Foreign direct investment and business cycle co-movements: The panel data evidence

The previous literature has largely overlooked the possible channels through which foreign direct investment (FDI) might influence business cycle synchronization. In this study we analyze the linkages that exist among FDI, trade and industrial dissimilarity in relation to business cycle co-movements using a panel data set taken from 77 pairs of developed countries. The error component three-stage least squares (EC3SLS) estimates from a simultaneous equations model with panel data are shown to be superior to the estimates obtained from single equation models or simultaneous equations models with cross-sectional data. Our results indicate that FDI serves as a channel of international business cycle transmission that is equally important as the channels of trade and monetary policy. On the contrary, industrial dissimilarity is identified as having an indirect impact on the business cycle correlation through trade and FDI. Furthermore, our findings suggest that in our sample FDI is of the horizontal type and tends to substitute for trade.     

Time-Series Wage Differential in Taiwan: The Role of International Trade

Rising relative wages between skilled and unskilled workers in developed countries has been a popular subject of recent studies. This paper analyzes Taiwan, a semi-developed economy, where the relative wage reveals a declining trend since the mid-1980s. The authors study the role of international trade. A major point of departure is to distinguish the effects of net exports to OECD countries from those to non-OECD countries. The paper also differentiates the effects of net exports to China from those to non-OECD countries except China. It is found that net exports to the OECD countries raise the relative wage of skilled workers, whereas net exports to non-OECD countries and China diminish the relative wage. Moreover, the impacts of net exports to China are much larger than those to OECD and other non-OECD countries. The documented wage effects of international trade in this work diverge from what existing works have argued based on Heckscher–Ohlin theory.     

Is there Causal Relationship between Money Supply Growth and Inflation in China? Evidence from Quantity Theory of Money

This study examines the causal relationship between Chinese money supply growth and inflation, using the bootstrap Granger full‐sample causality test and sub‐sample rolling‐window estimation test to determine whether such a relationship in China supports the quantity theory of money. The result indicates that there is a unidirectional relationship from inflation to money supply growth. However, considering structural changes in two series, we find that short‐run relationships using full‐sample data are unstable, which suggests that full‐sample causality tests cannot be relied upon. Then, we use a time‐varying rolling‐window approach to revisit the dynamic causal relationship, and the results show that money supply growth has both positive and negative impacts on inflation in several sub‐periods, and in turn, inflation has the same effects on money supply growth for China. These findings are basically consistent with the modern quantity theory of money from the perspective of money supply and price level. When money supply growth does not outweigh output growth, inflation should not be curbed only by decreasing money supply. It notes that a stable money supply growth is critical to price level stability and economic development in China.     

Current Account, Capital Formation and Terms of Trade Shocks: a Revisit of the Harberger-Laursen-Metzler Effect

This paper extends the Blanchard model of a closed-economy to a three-good (exportable, importable and non-tradable goods) open-economy model with capital accumulation and uncertain lifetimes to study the impacts of terms of trade shocks on the current account. The simulation results show that a model with uncertain lifetimes is more appropriate to describe a small open economy like Taiwan at the steady-state equilibrium than a model with infinite lifetimes. We find that the Harberger-Laursen-Metzler effect is discernible for temporary or permanent terms of trade shocks. Furthermore, the steady state is a saddle point and the speed of convergence of capital and consumption is quite low.     

Trade,inventories, and forward exchange under exchange rate and demand uncertainty

The author is very grateful to Professor Klaus Spremann of University of Ulm and an anonymous referee for invaluable comments and suggestions. The research support from the National Science Council of R. O. C. is appreciated.     

Production location and random input price

The purpose of this paper is to develop systematically the theory of plant location for a competitive firm facing random input price. It will be shown that the impact of input price uncertainty on the firm's optimum location depend crucially upon (i) the firm's attitude toward risk, (ii) the characteristics of the production function, (iii) the structure of transport costs on inputs and output, and (iv) the type of input usages. Moreover, and more importantly, some conclusions obtained by prior studies on location theory in a certainty world can also be shown to be special cases of our more general results, but some are not justifiable in a world with random input price.     

International technology spillovers and innovation: Evidence from Taiwanese high-tech firms

This paper uses Taiwanese high-tech firms’ data from 2003 to 2007 to investigate the impacts of international technology spillovers and firms’ R&D activities on firms’ innovation performance. We also consider absorptive capability and examine whether the technology spillovers have different effect on firms' innovation performance. We choose patent application counts to measure firms' innovation performance, and adopt panel Ordinary Least Squares (OLS) with fixed-effect and random-effect models as well as System Generalized Method of Moments (GMM) model to estimate. The empirical findings indicate the innovation performance of high-tech firms is positively affected by their R&D efforts, export performance, and the presences of multinational corporations. Furthermore, when absorptive capacity is taken into account, the technology spillovers by exporting and technology import would affect the innovation performance more.     

Pricing and hedging of quanto range accrual notes under Gaussian HJM with cross‐currency Levy processes

This study analyzes the pricing and hedging problems for quanto range accrual notes (RANs) under the Heath‐Jarrow‐Morton (HJM) framework with Levy processes for instantaneous domestic and foreign forward interest rates. We consider the effects of jump risk on both interest rates and exchange rates in the pricing of the notes. We first derive the pricing formula for quanto double interest rate digital options and quanto contingent payoff options; then we apply the method proposed by Turnbull (Journal of Derivatives, 1995, 3, 92–101) to replicate the quanto RAN by a combination of the quanto double interest rate digital options and the quanto contingent payoff options. Using the pricing formulas derived in this study, we obtain the hedging position for each issue of quanto RANs. In addition, by simulation and assuming the jump risk to follow a compound Poisson process, we further analyze the effects of jump risk and exchange rate risk on the coupons receivable in holding a RAN. © 2009 Wiley Periodicals, Inc. Jrl Fut Mark 29:973–998, 2009     

Optimizing the Information Outsourcing Practices of Primary Care Medical Organizations Using Entropy and TOPSIS

As clinics strive to select information technology contractors that meet their particular outsourcing needs, the medical sector urgently needs evaluation criteria for outsourcing to information technology contractors to alleviate unnecessary risks and achieve an excellent performance. Therefore, this work presents an entropy combined technique for order preference by similarity to ideal solution (TOPSIS)-based decision-making method for clinics to objectively assess the quality of an information technology supplier when outsourcing their medical information needs, as an alternative to previous decision-making approaches based on subjective evaluations. Each sub-criterion for outsourcing vendors is evaluated using the Delphi method. Moreover, results of interviews with experts are integrated with the entropy method to calculate each criterion of an objective evaluation weight for medical information system (MIS) vendors. Furthermore, a TOPSIS-based survey is designed using comparison to effectively respond to MIS outsourcing demand scores for each item. Furthermore, the proposed entropy and TOPSIS-based decision-making method can provide administrators in hospital clinics with a decision-making and evaluation criteria that actively encourage the medical sector to outsource its information technology needs to contractors.