Exchange Rate Disconnect in a Standard Open-Economy Macro Model

This paper demonstrates that the well-documented exchange rate disconnect can be explained within traditional exchange rate models. It is shown that even if the underlying fundamentals are invariant across exchange rate regimes, equilibrium real exchange rates are more volatile under flexible nominal exchange rates than under fixed rates. In particular, fixed rates reduce the requisite adjustments of the real exchange rate in response to both nominal and real shocks relative to a floating-rate scenario.     

Central Bank Intervention and Heterogeneous Exchange Rate Expectations: Evidence from the Daily DEM/US-Dollar Exchange Rate

In this paper we propose a generalisation of the noise trader transmission mechanism to examine the impact of central bank intervention on exchange rates. Within a heterogeneous expectation exchange rate model intervention operations are supposed to provide support for chartist or fundamentalist forecasts, which forces portfolio managers to adjust their foreign currency positions. The empirical examination of the hypothesis is done by applying a Markov regime-switching approach to daily DEM/US-dollar exchange rates and intervention data of the Deutsche Bundesbank and the Federal Reserve from 1979 to 1992. It is shown that chartists profits rose whenever these central banks intervened on the foreign exchange market. This is not true for those who follow a fundamentalist approach.JEL Classification Numbers: F31, C32, E58, G15     

Employer Recognition of Same-Sex Relationships in the United States: Legal and Economic Implications

Recognition of same-sex relationships is receiving increasing national attention in the United States. This paper discusses the current availability of employee rights in the United States on the basis of marital status to same-sex couples, and both the direct and indirect economic consequences to organizations of providing such rights. Despite legal recognition in some states and by many employers in the private sector, the availability of marital rights in the workplace for same-sex couples remains tenuous, at most. Although the direct economic consequences of same-sex relationships remain a matter of debate, the indirect economic advantages are several, including being an employer of choice and having a favorable reputation in the consumer, stockholder, and applicant marketplace. Employers should counterbalance indirect economic benefits with opposition to same-sex relationships, including product boycotts. The issue cannot be ignored from a legal or economic perspective.     

Economic Efficiency and Productivity Growth in the Post-Privatization Chilean Hydroelectric Industry

Chiles hydroelectric industry was privatized in 1985, but required to operate within a regulatory framework designed to achieve a competitive outcome. A centralized dispatch center was established to ensure production at minimum cost, subject to constraints on minimum release and minimum reservoir stock. A reluctance to rapidly reduce the industry work force may also have existed. We develop a constrained cost-minimization model for thermal and hydro generation to obtain the shadow price of water and to determine the qualitative effect of these constraints on allocative efficiency. Using panel data from 1986–1997, we assess the economic efficiency of the hydro industry by estimating a stochastic distance frontier and price equations from the dual cost-minimization problem. We find dramatic increases in technical change and productivity change, with positive efficiency change for all years but the last. We also observe a dramatic decline in allocative inefficiencies over our sample period. The share of hydro generation from run-of-river and thermal plants relative to reservoir plants has increased, presumably in reaction to the water release and reservoir stock constraints, reducing the relative over-utilization of capital to water from the pre-1985 regime. Further, the over-utilization of labor to capital and water has fallen over time. However, considerable allocative inefficiencies remain, consistent with our finding of industry-wide scale economies. Substantial cost savings would result if technical and allocative efficiency were eliminated.JEL Classification: L94, D24     

High-Tech Production Workers’ Fear of Unionizing: A Wheeler–McClendon Model Analysis of a Union Organizing Campaign at a US Medical Electronics Factory

Using the framework of the Wheeler and McClendon (1991) theory of employee support for unionization, the purpose of this article is to examine an unsuccessful unionization drive in a US medical electronics factory that the author took part in while working as a production worker during 1983 in order to gain insight into why unionization is so difficult to promote among production workers in high-tech industry. I argue that high-tech companies take advantage of the inherent fear in production employees to organize in order to defeat unionization campaigns. That is, they negatively affect employee support for unionization through the development of inhibiting conditions of the emotional path of the Wheeler–McClendon theory to prevent unionization. The use of this widespread strategy is crucial for understanding such low rates of unionization in this industry.     

Restricting Multiple-Output Multiple-Input DEA Models by Disaggregating the Output–Input Vector

One of the strengths of DEA in the measurement of technical efficiency is that it readily accommodates multiple-output multiple-input production technologies. In doing so, it assumes that each of the inputs is used jointly in the production of each output. In some applied studies, this can be undesirable. We propose a new disaggregated formulation that allows a specific output to be made independent of a specific input, while maintaining the joint production relationship for the other outputs and inputs. We demonstrate the approach by applying it to measure the technical efficiency of national rail systems in 20 countries between 1990 and 1998.JEL Classification: C6, D24, N7     

The Impact of Regulation on Cost Efficiency: An Empirical Analysis of Wisconsin Water Utilities

The impact of regulation of efforts to minimize costs has been widely discussed, but remains difficult to measure. The sophisticated regulation of water utilities in Wisconsin allows us to attempt such on assessment since different firms can be under different regulatory regimes (price cap or rate-of-return) in the same geographical area at the same time. To measure the impact of regulation on efficiency, we use a stochastic cost frontier approach defining the unobservable efficiency of a water utility as a function of exogeneous variables. Using a panel of 211 water utilities observed from 1998 to 2000, we show that their efficiency scores can be partly explained by the regulatory framework.     

Heterogeneous Agents in Public Goods Experiments

We explore by purely experimental means a heterogeneous agents scenario in experimental public goods games, assuming the existence of at least three types of player: free riders, cooperators, and reciprocators. We identify the various types by means of four classification methods, and then play the public goods game with homogeneous groups. We observe that (eq1) the average contribution level is enhanced in this setting; (2) the decay phenomenon is replicated in groups of pure free riders, whereas in groups of cooperative and reciprocating players the contribution is high and fairly stable throughout the game.The experiments reported in this paper were financed by the Cognitive Science Laboratory and the Computational and Experimental Economics Laboratory of the University of Trento. We would like to thank Marco Tecilla, Macrina Marchesin and Dino Parisi for their help in running the experiments, and Luigi Mittone, director of CEEL, for letting us use the laboratorys resources. Paul Webley, Robert Moir, seminar participants at the Universities of Pisa and Trento, Charles Holt and two anonymous referees provided very useful comments on a previous draft.