ESTIMATING SOURCES OF FLUCTUATIONS IN THE AUSTRALIAN WOOL MARKET: AN APPLICATION OF VAR METHODS

Vector autoregression (VAR) methods are used to analyse the contribution of supply, demand and policy shocks to unpredictable fluctuations in the market for Australian wool. VAR procedures are compared with conventional structural econometric models as methods for decomposing sources of instability. While each has advantages and disadvantages, VAR procedures might be viewed as preferable when the underlying market structure is complex and uncertain, as it is in the case of wool. Based on the results obtained, demand shocks are the dominant source of uncertainty in the wool market in the absence of Australian Wool Corporation intervention, but intervention has blunted their effects, reducing market uncertainty and increasing the average level of prices and revenues.     

Comparative statics for state-contingent technologies

The implications of supermodularity conditions in comparative-static analysis are analyzed for a generalized version of the separable-effort representation of a firm facing stochastic prices and a stochastic technology. Previous analysis is generalized in two ways. General risk-averse, as opposed to expected-utility, preferences are considered. The stochastic technology is represented by an Arrow–Debreu state-space representation. It is shown that results familiar from the theory of the price-taking firm in the absence of risk generalize to the uncertain case.      

U.S. DIRECT INVESTMENT TO MEXICO: POLITICS, ECONOMICS, AND NAFTA

The goal of this paper is to determine whether the recent opening of the Mexican economy caused a significant change in the investment behavior of U.S. multinational firms. The first finding is that a real investment function that explained the data well through 1989 shifted dramatically thereafter. Tests indicate that the probable causes of this shift were (i) the relaxation of Mexican restrictions on direct investment after 1989 and (ii) anticipatory investment behavior after the positive conclusion of the NAFTA negotiations.     

Deutsche Mark–Dollar Volatility: Intraday Activity Patterns, Macroeconomic Announcements, and Longer Run Dependencies

This paper provides a detailed characterization of the volatility in the deutsche mark–dollar foreign exchange market using an annual sample of five-minute returns. The approach captures the intraday activity patterns, the macroeconomic announcements, and the volatility persistence (ARCH) known from daily returns. The different features are separately quantified and shown to account for a substantial fraction of return variability, both at the intraday and daily level. The implications of the results for the interpretation of the fundamental "driving forces" behind the volatility process is also discussed.     

Thorstein Veblen's Theories of Governmental Failure: The Critic of Capitalism and Democracy Neglected Some Useful Insights, Hindsight Shows

A bstract . In T he T heory of B usiness E nterprise , Thorstein Veblen introduced a general theory of governmental failure in constitutional democracies based on the common man's delusion that policies benefiting businessmen also benefited him. This general theory runs consistently through Veblen's later works and was developed more fully in T he V ested I nterests and the C ommon M an . But other elements of an economic theory of government introduced in T he T heory of B usiness E nterprise were less durable. A briefly sketched economic theory of political parties was never mentioned again in any of Veblen's subsequent writings. A concept of governmental officials pursuing their own self interest did reappear in Veblen's wartime works, but was completely missing in A bsentee O wnership . The concept of a Leviathan-type government which pursued policies detrimental to the interests of both the common man and businessmen was repudiated in T he N ature of P eace . The conditions for its existence had been eroded by the influence of modern industrial technology on military operations     

Growth versus retrenchment strategies in marketing. The Australian experience

This study is based on a cross-sectional survey of 211 top level managers whose organizations have operations in Western Australia. Utilizing a custom model of competitive strategy developed from the organizational theory and policy, regression analysis is used to evaluate the influence of the external business environment upon growth/expansion and retrenchment strategies as well as corporate performance. Significant relationships are discussed along with their implications for the analysis of competitive and marketing strategy. Directions for future research efforts are also provided.