LOUD AND CLEAR? CAN WE HEAR WHEN THE SARB SPEAKS?

Inflation targeting is a forward‐looking framework for monetary policy that has brought unprecedented transparency to the process of monetary policy. This paper aims to assess the degree to which the South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) has, since the introduction of inflation targeting, successfully communicated to the public its policy analysis, and, in particular, the expected future policy changes. It follows international literature in constructing a numerical index that is used to reflect the information content of the SARB's communications, specifically the monetary policy statements that accompanied each of the MPC meetings since 2000. This method allows us to judge, systematically, the degree to which the MPC has communicated successfully, and the evolution of that success over the past nine years. We find evidence that the MPC has succeeded in signalling their likely future policy decision with consistency over this period.     

Hazard rate for credit risk and hedging defaultable contingent claims

We provide a concise exposition of theoretical results that appear in modeling default time as a random time, we study in details the invariance martingale property and we establish a representation theorem which leads, in a complete market setting, to the hedging portfolio of a vulnerable claim. Our main result is that, to hedge a defaultable claim one has to invest the value of this contingent claim in the defaultable zero-coupon.Received: April 2003Mathematics Subject Classification: 91B24, 91B29, 60G46JEL Classification: G10The authors would like to thank D. Becherer and J.N. Hugonnier for interesting discussions and the anonymous referee whose pertinent questions on the first version of this paper help them to clarify the proofs. All remaining errors are ours.     

Options and earnings announcements: an empirical study of volatility, trading volume, open interest and liquidity

In this paper we study the impact of earnings announcements on implied volatility, trading volume, open interest and spreads in the stock options market. We find that implied volatility increases before announcement days and drops afterwards. Also option trading volume is higher around announcement days. During the days before the announcement open interest tends to increase, while it returns to regular levels afterwards. Changes in the quoted spread largely respond to higher trading volume and changes in implied volatility. The effective spread increases on the event day and on the first two days following the earnings announcement.     

Default times, no-arbitrage conditions and changes of probability measures

In this paper, we give a financial justification, based on no-arbitrage conditions, of the (H)-hypothesis in default time modeling. We also show how the (H)-hypothesis is affected by an equivalent change of probability measure. The main technique used here is the theory of progressive enlargements of filtrations.     

Compositional Effects,Segregation and Test Scores: Evidence From the National Assessment of Educational Progress

A model of the effects of economic level and ethnicity on grade 8 mathematics scores both within and between schools found that both the economic composition and the ethnic composition of a school were directly related to the effectiveness of that school. Projection of the data suggests that if the nation's schools were completely desegregated economically (but not at all ethnically), the test-score gap between free lunch students and students paying full price for lunch would decline by 25 %. Ethnic compositional effects for black, Asian/Pacific Islander (API), and Hispanic students were reversed from their within-school effects, with positive effects for students in schools with larger proportions of black and Hispanic students and a strong negative effect for students in schools with larger proportions of Asian/Pacific Islander students.     

Risk communication and social media during food safety crises: a study of stakeholders’ opinions in Ireland

Social media is a particular communication platform which has witnessed an exponential growth in use and influence in recent years, democratising the communication process, and offering risk communicators a way of putting into practice those principles which are advocated to be at the core of risk management and communication. However, little is known about stakeholders’ willingness to embrace this new form of communication in a food crisis. The current study presented an exploratory investigation of the opinions of Irish stakeholders on the position of risk communication in a crisis, with a particular focus on understanding what application social media may have. In-depth one-to-one interviews were carried out with key stakeholders holding frontline positions in managing and communicating about risk in the food sector in Ireland. The stakeholders identified risk communication as a central activity in a food safety crisis, driven by an obligation to protect both consumer health and the reputation of the Irish food sector. Stakeholders relied primarily on risk communication to disseminate information in a crisis so to educate and inform the public on a risk and to prevent confusion and alarmism; most did not explicitly value two-way risk communication in a crisis. The ability to effectively manage future crises may depend on stakeholders’ willingness to adapt to the changing communication landscape, namely – their willingness to adopt social media and use it effectively. The findings indicate that the stakeholders interviewed are appreciative of the need to engage with social media in times of a food safety crisis. However, most valued social media as a one-way channel to help spread a message and there was little reference to the interactive nature of this medium. Implications for integrating social media into crisis risk communication strategies are discussed.     

Beyond Seeing McDonald's Fiesta Menu: The Role of Accent in Brand Sincerity of Ethnic Products and Brands

Given the significant increase in the number of ethnic consumers, firms attempt to utilize various marketing communication strategies and tactics to promote their brands to these ethnically diverse groups. Similarly, many marketers are striving for brand crossovers by introducing ethnic offerings to new audiences. This research focuses on one such ethnic marketing communication strategy—the use of accented spokespersons. Building on a prosodic theory of accent, we propose that certain prosodic features (i.e., intonation) connote associations of sincerity and trustworthiness and thus affect brand sincerity perceptions. The current research also demonstrates that the effect of intonation depends on the degree of congruity between product ethnicity and a spokesperson's accent. Our results reveal that when these variables are congruent, consumers rely on the cues that are consistent with the advertising appeals. Thus, when a message uses a sincerity appeal, falling (versus rising) intonation leads to greater attributions of brand sincerity, whereas when a message uses a competence appeal, rising (versus falling) intonation triggers higher perceptions of brand sincerity. In the condition of incongruity, consumers aim to resolve the incongruity and rely on cues that connote the trustworthiness of a message (i.e., falling intonation). Theoretical and managerial implications conclude the article.     

Where there's a will,there's a way! A practitioner's view

This contribution is focused on the gaps which exist between regulation and its practical effects. It does refer to the possible implications of the Maastricht Treaty on future EC consumer policy but is not at all limited to this aspect of the issue. The goal is rather to shed some light on the practical difficulties encountered by consumer representatives in the adoption of EC consumer policy initiatives, in contrast to the more theoretical approach adopted by some other contributors to this issue. It also refers to some of the positive developments which have taken place, as a response to consumer activism, within the EC.

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Wo ein Wille ist, ist auch ein Weg! Eine Meinung aus der Praxis

Zusammenfassung Der Beitrag befa\t sich mit der Lücke, die zwischen Absichten der Regulierung und ihren praktischen Auswirkungen besteht. Er bezieht sich zwar auf die möglichen Implikationen des Vertrages von Maastricht für die künftige Verbraucherpolitik der Gemeinschaft, ist aber keineswegs auf diesen Aspekt beschränkt. Vielmehr werden die praktischen Schwierigkeiten beleuchtet, denen sich Verbraucherrepräsentanten bei der übernahme von verbraucherpolitischen Initiativen der Gemeinschaft gegenübersehen — ein Blickwinkel, der sich von den eher theoretischen Perspektiven mancher anderer Beiträge zu diesem Heft unterscheidet. Behandelt werden auch einige positive Entwicklungen, die als Antwort auf Konsumentenaktivitäten innerhalb der Europäischen Gemeinschaft stattgefunden haben.

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All opinions expressed in this article are personal and do not commit BEUC.     

Intellectual property rights as development determinants

Abstract While intellectual property rights (IPRs) are the key drivers of economic performance in R&D based growth models, they have not been fully explored in empirical development studies. We introduce IPRs to this literature, using Two‐Stage Least Squares Bayesian Model Averaging to address endogeneity and model uncertainty at the instrument and income stages. We show that IPRs exert effects similar to ‘Rule of Law’ and therefore provide robust evidence that both physical and intellectual property rights are crucial development determinants. We document that unenforced IPRs exert no effect on development. Instead, it is the level of enforced IPRs that causes development.     

Supporting weakly Pareto optimal allocations in infinite dimensional nonconvex economies

In this paper, we prove a new version of the Second Welfare Theorem for economies with a finite number of agents and an infinite number of commodities, when the preference correspondences are not convex-valued and/or when the total production set is not convex. For this kind of nonconvex economies, a recent result, obtained by one of the authors, introduces conditions which, when applied to the convex case, give for Banach commodity spaces the well-known result of decentralization by continuous prices of Pareto-optimal allocations under an interiority condition. In this paper, in order to prove a different version of the Second Welfare Theorem, we reinforce the conditions on the commodity space, assumed here to be a Banach lattice, and introduce a nonconvex version of the properness assumptions on preferences and the total production set. Applied to the convex case, our result becomes the usual Second Welfare Theorem when properness assumptions replace the interiority condition. The proof uses a Hahn-Banach Theorem generalization by Borwein and Jofré (in Joper Res Appl Math 48:169–180, 1997) which allows to separate nonconvex sets in general Banach spacesThis work was partially supported by Nucleo Complex Engineering System. The successive versions of the paper were partly prepared during visits of Alejandro Jofré to CERMSEM and of Monique Florenzano and Pascal Gourdel to the Centro de Modelamiento Matematico. The hospitality of both institutions and the support of the french Coopération régionale Cone Sud are gratefully aknowledged. The authors thank Ali Khan for stimulating exchange of ideas and literature, Roko Aliprantis, Jean-Marc Bonnisseau, Alain Chateauneuf, Roger Guesnerie, Filipe Martins Da Rocha, Moncef Meddeb, B. Mordukovich, Lionel Thibault and Rabee Tourky for valuable discussions