TESTING FOR PURCHASING POWER PARITY AND UNCOVERED INTEREST PARITY IN THE PRESENCE OF MONETARY AND EXCHANGE RATE REGIME SHIFTS

Testing for purchasing power parity (PPP) and uncovered interest parity (UIP) has been the focus of many empirically oriented studies. While these simple economic theories of exchange rate and interest rate determination are theoretically attractive, the empirical support for these equilibrium conditions is at best mixed. Many potential reasons have been cited in the literature for the failure of such studies, ranging from market imperfections to inappropriate modelling strategies. The current state‐of‐the‐art procedure involves testing for two cointegrating vectors in a multivariate error correction model which may be economically identified as the PPP and UIP relations. However, such a procedure does not account for policy regime shifts which distort the underlying PPP and UIP relations. In this paper, a Markov‐switching vector error correction model (VECM) is considered for time series data in which monetary and exchange rate regime shifts are known to be present. Weak evidence in favour of PPP and UIP is established in a standard linear VECM, although the residuals of this model indicate that it is inappropriate in terms of functional form. The Markov‐switching VECM, however, provides convincing evidence in favour of both the PPP and UIP relations and a marked improvement in the residual distributions.     

Mathematical Needs and Economic Interpretations

This paper discusses why the disconnection between formal structuresand theoretical content in economic model building can leadto undesirable consequences. By contrast, linking formal andverbal contents by means of coherent and relevant interpretationsis worth the effort: it is a relatively simple way of helpingto improve mathematical economic theorization. By way of illustration,the interpretation that Arrow and Debreu put on the inclusionof free goods in their proof of existence of general equilibriumis also discussed.     

Employee attitudes,customer satisfaction,and sales performance: assessing the linkages in US grocery stores

Using store‐level panel data for a major supermarket company, we investigate the linkages between employee attitudes, customer satisfaction, and sales performance, while controlling for observed and unobserved differences across stores. We find that employee attitudes positively affect customer satisfaction with service but do not affect customer satisfaction with quality or value. Additionally, we find that customer satisfaction with service positively affects sales performance. Our results suggest that employee attitudes affect sales performance through their impact on customer service. Copyright © 2008 John Wiley & Sons, Ltd.     

Research and development in pharmaceuticals: Mexico

The article analyses the activities of the pharmaceutical industry in Mexico. From information available, there appear to be close links between the imports of foreign technology, the restrictive uses of industrial property and the weakness of local R and D. The spending on local R and D by US-owned drug companies was negligible compared to their expenditure on technology imports and advertising. It is suggested that the prerequisite for a strong indigenous pharmaceutical industry is the development of local technological capability. The article concludes by putting forward policy-oriented proposals aimed at creating local R and D capability.     

Making urban road pricing acceptable and effective: searching for quality and equity in urban mobility

Urban Road Pricing has been proposed many times as a powerful instrument to fight congestion in urban traffic, but has systematically faced a hostile political envirionment, due to lack of confidence on its promised (traffic) results and fear of its political consequences. Lack of action in this front is contributing to stable or even growing congestion problems in most large cities.This paper tries to address the problem with a fresh look at the objectives of road pricing and at the reasons for that political hostility. For managing and developing the urban mobility system, efficiency and equity are normally taken as the basic economic objectives. Sustainability objectives may be integrated in the efficiency objective if we are able to represent adequately the costs of the resources consumed in the process. Political hostility is normally based on having to pay for what was freely available, and on the risk of exclusion for those with little revenue available for the extra cost of driving into the city.Pursuit of efficency leads to suggestion of marginal social cost pricing but this is hard to explain to the public and application of this principle is fraught with pitfalls since some components of that cost get smaller as traffic grows (noise related costs for example). Pricing is still a good option but the objective has to be something easier to understand and to serve as a target for mobility managers. That “new” objective is quality of the mobility system, with a meaning similar to that of “level of service” in traffic engineering, and prices should be managed to across space, time and transport modes in such a way that provision of service is made with good quality in all components.Pursuit of equity leads to some form of rationing, which has often been associated with high transaction costs and abuse by the administrators. But the use of electronic road pricing should allow easy ways to address the rationing process without such high costs. The basic proposition is that all local taxpayers receive as a direct restitution of their tax contribution a certain amount of “mobility rights”, which can be used both for private car driving in the tolled areas and for riding public transport.These principles are easily applicable with a variety of technical solutions for road pricing, from the simplest cordon pricing to the more sophisticated “pay-as-you-go” schemes. The paper addresses this question of implementation and argues for increasingly sophisticated schemes, as people get accustomed to the principles and finer targeting of demand segments may be needed.     

Consumer behaviour in tourism: Concepts,influences and opportunities

Although consumer behaviour (CB) is one of the most researched areas in the field of tourism, few extensive reviews of the body of knowledge in this area exist. This review article examines what we argue are the key concepts, external influences and opportune research contexts in contemporary tourism CB research. Using a narrative review, we examine the CB literature published in three major tourism journals from 2000 to 2012. Of 519 articles identified and reviewed, 191 are included in this article. We examine the development of and scope for future research on nine key concepts, including decision-making, values, motivations, self-concept and personality, expectations, attitudes, perceptions, satisfaction, trust and loyalty. We then examine three important external influences on tourism behaviour, technology, Generation Y and the rise in concern over ethical consumption. Finally, we identify and discuss five research contexts that represent major areas for future scholarship: group and joint decision-making, under-researched segments, cross-cultural issues in emerging markets, emotions and consumer misbehaviour. Our examination of key research gaps is concluded by arguing that the hedonic and affective aspects of CB research in tourism must be brought to bear on the wider CB and marketing literature.     

Job satisfaction and disability: lower expectations about jobs or a matter of health?

This article focuses on the analysis of the reported differentials of job satisfaction for disabled and non-disabled individuals. Using the Spanish data of the European Community Household Panel during the period 1995–2001, we estimate a job satisfaction equation for each group and evaluate job satisfaction differentials through the Oaxaca-Blinder methodology. The results show that disabled individuals are more likely to be more satisfied in their jobs than non-disabled ones, but only after controlling for other variables. Oaxaca-Blinder decomposition shows the greater importance of the returns in job satisfaction for disabled people, which is supported by explanations based on the lower expectations about jobs of disadvantaged groups.