Pricing of Forward and Futures Contracts

There has long been substantial interest in understanding the relative pricing of forward and futures contracts. This has led to the development of two standard theories of forward and futures pricing, namely, the Cost-of-Carry and the Risk Premium (or Unbiased Expectations) hypotheses. These studies have modelled the relationship between spot and forward/futures prices either through a no-arbitrage condition or a general equilibrium setting. Relatively few studies in this area have considered the impact of stochastic trends in the data. With the emergence of non-stationarity and cointegration in recent years, more sophisticated models of futures/forward prices have been specified. This paper surveys the significant contributions made to the literature on the pricing of forward/futures contracts, and examines recent empirical studies pertaining to the estimation and testing of univariate and systems models of futures pricing.     

Hedging and nonlinear risk exposure

This paper documents some empirical evidence of nonlinear spot-futuresexchange rates relationships and develops an expected utilitymodel of an exporting firm to examine the associated economicimplications. The model shows that the firm should export more(less) and adopt an over (under) hedge in an unbiased currencyfutures market if the spot-futures exchange rates relationshipsis convex (concave) rather than linear. When fairly priced currencyoptions on futures are available, the firm should use them inconjunction with the currency futures so as to achieve betterhedging against its nonlinear exchange rate risk exposure. Thisprovides a rationale for the hedging role of options when theunderlying uncertainty is nonlinear in nature.     

Endogenous Sequencing in Strategic Trade Policy Games Under Uncertainty

This paper examines a strategic trade policy game with endogenous timing. A trade-off between commitment and flexibility is identified. The equilibrium timing of trade policy decisions is shown to highly depend on the degree of demand uncertainty. When demand uncertainty is low, countervailing duties will never be used because the home government always sets its import tariff before the foreign government sets its export subsidy. When demand uncertainty reaches a threshold level, the home government starts to find it optimal to move second with positive probability. As a result, we provide an economic rationale for the prevailing use of countervailing duties in practice.     

Deregulation,tax policy,and certainty: foundations of the U.S. recovery

Business Economics - This paper focuses on the impact that the change in direction of economic policy ushered in by the Trump administration has had on the performance of the U.S. economy. Since...     

Time Orientation and Attitudes toward Advertising in a High-Context Culture: An Empirical Study of Macau

Each culture has its own dominant construct of time that influences the value placed on the use of time by individuals. This empirical study examines how time orientations influence attitudes toward advertising in a high-context culture of an Asian economy. Data was collected through surveys in Macau. Findings show that Macanese are more future orientated but less enthusiastic towards advertising; they switch to another channel and engage in other activities during commercial breaks. Results also show that past orientation has the strongest impact on advertising avoidance. The authors offer managerial implications for the development of effective advertising programs in this emerging market.     

Temporal and Regional Differences In Image of a Tourist Destination: Implications for Promoters of Tourism

Based on a survey of 218 respondents from four different regional groupings, the study focuses on examining the temporal and spatial differences of the image tourists had of a place of visit. The results show that there are significant differences among some items of the image scale both in the temporal and spatial aspects. The implications and relevance of such Q study

are also discussed.     

Does Service Employee Arrogance Discourage Sales of Luxury Brands in Emerging Economies?

Upscalex stores selling luxury brands from Western, developed countries are having a strong presence in many emerging markets. However, it is not uncommon to find that the service employees of these stores are arrogant and inhospitable. This article uses a dual attitudes perspective to show how service employee arrogance affects customers’ attitudes and purchase intentions toward luxury brands in emerging markets. Experimental findings show that arrogance produces dual attitudes, with positive implicit attitudes exerting a stronger influence than unfavorable explicit attitudes on purchase intentions. In addition, for customers with high self‐esteem, service employee arrogance has a negative effect on their purchase intentions. In line with the expectation disconfirmation model, when service employees change their arrogant attitudes and subsequently show hospitality, customers also change their expectations. When the improved service exceeds customers’ expectations, their explicit attitudes turn positive and exert a stronger influence on purchase intentions than when service employees are consistently hospitable.     

Has China Crowded out Foreign Direct Investment from Its Developing East Asian Neighbors？

This paper applies a gravity model to investigate the determinants of foreign direct investment (FDI) in East Asia. Economic fundamentals, such as market size, per capita income and country risk indicators, economic and cultural ties, exchange rate volatilities and information asymmetry are found to be important determinants for FDI. Globally, the inward FDI among high-income OECD economies declined significantly on average over the period of 1990-2003, whereas the inward FDI of the high-income OECD economies in emerging market economies gained substantially. In the East Asian region, the ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand) received above-average inward FDI from the high-income OECD economies after controlling for their economic fundamentals. By contrast, China's FDI from the high-income OECD economies is below average relative to its economic fundamentals. Therefore, it is difficult to establish that China has crowded out FDI from its developing ASEAN neighbors.