Economic relations between the EU and East Asia: Past, present and future

Present economic linkages between the European Union and East Asia are relatively underdeveloped despite the fact that a number of EU member states have deep historical associations within the region. It is imperative that EU business engages itself more intensively in East Asia if Europe is not to become marginalised in an emergent “Pacific century”. *** DIRECT SUPPORT *** A02GP109 00002     

The Proactive Corporation: Its Nature and Causes

We argue that the stakeholder perspective on corporate social responsibility is in the process of being enlarged. Due to the process of institutional isomorphism, corporations are increasingly adopting organizational features designed to promote proactivity over mere reactivity in their stakeholder relationships. We identify two sources of pressure promoting the emergence of the proactive corporation -- stakeholder activism and the recognition of the social embeddedness of the economy. The final section describes four organizational design dimensions being installed by the more proactive corporations today -- cooperation, participation, negotiation, and direct anticipation.     

Using an approximate kiefer-weiss solution for testing insect population densities

Summary A sequential testing procedure called 2-SPRT for the meanμ of the negative binomial distribution with known exponentk is presented. For any fixedμ ₀(μ ₁<μ ₀<μ ₂), the 2-SPRT provides an asymptotic solution to the modified Kiefer-Weiss problem. Determination ofμ ₀ such that the test provides an approximate solution to the Kiefer-Weiss problem is described. The behavior of the 2-SPRT and the Sequential Probability Ratio Test is investigated using Monte Carlo methods. The error probabilities and the average sample numbers are compared. All the computations were carried out on the Alabama Supercomputer.     

On invariant parametric covariance families

Summary In this note we characterize all linear transformations of random vectors which are invariant for a given parametric covariance family. Two one-dimensional covariance families are discussed in detail.     

The effects of mergers on price and output: Two case studies from the airline industry

The literature on industrial organization contains very little direct evidence on the effects of actual mergers. This study estimates the effects of two recent airline mergers approved by the Department of Transportation over the objection of the Department of Justice. The merger of TWA and Ozark appears to have caused a slight increase in fares and a far greater reduction in service on city pairs out of St Louis. The merger of Northwest and Republic appears to have caused a significant increase in fares and a significant reduction in overall service on city pairs out of Minneapolis-St Paul.     

Exchange Rate Volatility, Nominal Rigidities, and Persistent Deviations from PPP

It is shown how nominal exchange rate volatility can cause persistent deviations in the real exchange rate. The key to nominal rigidities is a capital market imperfection implying that agents cannot hedge perfectly against consumption risks. As a consequence, nominal changes have real effects by both affecting the ex post real purchasing power of savings and by affecting the ex ante incentives in savings and labor supply. The consequences of exogenous changes in the nominal exchange rate are considered in an OLG version of a two sector small open economy with competitive product and labor markets.J. Japan. Int. Econ.,December 1997,11(4), pp. 584–609. Department of Economics, University of Aarhus, 8000 Aarhus, Denmark.     

Financing budget deficits in the Netherlands

Summary In The Netherlands public debt management is in the hands of the budgetary policy-maker, whose recourse to the capital market can exceed or fall short of the total borrowing requirement in order to absorb or create liquidity. The conduct of that policy since the early 1960's is analyzed in this paper, emphasizing the importance of medium-term control over the public finances as a prerequisite for the ability of debt management to make a flexible contribution to monetary policy. During the 1960's this condition was satisfied and debt management followed a stable countercyclical pattern which, however, was abandoned after the early 1970's as the public finances swung into substantial disequilibrium.The author thanks J. Boughton, L. Bovenberg, D. Hendry, P. Masson, J. Muellbauer, and the referees for comments on earlier versions. However, the views expressed are his alone and do not necessarily represent those of the International Monetary Fund.     

Exchange rate volatility and its impact on the transaction costs of covered interest rate parity

This paper provides empirical evidence on the linkage between foreign exchange market volatility and daily 90-day covered interest rate parity (CIP) conditions of the three major exchange rates against the US dollar (US$). Markov regime shifting models were utilized to generate time series of volatility regime probabilities and these were used to explain the first and second moments of the daily deviations from and the transaction cost bands around the covered parity conditions. We find a significant positive relationship between the deviations and the regime probabilities, indicating an increasing probability of higher volatility state being associated with rising deviations (both first and second moments) from the parity condition. Similar positive relationship is found for the transaction bands. Rising (falling) probabilities of high (low) volatility regimes increased the first and second moments of the bands. Furthermore, we find a higher volatility state combined with a US$ depreciation is associated with significantly higher volatility in the daily deviations than an appreciation. Also, US$ depreciation is associated with widening transaction bands. This suggests that the level of market uncertainty was higher when the US$ was depreciating.