Seasonal fluctuations and equilibrium models of exchange rate

Most of the evidence on dynamic equilibrium exchange rate models is based on seasonally adjusted consumption data. Equilibrium models have not worked well in explaining the actual exchange rate. However, the use of seasonally adjusted data might be responsible for the spurious rejection of the model. This article presents a new equilibrium model for the exchange rates that incorporates seasonal preferences. The fit of the model to the data is evaluated for five industrialized countries using seasonally unadjusted data. Our findings indicate that a model with seasonal preferences can generate monthly time series of the exchange rate without seasonality even when the variables that theoretically determine the exchange rate show clear seasonal behaviours. Further, the model can generate theoretical exchange rates with the same order of integration than actual exchange rates, and in some cases, with the same stochastic trend.     

How Value Creation and Relationship Quality Coalignment Affects a Firm's Performance: An Empirical Analysis

This study intends to contribute to a better understanding of how value creation coaligns with relationship quality and how this coalignment affects a firm's performance. To examine this question a theoretical framework is developed following a configuration theory approach. The unit of analysis is the dyadic relationship between manufacturers and their main distributor. The empirical results reveal that not all the manufacturers have the same orientation towards their creation of value for the main distributor and that the coalignment between their creation of value for the main distributor and the dimensions of relationship quality yields stronger distributor loyalty. This was not the case, however, with manufacturer's business performance for which no such relationship was found.     

On the Sub-optimality of Entry Fees in Auctions With Entry

We study a variation of Myerson’s (1981) model in which we allow for uncertainty about the number of bidders. In our set-up, an appropriate reserve price in a standard auction maximizes the auctioneer’s expected revenue. However, entry fees can be optimal only under some special conditions. Basically, there must be some homogeneity in bidders’ beliefs about the number of bidders and the auctioneer must know, to some extent, these beliefs.     

The investment development path of newly developed countries

According to foreign direct investment (FDI) path theory, developed countries are grouped into two phases, known as the fourth and fifth phases. Fourth‐phase countries (newly developed economies) show a technological and institutional “gap” in comparison with fifth‐phase economies, which explains their lesser capacity to generate direct investment. We found that these countries, which were less developed economies in the 1980s, had undergone a deep structural transformation. This transformation encouraged the multinationalization of firms, which is a differentiating element and one outcome of their development process. These results have clear policy implications: the governments of newly developed countries should take steps to increase the endowment of knowledge‐intensive assets. The main contribution of this paper is the theoretical reformulation of the fourth phase of the investment development path theory.     

Regional Exports and Economic Growth: The Case of Spanish Regions

Different variables have been considered growth enhancing. Traditionally, physical capital, human capital, and public capital have been considered. While the first two variables have been considered positive factors, the latter shows an ambiguous effect. The literature has also considered the role of exports in the economic growth process, introducing several arguments that test the hypothesis that exports are growth enhancing. One argument to be considered is that higher exports can increase total factor productivity due to returns to scale and that exports are an effective means to introduce advanced technology. To test this argument, an empirical analysis considered three possibilities, an export model, a demand model, and a mixed model that combined both. This empirical analysis was carried out for the various Spanish regions.     

Tourist satisfaction and the souvenir shopping of domestic tourists: extended weekends in Spain

The satisfaction dimensions of domestic tourists when buying souvenirs are studied in relation to the overall satisfaction of the same tourists, a theme that has received little attention in the prior scientific literature. The research data were gathered from interviews with domestic tourists visiting Seville over an extended weekend. The results show that souvenir shopping satisfaction consists of four factors: internal attraction, service differentiation, service provision and external attraction. The last two, moreover, influence the overall tourist satisfaction rates. A discussion of these results and their implications help contribute to a better understanding among both scholars and practitioners of tourist satisfaction.     

The Price of Political Uncertainty: Theory and Evidence from the Option Market

We empirically analyze the pricing of political uncertainty, guided by a theoretical model of government policy choice. To isolate political uncertainty, we exploit its variation around national elections and global summits. We find that political uncertainty is priced in the equity option market as predicted by theory. Options whose lives span political events tend to be more expensive. Such options provide valuable protection against the price, variance, and tail risks associated with political events. This protection is more valuable in a weaker economy and amid higher political uncertainty. The effects of political uncertainty spill over across countries.     

Samuelson and Davidson on ergodicity: A reformulation

The concept of ergodicity in economics seems to have the qualities of a shibboleth—a word or saying used by adherents of a party, sect, or belief, and usually regarded by others as empty of real meaning. It is in use by both neoclassical economics—after Samuelson (1965 Samuelson, P. A. “Proof That Properly Anticipated Prices Fluctuate Randomly.” Industrial Management Review, 1965, 6 (2), 41–49.[Web of Science ®] , [Google Scholar], p. 43), who used the term in his paper on what later became a foundation of the efficient market hypothesis—and post Keynesian economics—after Davidson, who picked up the term in order to highlight methodological differences. Considering the origin of the concept in statistical physics and its use in the topology of dynamical systems, which most economists are not conversant with, the importance ascribed to ergodicity in economic debate seems mystifying. We deconstruct the meaning of the term in the major contributions of Samuelson and Davidson. We suggest an alternative to (non)ergodicity to discuss the nature of randomness in the real world. While neoclassical theory assumes stochastic randomness, post Keynesians assume nonstochastic randomness, a term developed by the mathematician Kolmogorov (1986 Kolmogorov, A.N. “On the Logical Foundations of Probability Theory.” In K. Ito, and J.V. Prokhorov (eds.), Probability and Mathematical Statistics, Moscow, 1986, pp. 467–471. [Google Scholar], p. 467). We argue that even in an ergodic world there is a problem with the idea that stochastic randomness can be dealt with by the financial system.     

Estimating the Intertemporal Risk–Return Tradeoff Using the Implied Cost of Capital

We argue that the implied cost of capital (ICC), computed using earnings forecasts, is useful in capturing time variation in expected stock returns. First, we show theoretically that ICC is perfectly correlated with the conditional expected stock return under plausible conditions. Second, our simulations show that ICC is helpful in detecting an intertemporal risk–return relation, even when earnings forecasts are poor. Finally, in empirical analysis, we construct the time series of ICC for the G–7 countries. We find a positive relation between the conditional mean and variance of stock returns, at both the country level and the world market level.     

The moderating role of past experience in the formation of a tourist destination's image and in tourists’ behavioural intentions

The aim of this work is to understand the moderating effects of tourists’ prior experiences of a given destination on the process of image formation (in both its cognitive and affective dimensions) for that destination and on the influence that the image – together with the tourist's satisfaction – has on their loyalty-driven behaviours as expressed in the intention to recommend. To achieve this aim, a sample of 512 tourists was used and a multi-group analysis performed, distinguishing between first-time and repeat visitors. The findings reveal that experience has a moderating effect on the formation of the cognitive image and on the influence of the tourist's satisfaction on the overall image of the tourist destination. These findings have significant management implications in the context of helping to create and appropriately manage the image of a tourist destination.