed away; prices are fixed by a markup over unit direct costs. The present model examines what happens when the last hypothesis is modified, i.e., when megacorps are assumed to fix prices on the basis of total unit costs, more specifically on the basis of target-return pricing procedures. Because higher costs are shifted on to productive labor, through higher prices and a reduction in their real wages, additional unproductive outlays may have a negative impact on economic activity. It turns out, in addition, that one must carefully distinguish between unproductive labor outlays and unproductive capital outlays when firms are assumed to shift these additional costs to consumers, on the basis of target-return pricing procedures.     

Virtual borders

Numerous studies have documented substantial deviations from the law of one price for consumer goods. However, in most cases small transaction costs can explain these violations. In our study, we purposely focus on a market where such frictions are minimal, namely online bookselling in the US and Canada. We exploit the high frequency nature of the data to disentangle nominal rigidities from market segmentation and show that while firms seem to respond to domestic competitive pressure, there is no evidence that they react to fluctuations in the relative price of foreign competition following exchange rate movements. In addition, we cannot identify any significant impact on sales volume stemming from variations in international relative prices. Hence, our results suggest that even in an environment with minimal frictions, international market segmentation is extensive and responsible for violations of the law of one price.     

Investment and concern for relative position

Economists typically analyze individuals' market behavior in isolation from their nonmarket decisions. While this research strategy has generally been successful, it can lead to systematic errors when agents' nonmarket behavior affects their market choices. In this paper we analyze how individuals' investment behavior changes as a result of nonmarket behavior. Specifically, we analyze a model in which individuals must decide how to allocate their initial endowment between two random investments, where the returns are perfectly correlated across individuals for the first investment but independent across individuals for the second. We consider an environment in which men and women match, with wealthier individuals more successful in matching. We show how individuals' concern about relative wealth can affect their investment decisions, and we provide conditions under which individuals bias their investments either toward or away from the investment with correlated returns. A modification of the model is used to explain why agents' investments might exhibit a home country bias.     

Modelling Transparency in Disclosure: The Case of Foreign Exchange Risk Management

Abstract:  When managers choose not to disclose all the relevant information in their possession in their financial statements, there is an information gap between the managers and users and consequently a lack of transparency. We model the degree of transparency observed when disclosures of foreign exchange (FX) risk management in financial statements are compared to managerial information on FX risk management policy, as evidenced in questionnaire responses. In this comparative study of US and UK firms we find incomplete disclosure in both samples but with differing aspects. In the US case, the information gap is lower where the information has higher relevance or firms with higher financial risk (greater leverage) are signalling the extent of risk, but the gap is greater where firms are in competitive product markets. For the UK sample, the information gap is significantly lower where firms have higher financial risk or higher liquidity but the gap is greater where the shares are more closely held. We conclude that modelling and explaining this aspect of incomplete accounting disclosure in an international setting must be sufficiently flexible to accommodate national differences in managerial behaviour.