Has International Financial Integration Increased?

This paper compares the behavior of real interest rate differentials across the major countries under the Bretton Woods regime and the regime of floating exchanges that replaced it. The primary object is to investigate both the extent of market integration and its changes over time. For all fifteen possible country pairs real interest differentials are mean reverting, and in two-thirds of these cases indistinguishable from zero statistically. For all country pairs on average and for most such pairs individually, moreover, the estimated differentials are not appreciably different in absolute value than the differentials that we estimate for various money-market rates within the United States. Additional evidence points to a narrowing of differentials under floating rates over time and an increase in speeds of convergence.     

Upgrading EC strategic choice capacities

The EC faces difficult strategic choices which constitute fuzzy gambles with history. Available capacities, however successful in the past, are inadequate for meeting new challenges. Required are upgrading in political will, realistic visions, policy cogitation, and implementation. Operational recommendations include: preserving and strengthening the authority of the Commission; changing voting rules in the Council, while avoiding membership increases until this is accomplished; building up coherent economic, internal, and external relations-security decision processes; encouraging utopian thinking on EC futures; strengthening coherent policy making by fortifying the Commission Presidency; installation of crisis decision making modalities; reinforcing implementation consideration, monitoring and facilitation; intensive training of high-level Commission staff in strategic choice analysis; establishment of an EC Policy College; and setting up a central EC Think Tank together with improvement of pluralistic EC policy R&D. Since the future is shaped by necessity, chance and choice, upgraded strategic choice does not guarantee the desired effects, but is imperative in terms of both morality and effectiveness.     

A note on the optimal control of a cash balance problem

This paper provides an analytical solution to a cash management problem when cash income and demand are described by Compound Poisson processes. The paper generalizes past results in the cash management literature to arbitrary income and demand distribution functions. Further, our results can be applied as well in the area of banking. Throughout the paper we restrict attention to the family of control barrier policies. These consist in hedging cash up to a critical level and investing all incoming cash exceeding this level. We employ a long-run average cost criterion to determine an optimal control barrier. A diffusion approximation of the cash level process (income less demand) is used to obtain a simpler expression for the average cost and to yield a closed form solution to the optimal control barrier. For demonstration purposes, an example is resolved.     

Spectral analysis of public utility returns

This study tests the practicality of using the capital asset pricing model to evaluate public utility returns. To this end, utilities are grouped into portfolios, in accordance with their industry classification and their prime regulatory authority. Then their relationship to a market index of unregulated securities is analyzed vis-à-vis the relationship between this index and several control securities believed, a priori, to be of commensurate risk. These relationships are analyzed in two steps: the first step investigates the real trend movements over time; the second, the association of the wide-sense stationary components of these return processes. Bivariate spectral analysis is used in the second phase of this investigation. This enables us to analyze the time lags between return processes, and to break up our estimates by duration of cyclical movement and compare the long-term and short-term estimates.We conclude that ordinary least squares estimates of utility β's lack value to either investors or regulators. This is due to the highly unstable relationship between utility returns and the market index and to the existence of a lag between these processes. One explanation for this finding is regulatory lag and the uncertainty (as well as the actual content) surrounding regulatory authority decisions.     

Identity and experience in Haitian voodoo shows

This paper explores relations between tourist and performer identities and definitions of the situation in tourist-oriented entertainment events in Haiti. In the staged authenticity of the tourist voodoo show, tourists and performers attempt to assert various identities and definitions of the event, using as cues performance media and cultural stereotypes that involve associations with a variety of social structures. In the interplay of these cognitive frameworks, structural arrangements, and social practices, participants' interpretations are shown to be neither freely chosen nor rigidly determined.