Monetary Model of Exchange Rate Determination： Evidence From the Czech Republic,Hungary, and Poland

Using a monetary model of exchange rate determination that suggests a strong link between the nominal exchange rate and a set of monetary fundamentals, exchange rate dynamics for the Czech Republic, Hungary, and Poland is studied. As the cointegration relationship among exchange rate, output, and the monetary fundamentals （money supply and interest rate） is found, vector autoregressions （VAR）/vector error-correction （VEC） and two-stage least squares （2SLS） error-correction models are used in this context, since both approaches allow estimating short-run correlations between exchange rates and fundamentals while taking into account the existent long-run exchange rate constraints. Based on the quarterly data for the period of 1998-2012, it is found that for all countries, an increase in the money supply, domestic output slowdown, or stronger growth abroad are factors behind a nominal exchange rate depreciation, just as predicted by the monetary model of exchange rate. However, the effects of domestic-foreign interest rate differential are quite heterogeneous, being in line with theoretical predictions of a standard monetary model for Poland only. According to the decomposition of variance, money supply and interest rates account for 30%-46% of the exchange rate variation in the Czech Republic, from 10% to 14% in Hungary, and from 23% to 42% in Poland.     

Market Power and Technology

It is well known that market power depends on the price elasticity of demand and the intensity of competition. It is also well known that technology can influence market power through its effect on market structure. However, there is limited research on the direct link between market power and technology. In this paper, we investigate this relationship. We find that the monopoly price can be constrained to be identical to marginal cost under certain technological conditions. We also show how market power depends directly upon technology, holding constant demand conditions, market structure, and the degree of competition.     

Business travellers' perception of service quality: a prefatory study of two European city centre hotels

The business traveller contributes significantly to the turnover of the hotel industry and, with the globalisation of business, this sector shows signs of increasing growth. Service quality has now become one of the main factors used to gain competitive advantage, thus the industry must focus more specifically on the needs and expectations of its business customers. The aim of this paper is to focus on the business travel market and more specifically on the comparison of two hotels in two European cities, Brussels and Manchester. This area of research has not been attempted before and will provide an interesting comparison with findings in USA. A literature review identified the relevant attributes used to measure service quality, which were utilised to design a questionnaire, distributed to customers in a five star hotel in Manchester and in Brussels. The primary data obtained were then compared with the findings of other researchers. The analysis indicated that Brussels scored the majority of the attributes more highly (many significantly) than did Manchester. This may be influenced by the international profile of the Brussels respondents who tended to travel on business more frequently than the Manchester sample. The comparisons with the USA surveys found some inconsistencies that might be attributed to societal differences.Copyright © 2001 John Wiley & Sons, Ltd.