Effects of the euro on trade, capital markets and the international monetary system

The implications of the introduction of the euro undoubtedly reach far beyond Europe. How will the rest of the world be affected? What role will the euro play as an international trading, investment and reserve currency? Will it be able to function as a stabilising element in the international monetary system?     

Dynamic Hedging Effectiveness in South Korean Index Futures and the Impact of the Asian Financial Crisis

This paper focuses on the impact of the 1997 Asian financial market crisis upon hedging effectiveness within the KOSPI 200 stock index and index futures markets. The paper utilizes the inter-temporal relationship between the two markets to examine the characteristics of several minimum variance hedge ratios. It also examines the performances of alternative hedging strategies for dynamic portfolio management in the presence of cointegrated time-varying risks. The results show a decline in the persistence of conditional volatility within market prices after the crisis. This decline leads to the relative performance of utilizing constant hedge ratios to increase, though not significantly so to guarantee a superior performance over more sophisticated time-varying hedge ratio strategies.     

Recreational demand for farm commonage in Ireland: A contingent valuation assessment

This paper measures willingness to pay (WTP) for public access and trail improvements on commonage farmland for recreational walking in upland and lowland areas of Connemara region in the West of Ireland using the contingent valuation method (CVM). Common to both upland and lowland commonage sites was the much higher ranking for infrastructural features by those WTP for scenario implementation compared to those preferring the status quo. Results for those expressing a positive WTP reveal a median willingness to pay (MWTP) for formal access with improved trail infrastructure of €12.22 for the lowlands compared with €9.08 for the uplands.     

The new ECB voting system: Some room for improvement

In order to overcome the “numbers problem”, the ECB recently proposed a weighted rotation system that limits the number of votes to at most 21. Many academics heavily criticise the proposal. Besides very fundamental criticism the composite indicator that allocates national central banks into the voting groups has especially been called into question. Its implementation would cause some conflicts concerning procedure and in connection with the discretionary elements of the ECB proposal.     

EU Constitutional Governance: Failure as Opportunity!?

The French and Dutch rejection of the proposed EU Constitution in May 2005 threw the European Union into what many observers regard as its deepest crisis to date. This crisis can also be seen as a unique opportunity for political, economic and institutional renewal, however. The following article outlines the problems presently facing Europe and discusses what changes would have to be made in the EU system of governance in order to overcome them.      

European water infrastructures: Regulatory flux void of reference?

This article outlines the structure of, and the challenges facing, the water industries in several European countries and describes their respective experiences with technocratic infrastructure management, delegated supervision of private concessions, and price-cap regulation. It then addresses common concerns related to operating efficiency and pricing to point to the dearth of comparable data, which limits meaningful benchmarking of productivity and infrastructure conditions, thwarts regulatory and managerial supervision and hampers the identification of some global norms. Attaining that reference calls for an independent, central body able to shed light on national performance and stakeholder interests.     

Are heterogeneous FOMC forecasts consistent with the Fed’s monetary policy?

Yes, they are! We find that although there is a surprisingly high dispersion of individual forecasts and some dissent on the Federal Funds target, the FOMC’s individual behavior is well described by a Taylor-type rule.     

Does market power discipline CEO power? An agency perspective

We examine how product market competition (PMC) shapes chief executive officer's (CEO) power. Using various measures to capture both PMC and CEO power, our analyses, which include a quasi‐natural experiment, find evidence that CEOs have less power when the product market is more competitive. Furthermore, the impact of PMC on CEO power is more pronounced for firms with entrenched management, lower CEO ownership, lower analyst coverage, and for firms experiencing good ‘luck’ (windfall performance). Our results suggest that market power can act as a substitute for corporate governance in disciplining CEO power, particularly when prone to agency problems.     

Bank monitoring: Evidence from syndicated loans

We directly measure banks’ monitoring of syndicated loans. Banks typically demand borrower information on at least a monthly basis. About 20% of loans involve active monitoring (i.e., site visits or third-party appraisals). Monitoring increases with the lead bank’s incentives and the value of information and is negatively associated with loan spreads and maturity. The monitoring captured by our measures can either complement or substitute for covenant-based monitoring, depending on whether the monitoring informs covenant compliance. Banks increase monitoring following deteriorations in borrower financial condition and credit line drawdowns. Finally, monitoring is positively related to future covenant violations and loan renegotiations.