The foreign exchange constraint,suppression of the trade deficit and the shadow price of foreign exchange in a fix-price economy

The foreign exchange gap is analysed as a possible feature of a fix-price economy. The implications of closing the gap by means of import rationing are then discussed. Finally, a set of shadow rates of exchange is derived. These shadow prices are conditional on the prevailing regimes, and include the paradoxical possibility of a negative shadow rate of exchange.     

Gold options,an attractive investment instrument for the non-U.S. investor — the case of the Belgian and Dutch investor

Summary Gold has always been an investment instrument whose popularity is closely linked to economic and political instability. Since gold transactions occur in U.S. dollars any investor with a non-U.S. dollar base currency will therefore assume exchange risk exposure. Empirical evidence is given that the gold price has historically varied inversely with the strength of the U.S. dollar. The investor whose base currency is not the dollar, i.e. the Belgian franc or Dutch guilder, incurs less risk when investing in gold than his dollar counterpart.     

Changes in the fiscal stance and the composition of public spending

We consider the impact of both cyclical and structural changes in the fiscal stance on public spending composition for a panel of EU countries, including individual components of public investment. We find that both cyclically induced and structural changes in the fiscal stance affect the composition of public spending, with fiscal tightening of both types increasing the relative share of investment and loosening favouring consumption expenditure. Of the components of public investment, infrastructure and redistribution respond to cyclical changes in the fiscal stance, while investment in hospitals and schools responds most clearly to structural changes.     

Adaptation and Mitigation amid the Consequences of Failure

Societies once could choose between changing direction or dealing with climatic disaster; now it is necessary to do both at once. The best-laid plans for mitigation would be hard enough to fulfill in a stable climate, but they will be vastly harder in the climate chaos ahead. If simultaneous mitigation and adaptation are still achievable, such a difficult balance cannot also take on the burden of supporting unrestrained economic growth. The failing efforts so far have been dominated by a search for synergistic ways to mitigate, adapt, and grow economies at the same time, while wishing away the predictable trade-offs between these goals. Wealthy polluting countries have enforced this optimistic spirit in international climate debates, in part to counter the language of loss and damage, which they have seen as a direct challenge. Key to their effort has been a reframing of adaptation that flips the focus from the vulnerability of exposed populations to their resilience. However, the reality of implementing plans for resilience is running into problems, and those populations are instead taking up the banner of climate justice. Debt- and disaster-plagued Puerto Rico illustrates the failure of both adaptation and mitigation through growth and the promise of climate justice as a means to articulate other forms of balance.     

Private Wealth in a Developing Country:Evidence from South Africa

The point of departure of Piketty's influential Capital in the Twenty‐First Century (2014) was the dramatic growth of private wealth‐income ratios in advanced economies between 1970 and 2010. Using official balance sheet data for South Africa—the first country to publish such data in the developing world—, this paper examines to what extent this re‐emergence of private wealth was also experienced in the developing‐country context. First, we find that the South African current wealth‐income ratio is very close to its 1975 level, and much lower than those of Piketty's sample of advanced economies. Second, we show that the discrepancy is explained not only by South Africa's relatively low savings rates, but also by the reduction of wealth before and during the transition to democracy in the 1990s. Since then, private wealth recovered significantly, but the U‐shaped relationship does not support the argument that there is a clear correlation between the capital‐income ratio and capital share.     

Identity Bias in Negative Word of Mouth Following Irresponsible Corporate Behavior: A Research Model and Moderating Effects

Current research has documented how cases of irresponsible corporate behavior generate negative reactions from consumers and other stakeholders. Existing research, however, has not examined empirically whether the characteristics of the victims of corporate malfeasance contribute to shaping individual reactions. This study examines, through four experimental surveys, the role played by the national identity of the people affected on consumers’ intentions to spread negative word of mouth (WOM). It is shown that national identity influences individual reactions indirectly; mediated by perceived similarity and sympathy. Consumers perceive foreign victims as different from the self and this reduces the sympathy experienced towards them. Sympathy is an emotion that shapes consumer reactions and regulates WOM. The study identifies two moderating processes of this effect. Individuals who score high on collective narcissism are most likely to be strongly biased against foreign victims. In-group bias is also moderated by the perceived severity of the crisis. When a case is perceived as very serious, perceived similarity plays a less important role in generating sympathy because consumers focus on the perceived suffering of the victims. Hence, in-group bias is stronger in cases perceived as having minor consequences. The paper contributes to the literature on corporate social irresponsibility and offers implications for both scholars and managers.