The Target Zone Model, Non-Linearity and Mean Reversion: is the Honeymoon Really Over?

We estimate a target zone model for three ERM exchange rates for 1983–6 and 1987–91 by the method of simulated moments, taking account of the continuous time specification by using daily data with the interruptions of holidays and weekends. Specification tests are unable to reject the model. The estimates imply, however, an essentially linear relationship between the exchange rate and the fundamentals, with a very limited 'honeymoon effect'. Using Monte Carlo simulations, calibrated on the estimates, we find that standard tests for mean reversion of the exchange rate would largely reject the target zone model when, in fact, it held.     

Modelling the impact of alternative pricing policies on an urban multimodal traffic corridor

This paper investigates the effects of alternative or joint schemes of road pricing and parking pricing to verify if private behaviour in operating parking facilities, road tolling and transit systems can lead to profitable results in the private sector and for public welfare. The evaluation is carried out using an idealised urban multimodal traffic corridor with some numerical examples that show the effects of different pricing policies. A Deterministic User Equilibrium assignment procedure is used to calculate certain performance indicators such as user travel costs, social costs and private profit. The results show that the system is highly sensitive to pricing policy and that a proper joint pricing of park-and-ride facilities, city centre parking and road tolls can be developed to simultaneously attain good private and social benefits.     

Post-Keynesian endogenous money theory: Horizontalists,structuralists and the paradox of illiquidity

The paper aims to provide a theoretical advancement in the post-Keynesian debate between horizontalists and structuralists by offering an additional theoretical support to the horizontalist view. Through the newly introduced notion of paradox of illiquidity, a critique to the endogenous money–liquidity preference model is developed, by focusing on the relationship between the volume of loans and the mark-up. The paradox of illiquidity aims to deny: (a) the idea of a banking sector achieving illiquid position during its lending activities and, consequently, (b) the view of an upward sloping credit supply curve.     

Consumer perceptions of carbon labeling in print advertising: Hype or effective communication strategy?

Eco-labels are being used more frequently in the marketplace. Recently, carbon-neutral labels have emerged on product packaging and advertisements as a popular form of eco-label. How consumers view these specific labels is of both conceptual and practical interest. Therefore, in a mixed-experimental design building on congruity theory and Deighton's two-step model of advertising effectiveness, the authors examine how consumers view the credibility and environmental concern of companies who use these labels, as well as their resulting purchase intentions. A 2(product) × 2(label) × 3(information) mixed design was used to examine consumer perceptions and behavior intentions. Product category (environmentally neutral vs. environmentally harmful) was a within-subjects factor; the presence/absence of the carbon-neutral label and information (positive/negative/control) was both manipulated between-subjects factors. Results show that the presence of a carbon-neutral label in an advertisement, regardless of the type of product, leads to more favorable perceptions of company environmental concern. However, there is a more pronounced increase in consumer perceptions of company environmental concern for an environmentally harmful product than for an environmentally neutral product.     

The Euro — A Tale of 20 Years: What Are the Priorities Going Forward?

Intereconomics - First, we need to recall the initial objectives set for the euro and how these have changed over time, notably due to the weaknesses that came to the fore throughout the recent...     

Likelihood evaluation of models with occasionally binding constraints

Applied researchers interested in estimating key parameters of dynamic stochastic general equilibrium models face an array of choices regarding numerical solution and estimation methods. We focus on the likelihood evaluation of models with occasionally binding constraints. We document how solution approximation errors and likelihood misspecification, related to the treatment of measurement errors, can interact and compound each other.     

Exploring the effect of gender diversity in MFIs during turbulent periods

Abstract

Gender diversity is generally recognized as relevant in microfinance, and the relationship between gender diversity and firms’ performance has received attention in academic literature. The above-mentioned relationship has not been addressed until now in the microfinance industry specifically. This study seeks to explain the role played by gender diversity in the workforce of microfinance institutions (MFIs) during turbulent periods in the firms’ performance. The study analyses data from 555 ratings of 185 MFIs from MicroFinanza Rating, a leading microfinance rating agency. The analysis shows that the number of women on the staff of MFIs is significantly and positively associated with both the Return on Equity and Operational Self-Sufficiency of MFIs, indicating a positive impact of gender diversity on firms’ performance.