Strategic Network Disruption and Defense

We study a game between a network designer, who uses costly links to connect nodes in a network, and a network disruptor who tries to disrupt the resulting network as much as possible by deleting either nodes or links. For low linking costs networks with all nodes in symmetric positions are a best response of the designer under both link deletion and node deletion. For high linking costs the designer builds a star network under link deletion, but for node deletion excludes some nodes from the network to build a smaller but stronger network. For intermediate linking costs the designer again builds a symmetric network under node deletion but a star‐like network with weak spots under link deletion.     

International Asset Pricing and Portfolio Diversification with Time-Varying Risk

We test the conditional capital asset pricing model (CAPM) for the world's eight largest equity markets using a parsimonious generalized autoregressive conditional heteroskedasticity (GARCH) parameterization. Our methodology can be applied simultaneously to many assets and, at the same time, accommodate general dynamics of the conditional moments. The evidence supports most of the pricing restrictions of the model, but some of the variation in risk-adjusted excess returns remains predictable during periods of high interest rates. Our estimates indicate that, although severe market declines are contagious, the expected gains from international diversification for a U.S. investor average 2.11 percent per year and have not significantly declined over the last two decades.     

What Makes the Output–Inflation Trade‐Off Change? The Absence of Accelerating Deflation in Japan

It is standard to model the output–inflation trade-off as a linear relationship with a time-invariant slope. We assess empirical evidence for two sets of theories that allow for endogenous variation in the slope of the short-run Phillips curve. At an empirical level, we examine why large negative output gaps in Japan in the late 1990s did not lead to accelerating deflation but instead coincided with stable, albeit moderately negative inflation. Our results suggest that this episode is most convincingly interpreted as reflecting a gradual flattening of the Phillips curve. We find that this flattening is best explained by models with endogenous price durations. These models imply that in any economy where trend inflation is substantially lower (or substantially higher) today than in past decades, time variation in the slope of the Phillips curve has become too important to ignore.     

Consumer behaviour reflected in store and clothing selection criteria: a pilot study in Canada and England

Similarities and differences in selected clothing acquisition behaviour at two independent sites have been investigated using the Engel, Blackwell and Miniard consumer behaviour model as the conceptual framework. Similar clothing values orientations were found, supporting the assumption of a common Anglo-root culture at both sites. The paper focuses on an outcome of the values issue, namely store selection criteria and clothing evaluative criteria used by university students in Winnipeg, Canada and Newcastle upon Tyne, U.K. Respondents at both sites rated the store selection criteria and clothing evaluative criteria in similar orders of importance. Significant Spearman rank correlation coefficients for store selection criteria (r_s= 0-95) and clothing evaluative criteria (r_s= 0-88) suggest that the common Anglo-root culture of the Winnipeg and Newcastle participants has more influence on the alternative evaluative stage of the decision-making process than marketing stimuli and strategies found at each site. When individual criteria were compared across sites, only three of the ten store selection criteria gave statistically different responses, while three of the 21 clothing evaluative criteria were found to be statistically different.     

REVIEW OF THE FINANCIAL AND ECONOMIC SITUATION IN SOUTH AFRICA*

I have pleasure in formally presenting to you the Final Accounts of the Bank, and the Reports of the Board and the Auditors, for the year ended 31st March 1969. I also submit to you the Bank's Annual Economic Report which describes in some detail the economic and monetary developments in South Africa during the year ended June 1969 and which in general serves as a background to my remarks today. As is customary, however, I will survey these developments very briefly before discussing the present situation and the prospects for the near future.     

Bank Finance versus Bond Finance

We present a model with agency costs where heterogeneous firms raise finance through either bank loans or corporate bonds and where banks are more efficient than the market in resolving informational problems. We document some major long‐run differences in corporate finance between the United States and the euro area, and show that our model can explain those differences based on information availability. The model fits the data best when the euro area is characterized by lower availability of public information about corporate credit risk relative to the United States, and when European firms value more than United States firms banks’ flexibility and information acquisition role.