FOREIGN EXCHANGE RATE EXPECTATIONS: SURVEY AND SYNTHESIS

Abstract.  This paper reviews the empirical literature on foreign exchange rate expectations. Prominent issues are the forward premium puzzle, expectations formation in financial markets, heterogeneity of expectations, market microstructure, time-varying risk premiums and forecast performance. Although much has been learned in each field, this survey highlights the areas of research in which our understanding of the mechanism of exchange rate expectations is still incomplete. Our survey suggests that both irrational expectations and time-varying risk premiums account for the forward discount anomaly, that long-term expectations reverse towards their long-run equilibrium values and that heterogeneous behaviour of market participants has the potential of explaining some of the empirical regularities in the international finance literature.     

Recurrent Collusion: Cartel Episodes and Overcharges in the South African Cement Market

Review of Industrial Organization - Cartel cases may involve recurrent collusion, with cartel periods interspersed by periods of greater competition. An empirical model of recurrent collusion must...     

Trade Blocs: Relevant for Africa?

African trade blocs are largely pursued for political reasons.The economic effects are dubious: a bloc may well reduce thewelfare of its members, particularly if the rest of the worldis the marginal supplier. Even if the bloc raises aggregatewelfare it is likely to be problematic, leading to a divergenceof income levels with the poorer members of the bloc losing.Far from promoting regional trust and cooperation the bloc canthen cause tensions between the member countries. An importantpositive effect is improved product variety. This makes theadjustment of the production structure less painful than iscommonly assumed. In Africa there has seldom been clarity onthe objectives of preferential trading arrangements. This matterssince many objectives (scale and competition effects, improvedvariety and regional cooperation on infrastructure projects)do not require the formation of a trade bloc. If a trade blocis set up for political reasons (e.g. to improve security) thenit is desirable that it unilaterally lowers external tariffsso as to reduce trade diversion and income divergence.     

Consumers engaged in a member-gets-member campaign: an agency perspective

In this article, the use of member-gets-member-campaigns is perceived as an agency problem: the agent (a consumer) is going to take some action on the principal's behalf (a manufacturer). However, before the principal decides to engage the agent in their member-gets-member campaign, the principal needs to know whether a particular agent has the appropriate characteristics and whether the agent will have the proper motivations to behave in accordance with the principal's goals. Moreover, the principal needs to know how the agent's ideas and behaviour can be changed. In this article, concepts from opinion leadership, social network theory and attitude research are used to test and evaluate the characteristics of the agent, who voluntarily participated in a member-gets-member campaign of a large producer of several brands of dog food. The outcomes show that agents that participate in the member-gets-member campaigns have characteristics which might be desirable for the manufacturer: these agents are opinion leaders and have a positive brand attitude. To some extent, these agents also ask permission from the consumer whether they are allowed to make them members and seek membership from people with whom they have close ties. The results also show that the agents positively respond to incentives used by the manufacturer. In general, the agents are not motivated to oversell the membership to the consumers.     

Exploring the Conceptual Expansion within the Field of Organizational Behaviour: Organizational Climate and Organizational Culture

Developments within social and exact sciences take place because scientists engage in scientific practices that allow them to further expand and refine the scientific concepts within their scientific disciplines. There is disagreement among scientists as to what the essential practices are that allow scientific concepts within a scientific discipline to expand and evolve. One group looks at conceptual expansion as something that is being constrained by rational practices. Another group, however, suggests that conceptual expansion proceeds along the lines of ‘everything goes’. The goal of this paper is to test whether scientific concepts expand in a rational way within the field of organizational behaviour. We will use organizational climate and culture as examples. The essence of this study consists of two core concepts: one within organizational climate and one within organizational culture. It appears that several conceptual variations are added around these core concepts. The variations are constrained by rational scientific practices. In other terms, there is evidence that the field of organizational behaviour develops rationally     

Are We Measuring Up …? Questions on the Performance of National Statistical Systems

This article proposes a systematic approach to evaluating the performance of national statistical systems. Its starting point are the so-called Fundamental Principles of Official Statistics, which were adopted by the United Nations some time ago. The aim is to translate the principles into operational terms and concrete questions about 'how we are measuring up'.     

The effect of exchange rate changes on Japanese consumption exports

This paper investigates how exchange rates affect Japanese exports. This is difficult because many of Japan's exports are used to produce goods for re-export. An appreciation in the importing country that decreases exports can decrease its imported inputs from Japan. To avoid this bias we examine consumption exports. Using a panel dataset of Japan's consumption exports to 17 countries over the 1988–2009 period, we find exchange rate elasticities of about one. These results indicate that the large swings in the value of the yen over the last decade have caused large swings in the volume of Japanese exports.     

Taxing land for urban containment: Reflections on a Dutch debate

Excessive land use regulations aimed at containing urban sprawl have been criticised, because they may overcompensate for the external effects of uncontrolled greenfield development and contribute to stagnation in house building. Taxes on building in green spaces may be an instrument for balancing urban growth and the protection of the landscape. This paper discusses development tax and puts it in the context of other planning instruments. It reviews a recent policy debate in the Netherlands relating to the introduction of an open space tax and the research into this tax. It also investigates the policy process, which resulted in the tax not being introduced. Finally, conclusions are drawn as to whether the taxation of development may be a useful instrument to complement other planning measures.     

Understanding Japan's Capital Goods Exports

Japan is the leading supplier of sophisticated capital goods to East Asian countries. These goods embody advanced technologies and facilitate learning and productivity growth. Capital goods also represent 30–40% of Japan's exports. This paper investigates the determinants of these exports. Results from dynamic ordinary least squares estimation indicate that exports depend on exchange rates, income in the importing countries and downstream countries' exports to the rest of the world. Results from out‐of‐sample forecasts indicate that Japanese exports crashed in 2009 because of the perfect storm of a yen appreciation, a global slowdown and a collapse in Asia's exports.