Speculation,interest arbitrage,and the forward foreign exchange rate of the Canadian dollar: Updated evidence

This note presents updated estimates of the reduced forms of the “Modern Theory of the Forward Foreign Exchange Rate” and of the “Interest Parity Theory” for Canada for the period 1962–1977. The evidence does not support the Modern Theory's hypothesis of a significant effect of speculation on the forward rate, and supports the hypothesis of effective interest arbitrage only for the most recent period 1976–1977.     

A note on control costs and logit rules for strategic games

We consider best response dynamics with endogenous noise based on a finite game in strategic form. A player can reduce the noise level by expending an extra effort and incurring some disutility or control costs. We specify control costs that result in logit adjustment rules. The stochastically stable states of the dynamic process are partial Nash configurations, that is, states where at least one player plays a best response against the others. If the game has a potential, then the stochastically stable states coincide with the Nash equilibria on which the potential is maximized. RID="*" ID="*" Instructive comments of a referee are gratefully acknowledged. Correspondence to:H. Haller     

Returns to Scale on Nonparametric Deterministic Technologies: Simplifying Goodness-of-Fit Methods Using Operations on Technologies

Thepurpose of this short article is to simplify goodness-of-fitmethods to obtain qualitative information about returns to scalefor individual observations. Traditional and new goodness-of-fitmethods developed for estimating returns to scale on nonparametricdeterministic reference technologies are reviewed. Using compositionrules for technologies with specific returns to scale assumptions,we show how these goodness-of-fit methods can be simplified inthe case of convex technologies (Data Envelopment Analysis (DEA)models).     

Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs

This article formalizesthe theoretical interconnections among four post–industrialrevolution phenomena—the industrialization and growth take-offof rich northern nations, massive global income divergence, andrapid trade expansion. In stages-of-growth model, the four phenomenaare jointly endogenous and are triggered by falling trade costs.In the first growth stage (with high trade costs) industry isdispersed internationally, and growth is low. In the second (mediumtrade costs), the North industrializes rapidly, growth take-off,and the South diverges. In the third (low trade costs), highgrowth and global divergence become self-sustaining. In the fourthstage, when the cases of ``trading' ideas decreases, the Southquickly industrializes and converges.     

Exploring the Curvature of the Relationship Between HRM–CSR and Corporate Financial Performance

Journal of Business Ethics - This article contributes to the general literature on the relationship between corporate social performance and corporate financial performance, as well as to the...     

Geo-Logics of Power: Disaster Capitalism,Himalayan Materialities,and the Geopolitical Economy of Reconstruction in Post-Earthquake Nepal

ABSTRACT

The 2015 earthquakes in Nepal killed more than 9,000 people, displaced millions of people and deeply affected the economy. The earthquakes and reconstructions processes also transformed Nepal into a complex terrain of geoeconomic accumulation and geopolitical manoeuvring, including major international capital flows, the promulgation of a new constitution, an economic blockade by India and the expansion of trade corridors with China. Building on critiques of ‘disaster capitalism’, we propose and mobilize the concept of ‘geo-logics of power’ to draw further attention to the materialities of geopolitical and geoeconomic processes shaping reconstruction in post-earthquake Nepal. Focusing on two trans-Himalayan corridors connecting Nepal and China, we argue that the Nepal experienced a particular form of disaster capitalism: one in which the geo-logics of power – including trans-Himalayan discourses, practices, and materialities – came to shape political and economic transformations of a country long portrayed as a ‘buffer’ state between Indian and China. More broadly, we suggest that geo-logics of power result from a combination of geopolitical and geoeconomic power dynamics informed by geological formations and associated socio-natural processes.     

Commons,Collective Action,and Corruption

John R. Commons tried to save capitalism by making it good. His career was characterized by a sustained attempt to reduce social inequality by promoting collective action. Thanks to his proximity to the terrain, Commons often found himself close to authentic examples of corruption. Indeed, in his published works, corruption was treated exclusively from this perspective. His analysis reveals that collective action is not only the cause, but also the consequence of corruption, and that, in addition, the struggle against corruption is dependent on collective action for its success. I argue that Commons’s position is diametrically opposed to the theses developed later by Nathaniel Leff and Samuel Huntington. For Commons, the main issue is not that there is too much control over individual actions, but that there is too little.     

Are hedge fund managers systematically misreporting? Or not?

A discontinuity, or kink, at zero in the hedge fund net return distribution has been interpreted as evidence of managers manipulating returns to avoid showing small losses. Instead, we propose alternative explanations for this phenomenon. In particular, we show that incentive fees can mechanistically create a kink in the net return distribution. This mechanism accounts for almost the entire kink observed in the large, liquid Long-Short Equity style. Furthermore, we show that asset illiquidity and the bounding of yields at zero can generate distribution discontinuities as well. Therefore, we conclude that the observed hedge fund return discontinuities are not direct proof of manipulation.     

Dual Distribution and the Penrose Effect

This paper develops an approach to analyzing an equilibrium in markets where firms can choose dual distribution to sell their products. Dual distribution involves a firm selling its product both through company-owned stores and through independently owned franchises. For a monopoly firm, the use of company-owned stores is assumed to play a number of roles. When the total number of markets is variable, an increase in company-owned stores can signal the quality of the product to potential franchisees, increasing the total number of markets served by the monopolist. Additional company-owned stores may also increase the royalty rate received by the franchisor, as well as increase demand in the local markets. There are limits, however, to the benefits of company ownership, called the “Penrose Effect.” For an equilibrium to exist, the monopoly firm must have no incentive to alter the the number of company-owned stores vis-à-vis franchised stores. The approach taken here yields a number of testable implications, which can form the basis of empirical tests of dual distribution.