Testing for non-linear dependence in inter-war exchange rates

Testing for Non-Linear Dependence in Inter-War Exchange Rates. — This paper tests weekly inter-war floating exchange rate data for the pound-dollar, pound-franc and pound-reichsmark for non-linearity. Initial tests reveal strong evidence of generic non-linearity in these series and indicate neglected non-linear structure in the residuals of linear representations. Attempts to model this structure using GARCH residual processes have only been partially successful. Thus, two parametric models of such non-linearity were estimated. Comparing the forecasts from these models shows the mean square forecast errors of linear-GARCH and bilinear models to be lower than those from linear forecasts for all series, and that SETAR model forecasts outperform all other models for the pound-dollar.     

Optimal growth with many consumers

A method is described for constructing all Pareto-optimal allocations for a dynamic economy with many heterogeneous consumers, under certainty, in which both the technology and consumer preferences are recursive but preferences need not be additively separable over time. Optimal (perfect foresight competitive equilibrium) allocations are obtained through the study of a dynamic program. For an economy with one consumption good, sufficient conditions are given for the existence of a unique interior stationary distribution of consumption and wealth. For a two-person exchange economy, sufficient conditions are given for the global asymptotic stability of the unique interior stationary point.     

A case against the consolidation of foreign subsidiaries’ and a United States parent’s financial statements

Generally accepted accounting principles in the United States usually require that companies which own more than 50% of the voting stock of foreign corporations prepare consolidated financial statements. The foreign financial statements must be recast into US GAAP and the foreign currency financial statements must be translated into US dollars. Alternative methods of translating foreign currency have major impacts on consolidated financial statements and on the behavior of management. Further, foreign subsidiary financial statements which are recast into US GAAP are less useful than the originals, and US users cannot analyze them without reference to the foreign environment. The interests of financial statement users are better served by alternative presentations of foreign currency denominated accounts rather than by consolidation.     

An analysis of some aspects of regulatory risk and the required rate of return for public utilities

This paper uses a modification of the continuous time asset pricing model of Cox, Ingersoll, and Ross to analyze the effect of regulatory risk on the cost of capital. Analysis shows that random errors in setting the allowed rate of return can either increase or decrease the cost of capital depending on other regulatory parameters. However, the analysis suggests that regulatory risk is not material.     

Technology Strategies For Economic Development In A Fast Changing Global Economy

East Asian development experience provides the basis for understanding which are the essential elements of effective technology strategy and policy, those that are required for the efficacious development of countries that have not yet embarked on a path of sustained modernization. Globalization has had a profound impact on development, enabling countries that could exploit its propelling forces to pursue a potent strategy of export-led economic and technological development. The policies needed to sustain this strategy are those required to foster institutions that permit effective commerce among economic agents, those necessary to generate the rapid accumulation of human and physical capital, and those essential to ensure that resources are allocated in accord with the economy's dynamic comparative advantage. Of crucial importance among the latter are effectively implemented policies of selective intervention designed to develop infant industries and to foster their fast-paced achievement of international competitiveness through rapid attainment of the requisite technological capabilities.     

Einzelbesprechungen

Ohne ZusammenfassungÜbersetzt von Gerhard Tintner, WienÜbersetzt von Ragnar Nurkse, z. Zt. Wienaus dem Italienischen übersetzt von Dr. Hans Fried, WienÜbersetzt von Paul Brüll, Wien.Aus dem Italienischen übersetzt von Dr. Hans Fried.