Moments structure of ? 1-stochastic volatility models

We consider Taylor??s stochastic volatility model (SVM) when the innovations of the hidden log-volatility process have a Laplace distribution (? ₁ exponential density), rather than the standard Gaussian distribution (? ₂) usually employed. Recently many investigations have employed ? ₁ metric to allow better modeling of the abrupt changes of regime observed in financial time series. However, the estimation of SVM is known to be difficult because it is a non-linear with an hidden markov process. Moreover, an additional difficulty yielded by the use of ? ₁ metric is the not differentiability of the likelihood function. An alternative consists in using a generalized or efficient method-of-moments (GMM/EMM) estimation. For this purpose, we derive here the moments and autocovariance function of such ? ₁-based stochastic volatility models.     

The impact of international agreements on domestic policy: An analysis of tariff policy in African countries

This paper estimates a fixed effects tariff model to study the impact of the tariff reform provisions of international agreements on domestic tariffs, using a sample of eight Sub-Saharan African countries. The structure of the model explaining domestic tariff changed from the preagreement period to the postagreement period. However, the results indicate that for the most part, efforts by governments to adhere to tariff agreements failed in all but a few countries. Even for the countries in which the agreements appeared to be successful, the significance of the results is relatively weak.     

Monetary policy, oil shocks, and TFP: Accounting for the decline in US volatility

An equilibrium model is used to assess the quantitative importance of monetary policy for the post-1984 decline in US inflation and output volatility. The principal finding is that monetary policy played a substantial role in reducing inflation volatility, but a small role in reducing real output volatility. The model attributes much of the decline in real output volatility to smaller TFP shocks. We also investigate the pattern of output and inflation volatility under an optimal monetary policy counterfactual. We find that real output volatility would have been somewhat lower, and inflation volatility substantially lower, had monetary policy been set optimally.     

Debt Relief and Social Services Expenditure: The African Experience, 1989–2003

Abstract: In June 2005 the G8 proposed the Multilateral Debt Relief Initiative (MDRI) with the goal of canceling all International Development Association (IDA), International Monetary Fund (IMF) and African Development Fund (ADF) debt claims on countries that have reached, or will eventually reach, the completion point under the enhanced Highly Indebted Poor Countries (HIPC) initiative. The objective is to help HIPC make progress towards the Millennium Development Goals. The G8 initiative is worth $40 billion and would benefit 14 African countries immediately. It has the potential of freeing more resources than any past debt relief program. Between the 1988 Paris Club debt relief program up to 2003, Africa earned debt relief worth $65 billion. We take a critical look at the chances that the G8 initiative will reach its goals by empirically investigating the extent to which past debt relief granted to African countries did translate into a larger share of resources being allocated to social services expenditure. Our estimates indicate that debt relief provided to Africa between 1989 and 2003 had a positive impact on the share of a country's resources allocated either to public education or health in countries which have improved their institutions. Consequently, donors must address the need for institutional change as they grant debt relief to HIPC if the latter are to channel the freed‐up resources to the social sector.     

Epistemic commitment and cognitive disunity toward fair-value accounting

This paper critically explores knowledge/professionalization relationships in a jurisdictional context characterized by shifting standards of practice. Focusing on the growing movement toward fair value within accounting standards, we examine practitioners' reactions to the growing compulsory application of fair-value accounting standards. To make sense of these reactions, we introduce the notion of epistemic commitment, that is to say one's degree of allegiance to a given knowledge template. Utilizing 27 interviews with Canadian experienced accountants, we rely on epistemic commitment to analyze the extent of variability in practitioners' reactions to the standardization movement toward fair-value accounting. Our analysis demonstrates an important level of variability in practitioners' epistemic commitment toward fair-value accounting, highlighting a lack of cognitive unity in the field. Our findings point to other important professionalization issues: practitioners' inclinations to refer to profitability issues when reflecting on the appropriateness of standards; practitioners' conception of accounting as an objective technology; practitioners' hesitations in voicing deep-level concerns over implementation ambiguities and lack of professional cognitive authority. Overall, our study raises doubts about the professional status of accountancy.     

Why is child labor illegal?

We present a theory of the emergence of laws restricting child labor or imposing mandatory education that is consistent with the fact that poor parents tend to oppose such laws. We find that if altruistic parents are unable to commit to educating their children, child-labor laws can increase the welfare of higher-income parents in an ex ante sense. On the basis of an empirical analysis of Latin-American household surveys, we demonstrate that per capita income in the country of residence has the predicted effect on child labor supply, even after controlling for other household characteristics.     

Exploring the differences between franchisee entrepreneurs and nascent entrepreneurs

This paper is singular in its use of the PSED dataset for deriving a better understanding of the nature of nascent entrepreneurs as compared to franchisee entrepreneurs. We used previous studies on the differences between the two groups and developed variables divided into three dimensions: (1) prior experience, (2) growth objectives, and (3) motivation and risk. Jonckheere–Terpstra (J–T) tests, Chi-Square tests, F-tests and logistic regression models detected differences in all three dimensions. The conclusion is that franchisee entrepreneurs in the United States of America are distinctive in their characteristics. As compared to nascent entrepreneurs, franchisee entrepreneurs have less experience, less confidence in their skills, less capital, more aspirations for larger organizations, less confidence in their abilities to make the business a success, and more belief that their first-year incomes will be stable.

IFRS: On the Docility of Sophisticated Users in Preserving the Ideal of Comparability

This paper questions the ideal of comparability, which is often mobilized by standard setters when justifying new – or ‘improvement’ to existing – accounting standards. The target of our analysis is constituted by the thoughts of sophisticated users of financial statements when reflecting about International Financial Reporting Standards (IFRS) implementation in Europe. Drawing on the work of Mary Douglas on purity and Michel Foucault on docility, it is argued and shown that sophisticated users tend to interpret aberrations – that is to say indications of incomparability which confront users in the flow of their professional lives – in ways that allow the ideal of comparability to be preserved. Important consequences ensuing from the docility of users in purifying aberrations are discussed.