ECONOMIC IMPORTANCE OF THE SUGAR INDUSTRY FOR FIJI

For more than a century, the sugar industry has been perceived as the backbone of the Fijian economy, given its contributions to gross domestic product (GDP) and employment generation. However, because of the non-renewal of land leases and the gradual withdrawal of preferential prices by the European Union, the industry is on the verge of collapse. We use the Fiji computable general equilibrium model to simulate the economy-wide impact of a 30% reduction in sugar production. Among our key results, we find that in the long run a 30% reduction in sugar production leads to a 2.1% fall in exports, and government expenditure and real consumption fall by 1.9% and 1.6%, respectively. These declines in the aggregate demand components are reflected in a fall of approximately 1.8% in Fiji's GDP. The negative repercussion of declining economic growth is reflected in a 1.5% decline in real national welfare.     

Investment barriers and international asset pricing

In this article a multicountry model of international asset pricing is developed. This model incorporates a more general representation of the degree of segmentation in the international capital market. Specifically,N types of investors andN classes of securities are postulated. In general, thenth (n=1, 2, 3, ...N) type of investor has access to all security markets up to and including thenth class. Using the standard mean-variance framework, closed form equilibrium risk return relationships are obtained for all classes of securities. It is also shown that class 1 securities are priced as if markets are integrated, classn (n=2, 3 ...N) securities commandn different risk premia. Finally, the nature of the model specification allows us to investigate the effects of partial integration on investor welfare. It is shown that, in general, all investors prefer full integration to any form of partial integration.     

The effect of time-varying covariances on asset risk premia

In this article we examine an intertemporal capital asset pricing model (CAPM) that allows for time-varying conditional covariances that are assumed to follow a multivariate integrated generalized autoregressive conditional heteroscedastic (IGARCH) process. The resulting pricing equation includes idiosyncratic risk premia in addition to the usual market beta. Empirical analysis based on ten size and ten industry portfolios reveals significant idiosyncratic premia for most portfolios. Overall, we reject the static CAPM in favor of the intertemporal CAPM.     

Offensiveness of Advertising with Violent Image Appeal: A Cross-Cultural Study

Violent images are often used in advertisements to gain attention and sell products, resulting in complaints to regulatory bodies and concern regarding the effects of these potentially offensive advertisements on society. This paper presents the results of a survey of 930 university students from six countries to determine which personal and attitudinal variables have a significant influence on their attitudes toward advertisements with violent images. The results indicate that gender, country, intensity of religious beliefs, economic inclination, and products (social/political groups) produced the strongest reaction. These factors should be considered when advertisers run local or global campaigns with violent images.     

On IT governance structures and their effectiveness in collaborative organizational structures

Organizations today engage in various forms of alliances to manage their existing business processes or to diversify into new processes to sustain their competitive positions. Many of today's alliances use the IT resources as their backbone. The results of these alliances are collaborative organizational structures with little or no ownership stakes between the parties. The emergence of Web 2.0 tools is having a profound effect on the nature and form of these alliance structures. These alliances heavily depend on and make radical use of the IT resources in a collaborative environment. This situation requires a deeper understanding of the governance of these IT resources to ensure the sustainability of the collaborative organizational structures. This study first suggests the types of IT governance structures required for collaborative organizational structures. Semi-structured interviews with senior executives who operate in such alliances reveal that co-created IT governance structures are necessary. Such structures include co-created IT steering committees, co-created operational committees, and inter-organizational performance management and communication systems. The findings paved the way for the development of a model for understanding approaches to governing IT and evaluating the effectiveness for such governance mechanisms in today's IT‐dependent alliances. This study presents a sustainable IT-related capabilities approach to assessing the effectiveness of suggested IT governance structures for collaborative alliances. The findings indicate a favorable association between organizations' IT governance efforts and their ability to sustain their capabilities to leverage their IT resources. These IT-related capabilities also relate to measures business value at the process and firm level. This makes it possible to infer that collaborative organizations' IT governance efforts contribute to business value.     

A disaggregated analysis of employment growth fluctuations in Canada

This paper studies the sources of fluctuations in Canadian employment growth disaggregated by province and, within each province, by one-digit industry. Using an error components decomposition, industry-specific shocks are found to be relatively more important in explaining fluctuations in employment growth. Aggregate and province-specific shocks also play an important role, with the latter contributing about 30 percent of the explained variance in employment growth. Using a set of additional identifying assumptions, the decomposition technique is then extended to construct time series on the underlying shocks and to examine their properties.The views expressed in this paper are those of the authors and do not necessarily reflect the views of the International Monetary Fund. The authors are grateful to an anonymous referee for helpful comments.     

Does financial globalization promote risk sharing?

In theory, one of the main benefits of financial globalization is that it should allow for more efficient international risk sharing. In this paper, we provide an empirical evaluation of the patterns of risk sharing among different groups of countries and examine how international financial integration has affected the evolution of these patterns. Using a variety of empirical techniques, we conclude that there is at best a modest degree of international risk sharing, and certainly nowhere near the levels predicted by theory. In addition, only industrial countries have attained better risk sharing outcomes during the recent period of globalization. Developing countries have, by and large, been shut out of this benefit. Even emerging market economies, many of which have reduced capital controls and all of which have witnessed large increases in cross-border capital flows, have seen little change in their ability to share risk. We find that the composition of flows may help explain why emerging markets have not been able to realize this presumed benefit of financial globalization. In particular, our results suggest that portfolio debt, which had dominated the external liability stocks of most emerging markets until recently, is not conducive to risk sharing.     

A model for risk classification of banks

This paper deals with designing a bank risk classification scheme based on readily available performance data. This risk rating is referred to as ‘Risk rating’. Due to non-availability of data on CAMEL rating (C rating), R risk rating has potential for studying risk-based premiums insurance policy and for determining optimal frequencies for variable frequency on-site examination policy. A composite non-performance measure is developed to estimate probability of failure of a bank based on performance data available in bank call reports by fitting a Logit curve and estimating its parameters using maximum likelihood method. Division of banks into healthy and watchful types is based on critical dividing value of probability of failure.