Central Bank Intervention in USD/INR Market: Estimating Its Reaction Function and Impact on Volatility

Econometric evidence on why central banks intervene in the foreign exchange market and the impact of such intervention has remained inconclusive. We contribute to the literature with evidence from India, a managed float regime that sees consistent monitoring and intervention by Reserve Bank of India, India’s central bank. Estimation of the central bank reaction function shows that increased volatility in the foreign exchange market and misalignment from targeted rates are important objectives behind intervention. The paper further uses the GARCH framework to study how intervention influences exchange rate volatility. We find that intervention in the spot market increases volatility while that in the forward market reduces volatility.     

Entrepreneur location decisions across industries

In this paper we analyse whether entrepreneur location decisions differ across industries and identify the factors determining the choice of location between rural and urban environments. Firm location is based on a new taxonomy developed over the influential three dimensions of Hayter’s (1997) approach. The paper uses data from sample of one thousand Portuguese firms. We present a stylized theoretical model to determine how these new five dimensions influence firm’s location and test the model through a logistic regression. Our results show that that the location decisions depend on the sector of activity, type of area (urban vs. rural) and the characteristics of the entrepreneur. We find that companies engaged in knowledge intensive business services prefer to locate in urban areas. From an institutional point of view, firms prefer to locate in rural areas.     

Effects of time horizon and asset condition on the profitability of technical trading rules

In much of the literature, the debate over technical trading strategies has centered around the question of whether an actively managed portfolio, controlled by a technical indicator, can outperform a passively managed portfolio. Typically, the time horizon is considered to be years. Additionally, the trader is assumed to use a technical trading strategy that is independent of asset conditions. These assumptions may not correspond well with reality. Traders often have much shorter time horizons and may switch between rebalancing or trading strategies on the basis of perceived shifts in market condition. This paper presents a study of the profitability of technical trading rules as a function of asset state or condition. Several common technical trading strategies were run on 296 stocks over a 15 year period. Strategies were run with 1 month rolling time horizons, significantly shorter than those used in similar studies in the literature. Stocks were segmented based on volatility and volume, which allowed for the examination of a strategy’s performance in different asset conditions. Several strategies were demonstrated to have consistently better risk-to-reward ratios under specific asset conditions and short time horizons. This finding helps to explain why some practitioners implement technical trading strategies.     

Dr. Martin Bronfenbrenner (1914-1997): Scholar, Critic, Cynic, and Comrade-in-Arms

ABSTRACT Professor Martin Bronfenbrenner's mark on the economics profession was significant and worth remembering. He touched the lives of many as a father, cousin, teacher, scholar, expert referee, colleague, and judge of important contemporary debates. Of special interest is his unique personality. He was a specialist in self-effacement, peppered with liberal shakes of cynicism and sarcasm. Despite all this, he managed to win the respect and hearts of individuals on several continents and across several generations. This essay brings a small but diverse part of the story together in one place.     

Linking Entrepreneurship and Economic Growth

In the 1980s stagflation and high unemployment caused a renewed interest in supply side economics and in factors determining economic growth. Simultaneously, the 1980s and 1990s have seen a reevaluation of the role of small firms and a renewed attention for entrepreneurship. The goal of this survey is to synthesize disparate strands of literature to link entrepreneurship to economic growth. This will be done by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macro-economic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations. Understanding the role of entrepreneurship in the process of economic growth requires the decomposition of the concept of entrepreneurship. A first part of our synthesis is to contribute to the understanding of the dimensions involved, while paying attention to the level of analysis (individual, firm and aggregate level). A second part is to gain insight in the causal links between these entrepreneurial dimensions and economic growth. A third part is to make suggestions for future empirical research into the relationship between (dimensions of) entrepreneurship and economic growth.     

Assignment models and reneging

Summary. We consider a non-cooperative assignment model where we show that any subgame perfect equilibrium is stable, and that an appropriate refinement criterion leads to the p-optimal outcome. We then consider a model with reneging and derive some interesting properties of this game. We show that in this case ‘unraveling’ may occur. Furthermore, the resulting outcome can be either stable, or unstable. Received: July 1, 1997; revised version: May 30, 1998     

The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?

This paper describes the United States recently enacted Africa Growth and Opportunity Act (AGOA) and assesses its quantitative impact on African exports. The AGOA expands the scope of preferential access of Africa's exports to the United States in key areas such as clothing. However, its medium‐term benefits – estimated at about US$100‐$140 million, an 8−11 per cent addition to current non‐oil exports – would have been nearly five times greater (US$540 million) if no restrictive conditions had been imposed on the terms of market access. The most important of these conditions are the rules of origin with which African exporters of clothing must comply to benefit from duty‐free access.     

Rethinking Management Theory and Practice for the Indian Context: An International Management Perspective

The Indian economy characterized variously as a slumbering giant, powerful tiger, and the most promising market has witnessed a slowdown, occasional disturbances in the industrial relations space, and attention of the world in the last five years. In this special issue, we raise pertinent questions and present research on multiple dimensions of the dynamic and rapidly changing business environment of India. The suitability of management models and frameworks developed in the North American contexts in emerging markets like India and China is questioned. One example of how the well‐established models in the literature on success of international joint ventures were insufficient to explain the success of three international joint ventures in the insurance space in India is presented as case in point. Finally, the nine papers that materially contribute to the theme of this special issue are introduced. © 2016 Wiley Periodicals, Inc.