Probing China’s Twenty-First-Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives

This article reviews the literature on China’s twenty-first-century Maritime Silk Road initiative (MSRI) to highlight the narratives surrounding it, its central features, its potential objectives, and the challenges affecting its implementation. It demonstrates that there are numerous political and economic narratives about the MSRI. It further indicates Beijing’s aims to use the MSRI to achieve manifold economic and political ends. Distinct from other analyses, it stresses how Beijing sees the MSRI advancing diverse objectives at the sub-national level. It also makes clear that economics and politics are intimately related regarding the MSRI within China, in the Asia-Pacific Region, and outside the region. Another contribution of this review is to underscore the multi-scalar, multi-actor, and multi-dimensional challenges Beijing’s grand scheme faces. From a policy vantage point, this review suggests that some of the alarm about, and some of the more negative interpretations of, the MSRI are, at this point, misplaced or unwarranted. As far as China is concerned, the central policy implication is that China must actively manage the project to implement it fully. In terms of theoretical contribution, this piece shows the value of using political-economic lenses to reflect about what is transpiring as well as the MSRI’s potential political and economic consequences.     

A support to consensus reaching in group decision

This paper outlines an interactive aid that facilitates consensus in cooperative decision making or policy recommendation. The approach draws on a previous result which shows that a multiple ranking can be derived from a single relational preference system. In other words, the preferences expressed individually by each member of a group may lead to either unanimous or a majority consensus, with or without concession from individual members.     

An Empirical Equilibrium Job Search Model With Search on the Job and Heterogeneous Workers and Firms

In this article we present and estimate a synthesis of previous equilibrium search models, allowing for continuous distributions of workers' opportunity costs of employment as well as firms' productivities. The model allows for on-the-job search, and we assume that job offer arrival rates for workers are independent of their labor-market state. We derive the theoretical implications of these assumptions, we provide simulations, and we develop a semiparametric estimation procedure that we apply to a dataset of individual labor-market histories.     

Demand for football and intramatch winning probability: an essay on the glorious uncertainty of sports

The aims of this study are (i) to identify the main determinants of the demand for French Premiere Division football matches using all matches played during the 1997/1998 season, (ii) to estimate a team-specific probability of success, and (iii) to propose an updating process for the intramatch winning probability. The methodology is tested empirically over an out-of-sample data set using matches of the 1998/1999 season. The results show that football appears to be an inferior product affected by both socio-economic and football variables, and that the main football variables have only a tenuous explanatory power concerning the final outcome of a given match.     

Seasoned equity offerings by small and medium-sized enterprises

Most analyses of small firms’ decision to seek outside equity financing and the conditions thereof concern private firms. Knowledge of the risk and return of entrepreneurial ventures for outside investors is consequently limited. This paper attempts to fill this gap by examining the Canadian context, where small and medium-sized enterprises (SMEs) are allowed to list on a stock market. We analyze seasoned equity offerings launched by SMEs over the last decade. These public issuers can be considered low quality firms with poor operating performance. Managers issue equity before a large decrease in operating and stock market performance. Individual investors do not price the stocks correctly around the issue and incur significant negative returns in the years following the issue. This is particularly true for constrained issuers. We confirm that entrepreneurial outside equity attracts lemons and that individual investors cannot invest wisely in emerging ventures. Probably as a consequence of individual investors’ lack of skill and rationality, the cost of outside equity financing of Canadian public SMEs is abnormally low.     

Consistent noisy independent component analysis

We study linear factor models under the assumptions that factors are mutually independent and independent of errors, and errors can be correlated to some extent. Under the factor non-Gaussianity, second-to-fourth-order moments are shown to yield full identification of the matrix of factor loadings. We develop a simple algorithm to estimate the matrix of factor loadings from these moments. We run Monte Carlo simulations and apply our methodology to data on cognitive test scores, and financial data on stock returns.     

The Geopolitics of China’s Maritime Silk Road Initiative

China’s “One Belt, One Road” project is comprised of two components: the Maritime Silk Road Initiative (MSRI) and the Silk Road Economic Belt (SREB)—that were announced separately in 2013. Each component has the potential to transform the global geopolitical landscape through the construction of interrelated infrastructure projects including ports, highways, railways and pipelines. Such hard infrastructure requires the complementary construction of soft infrastructure, such as free trade and investment agreements, and other accords. We introduce a special section focusing specifically on the geopolitics of the MSRI that stems from a workshop hosted in November 2015 in Shanghai. The origins, scope and content of the MSRI are described, along with a summary of the current literature discussing the project, and dominant geopolitical representations. The MSRI is a geopolitical project that involves a number of actors (governments, private companies and Chinese state-owned enterprises) at a number of geographic scales (cities, provinces, states and continents). Arrghi’s twin logics of territorial and economic power help frame and connect the papers of the special section to illustrate the complexity and dynamism of the geopolitics of the MSRI. The articles provide insights into the geopolitics of a large connectivity project.     

The reaction of Canadian securities to revisions of earnings forecasts*

Abstract. This first study of Canadian securities' earnings forecasts published by Institutional Brokers Estimate System (IBES) focuses on changes in the mean earnings per share forecasts of 159 to 188 companies from 1985 to 1987. Cumulative average residuals are used to detect the announcement effects of large earnings forecast revisions. The main results of this study are the following. First, an investor with access to changes of earnings per share forecasts at the beginning of the month of publication could realize abnormal excess returns. Second, trading strategies based on earnings forecasts revisions can also yield abnormal returns, but the magnitude of the revision, the sector of the company, and the month in which the revision is realized must be considered. Third, when financial analysts' forecasts are published, the informational content of large revisions in forecasts has already been discounted by the market. This result is similar to findings of U.S.– and U.K.–based studies. Finally, large forecasts revisions coincide with a period of abnormal returns. However, the information content of the announcement of forecasts changes cannot be established. The gains are larger if the trade is undertaken before the diffusion of the forecast revision to the IBES subscribers. These results do not vary with the model chosen to predict company returns. This does not necessarily indicate the existence of a market inefficiency because information acquisition and analysis costs, as well as transaction costs, may diminish considerably these abnormal trading gains.     

Some evidence on the gains from international diversification for Canadian investors

It is easily demonstrated ex post that international portfolio diversification results in increased returns and reduced risk. However, to determine the value of international diversification as an effective portfolio management strategy, it is necessary to form portfolios based on information available at the time of their composition, and then evaluate the performance of the portfolio in the following months. This is the main focus of our study, which adds several innovations to past research. First, we use daily rates of return on 23 national indices to evaluate the value of international diversification for a Canadian investor. Second, we evaluate the predictive value of the historical variance-covariance matrix vis-à-vis alternative models. Third, we use the Bayes-Stein correction to reduce errors in the historical return vector. Finally, we use a quadratic programming model in order to introduce the effects of constraints on the optimisation process. The results, obtained over the 1986–1989 period, are not in favour of international diversification. Returns on diversified portfolios were often lower than returns on the low-risk Canada market during the low-performance portfolio test periods. In other cases, higher returns on diversified portfolios could not be justified by their higher volatility. It is possible that these results may be partially due to the effects of the market crash in October 1987. Nevertheless, our study brings up many directions for future research. Is international diversification in fact profitable? Is portfolio optimisation appropriate in an international context? Finally, what is the best way to estimate the expected return vector in various markets?