The US Dollar and the Euro as International Currencies

For many decades the US dollar has remained unchallenged as the world’s dominant international currency. What is behind its persistent pre-eminence in the international monetary system and can this be expected to last? Could the euro rival or even surpass the dollar as the leading currency? If it did, what would be the consequences for Euroland?      

The East Asian Dollar Standard, Fear of Floating, and Original Sin

Before the crisis of 1997/98, the East Asian economies—except for Japan but including China—pegged their currencies to the US dollar. To avoid further turmoil, the IMF argues that these currencies should float more freely. However, the authors’ econometric estimations show that the dollar's predominant weight in East Asian currency baskets has returned to its pre‐crisis levels. By 2002, the day‐to‐day volatility of each country's exchange rate against the dollar had again become negligible. Most governments were rapidly accumulating a “war chest” of official dollar reserves, which portends that this exchange rate stabilization will come to extend over months or quarters. From the doctrine of “original sin” applied to emerging‐market economies, the authors argue that this fear of floating is entirely rational from the perspective of each individual country. And their joint pegging to the dollar benefits the East Asian dollar bloc as a whole, although Japan remains an important outlier.     

Organizational public value and employee life satisfaction: the mediating roles of work engagement and organizational citizenship behavior

Abstract

Building on Meynhardt’s public value concept, which has been developed to make transparent an organization’s contributions to the common good, we investigate the influence of organizational common good practices in the perceptions of employees (measured as public value) on employees’ work attitudes and life satisfaction. The proposed model is tested on a sample of 1045 Swiss employees taken from the 2015 Swiss Public Value Atlas data-set. Study findings reveal that organizational public value is positively related to employee life satisfaction, and that this relationship is partially mediated by work engagement and organizational citizenship behavior. Further, we show that employee common good orientations strengthen the positive impact of organizational public value on employee work engagement and organizational citizenship behavior. Results also provide evidence that the indirect effects of organizational public value on employee life satisfaction via work engagement and organizational citizenship behavior are stronger at higher employee common good orientation levels.     

The ECA-method for Identifying Sensitive Reactions within an IO Context

The paper introduces an alternative method to determine "sensitivity' within an input–output-context and makes the most sensitive connections visible in an overall graph. The method called ECA (Elasticity Coefficient Analysis) tries—like the Important Coefficient Analysis (ICA)—to derive structures from a certain property of the Leontief inverse. As the core of the method is elasticity—i.e. taking the relative reaction of the element bij of the inverse as a measure of response to a 1% change of the input coefficient aij—it describes the dynamic potential of certain sectors on possible changes of technical coefficients. In the second part of the paper, comparisons are made between the results of MFA (Minimal Flow Analysis), ICA and ECA upon using the same table for analysis. ICA and ECA to some extent show similarities but also some differences. Both contrast with MFA with respect to the very basis of the approach that enforces different interpretations of the results. Finally, some hypotheses on the differences and similarities are set up that could give a perspective for the further use of the different methods.     

The Subsystem—MFA: A Qualitative Method for Analyzing National Innovation Systems—The Case of Germany

The paper develops a method derived from the so-called minimal flow analysis (MFA), based on a subsystem approach, to find the characteristic technology flow structure of a national innovation system. The analysis uses input–output tables for Germany for the years 1980 and 1986, as well as innovation expenditure vectors, released by the Ifo-Institut, detailed for 58 sectors for the same years. The data are integrated into a subsystem approach and deliver a matrix of technology providers and technology users, which is analyzed by a suitably modified version of MFA. The results, differentiated according to rather economic vs more technical aspects, show what the German innovation system looks like and show that there was little change between 1980 and 1986.     

Central Bank Independence, Inflation Variability, and the Revenue Smoothing Hypothesis

This paper examines the revenue-smoothing hypothesis, which posits that an optimizing government will adjust both taxes and inflation to meet shocks to government spending. Our contribution is to examine this through the lens of a new methodology that relates both the first and second moments of inflation rates to central bank independence (CBI) measures. Unlike existing least-squares-based CBI papers, this study uses a maximum likelihood framework that facilitates the direct inclusion of CBI parameters in the residual covariance matrix. This new approach allows for a more intensive use of information contained in the CBI indexes and the estimates obtained are better reflective of CBI influences. Our results provide stronger evidence confirming the revenue-smoothing hypothesis, in particular for those countries with more independent central banks.     

Agenda-diffusion and innovation

The neoclassical approach to innnovation is based on its economic advantages and thus in a strict sense seems to be applicable only to incremental innovations with a low degree of novelty. It is contended in this paper that so-called generic innovations, which are more important to the evolutionary process because of their high degree of novelty, always bring about uncertainty which will be compensated by social contacts, i.e. by communication. The author shows that a communication model based on very simple assumptions and implemented as a simulation model is able not only to sketch significant features of the diffusion process but also to give additional clues to the process modelled.     

Is there a “Dark Side” to Monitoring? Board and Shareholder Monitoring Effects on M&A Performance Extremeness

Research summary: W e investigate the effects of monitoring by boards of directors and institutional shareholders on merger and acquisition (M&A ) performance extremeness using a sample of M&A deals from 1997 to 2006. Both governance research and legal reforms generally have espoused a “raise all boats” view of monitoring. We instead investigate whether monitoring may serve as a double‐edged sword that limits CEO discretion to undertake both value‐destroying M&A deals and value‐creating ones. Our findings indicate that the relationship between monitoring and M&A performance is more complex than previously believed. Rather than “raising all boats” in a shift towards better M&A outcomes, monitoring instead is associated with lower M&A losses, but also with lower M&A gains . Managerial summary: M ergers and acquisitions (M&A s) are a quintessential corporate activity. There were $3.8 trillion worth of M&A deals in 2015, despite scholars and practitioners reporting that M&A s often perform poorly. We question the widespread belief that more vigilant monitoring by boards of directors and large shareholders will raise M&A performance, overall. Put differently, does monitoring constrain CEO s' discretion to pursue bad deals, while simultaneously encouraging them to pursue good ones? We find that monitoring limits both large M&A losses and large M&A gains. Contrary to widely held beliefs, our results indicate that constraining executives' ability to pursue value‐destroying M&A deals does not simultaneously encourage or enable CEO s to pursue value‐creating deals . Copyright © 2017 John Wiley & Sons, Ltd.     

Synchronised Business Cycles in East Asia and Fluctuations in the Yen/Dollar Exchange Rate

Because many authors have proposed stimulating the ailing Japanese economy by monetary expansion and yen depreciation, we explore the repercussions of depreciating the yen against the dollar on the other East Asian economies – which largely peg to the dollar. Since 1980, economic integration among Japan's neighbours – China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore and Thailand – has intensified and (except for China and Singapore) their business cycles have been highly synchronised. These cycles have been closely linked to fluctuations in the yen/dollar exchange rate – through changes in the export competitiveness, inflows of foreign direct investment and intra‐Asian income effects. We show that a major yen devaluation would have a negative impact on incomes in other East Asian economies and that it is not a sensible policy option for Japan.     

Global food demand,productivity growth,and the scarcity of land and water resources: a spatially explicit mathematical programming approach

In the coming decades, an increasing competition for global land and water resources can be expected, due to rising demand for food and bio‐energy production, biodiversity conservation, and changing production conditions due to climate change. The potential of technological change in agriculture to adapt to these trends is subject to considerable uncertainty. In order to simulate these combined effects in a spatially explicit way, we present a model of agricultural production and its impact on the environment (MAgPIE). MAgPIE is a mathematical programming model covering the most important agricultural crop and livestock production types in 10 economic regions worldwide at a spatial resolution of three by three degrees, i.e., approximately 300 by 300 km at the equator. It takes regional economic conditions as well as spatially explicit data on potential crop yields and land and water constraints into account and derives specific land‐use patterns for each grid cell. Shadow prices for binding constraints can be used to valuate resources for which in many places no markets exist, especially irrigation water. In this article, we describe the model structure and validation. We apply the model to possible future scenarios up to 2055 and derive required rates of technological change (i.e., yield increase) in agricultural production in order to meet future food demand.