The Nature of Technological Knowledge: Philosophical Reflections and Educational Consequences

Technological knowledge has a normative component that scientific knowledge does not have. When we have knowledge of a computer, that often comprises normative judgements: it functions well or it does not function well. In knowledge of technical norms, rules and standards as another type of technological knowledge we also find a normative component. This characteristic has consequences for our assessment of knowledge. For scientific knowledge truth is the ultimate condition. For knowledge of norms, rules and standards as a type of technological knowledge this the condition is problematic. They refer to things that do not exist yet, but are still to be designed or made. Nor truth, but effectiveness is the condition here. For technology education the normative component is important. Pupils must learn to make judgements about effectiveness, as this is a prominent characteristic of technological knowledge, that makes it distinct from scientific knowledge. Pupils must also learn to deal with ethical and other values when doing technological project work.     

Price and Volume Effects Associated with 2003’s Major Reorganization of German Stock Indices

This paper investigates whether the announcement and/or the implementation of the major changes in March 2003 to the German stock index landscape led to significant price and volume effects. We examine five stock subgroups that were either removed from their former indices or that were added to existing or newly constructed indices. Around the announcement date, stocks in these groups are subject to (cumulative) positive average abnormal marketadjusted returns, whereas the average trading volume tends to decrease. Around the actual change date, (cumulative) abnormal returns are mainly positive, while findings on abnormal transaction volumes are fairly heterogeneous. Our empirical results are not supported by any of the prevailing theoretical explanations of market reactions to index changes, but, as an important result, all findings depend crucially on the chosen benchmark model.The authors are grateful to two anonymous referees for insightful comments and suggestions and for helpful discussions with Stephan Schmidt-Tank. They would like to thank Fabian Zettler for his assistance in collecting the data.     

Modelling Entrepreneurship: Unifying The Equilibrium and Entry/Exit Approach

Two approaches can be distinguished with respect to modelling entrepreneurship: (i) the approach focusing on the net development of the number of entrepreneurs in an equilibrium framework and (ii) the approach focusing on the entries and exits of entrepreneurs. In this paper we unify these approaches to arrive at a model explaining the equilibrium and actual number of entrepreneurs and the entry and exit rate of entrepreneurs simultaneously and consistently. We apply our unified approach to the Netherlands using self-employment data for the 1960–1999 period. We find error-correction of about 20% per year and a very different situation in terms of disequilibrium before and after the early 1980s. Periods of high unemployment appear to be characterized by both high entry and high exit rates.     

Do Currency Barriers Solve the Border Effect Puzzle? Evidence from the CFA Franc Zone

In this paper, we use a gravity model to investigate the extent to which currency barriers explain the border effect puzzle, i.e. the impact of national borders on international trade. We focus on the two monetary unions of the CFA Franc Zone in West and Central Africa. We find that these countries display large border effects, and that currency barriers explain between 17 per cent and 28 per cent of the overall border effect. JEL no. F11, F15, F33     

Exchange Rate Disconnect in a Standard Open-Economy Macro Model

This paper demonstrates that the well-documented exchange rate disconnect can be explained within traditional exchange rate models. It is shown that even if the underlying fundamentals are invariant across exchange rate regimes, equilibrium real exchange rates are more volatile under flexible nominal exchange rates than under fixed rates. In particular, fixed rates reduce the requisite adjustments of the real exchange rate in response to both nominal and real shocks relative to a floating-rate scenario.     

Central Bank Intervention and Heterogeneous Exchange Rate Expectations: Evidence from the Daily DEM/US-Dollar Exchange Rate

In this paper we propose a generalisation of the noise trader transmission mechanism to examine the impact of central bank intervention on exchange rates. Within a heterogeneous expectation exchange rate model intervention operations are supposed to provide support for chartist or fundamentalist forecasts, which forces portfolio managers to adjust their foreign currency positions. The empirical examination of the hypothesis is done by applying a Markov regime-switching approach to daily DEM/US-dollar exchange rates and intervention data of the Deutsche Bundesbank and the Federal Reserve from 1979 to 1992. It is shown that chartists profits rose whenever these central banks intervened on the foreign exchange market. This is not true for those who follow a fundamentalist approach.JEL Classification Numbers: F31, C32, E58, G15     

Examining models of collusion: The market for lysine

We compare the experience with collusion in the market for lysine with the predictions of theory. The lysine market provides an ideal setting following the confessions of cartel participants in antitrust investigations. Data availability allows demand and cost functions to be estimated and observed mark-ups compared with predictions. We find that several integral aspects of collusion in the lysine market are not adequately addressed in the literature: the dynamics associated with entry and investment; persistent asymmetries between firms; the cartel's bargaining problem; and the existence of cheating in equilibrium. These issues are likely to have much wider applicability beyond the lysine market.     

Is the US fiscal deficit sustainable?: A fractionally integrated approach

In this paper, we examine if sustainability of the US fiscal deficit holds by means of studying the univariate properties of the difference between expenditures and public revenues using a methodology based on fractional processes. Furthermore, we incorporate the possibility of structural breaks in the deficit process. The results show that when allowing for a break in the mid-1970s, the public deficit in the US is an I(d) process with the fractional integration parameter d being slightly less than unity, implying that the fiscal deficit is mean reverting, and thus, sustainable, though the adjustment process towards equilibrium will take a very long time.