Capital controls and covered interest parity in the EU: Evidence from a panel-data unit root test

Capital Controls and Covered Interest Parity in the EU: Evidence from a Panel-Data Unit Root Test. - This paper examines whether the abolition of the remaining capital controls in the EU during 1990 has facilitated the achievement of onshore covered interest parity with respect to Germany. We test for unit roots in covered interest differentials. However, we employ the new methodology of pooling our data and performing a unit root test based on a panel data set. Our results suggest that the period characterized by the absence of capital controls has not facilitated the achievement of covered interest parity. Indeed, evidence in favour of covered interest parity is strongest for the period preceding 1990.     

The Inflationary Effects of Effective Exchange Rate Depreciation in Selected African Countries

This paper investigates the long-run relationship between thenominal effective exchange rate and domestic inflation in selectedAfrican countries. Given that the study period is 1979–97,data availability is very limited. A new panel data cointegratingtechnique proposed by Pedroni is employed which lessens thelikelihood of accepting non-stationarity on account of limitedtest power. We find that effective exchange rate depreciationis inflationary but this is unlikely to outweigh the gains fromincreased price competitiveness. The results also point towardslimited effectiveness in monetary policy controlling inflation.Finally, the Pedroni methodology is expanded through the estimationof panel data error correction models that indicate a fairlysluggish adjustment towards long-run equilibrium.     

Consumer consumption intentions of smaller packaged snack variants

Smaller snack package variants are ubiquitous in the food marketplace. Although it is assumed that consumers intend to consume less because snacks are placed into smaller packages, consumer intentions are never measured. This research examines dietary‐restrained consumers' consumption intentions of smaller snack package variants found in the marketplace described by snack type (i.e. less healthy, more healthy – as per Guiding Stars® food labelling system) and front‐of‐package calorie labelling (99 calories, 100 calories). We conducted an online experiment wherein 203 participants were exposed to the aforementioned snack package variants and their consumption intentions were subsequently measured. A regression analysis revealed that consumers who are highly dietary restrained intend to consume more when (a) the snack is relatively healthier and (b) it includes 99‐calorie front‐of‐package labelling. We discuss the idea that dietary‐restrained consumers are not likely to view smaller packaged snacks as portion control devices, but rather, as a means to eat more of a healthier food.     

Are EU budget deficits stationary?

In this paper, we test for the stationarity of European Union budget deficits over the period 1971–2006, using a panel of thirteen member countries. Our testing strategy addresses two key concerns with regard to unit root panel data testing, namely (1) the presence of cross-sectional dependence among the countries in the panel and (2) the identification of potential structural breaks that might have occurred at different points in time. To address these concerns, we employ an AR-based bootstrap approach that allows us to test the null hypothesis of joint stationarity with endogenously determined structural breaks. In contrast to the existing literature, we find that the EU countries considered are characterised by fiscal stationarity over the full sample period irrespective of us allowing for structural breaks. This conclusion also holds when analysing sub-periods based on before and after the Maastricht treaty.