Should multivariate early warning systems for banking crises pool across regions?

Most extant work on prediction of banking crises has utilised global samples, which are in turn dominated by observations from middle-income countries, and rely on a single estimator. However, economic and financial structures as well as the pattern of shocks may differ substantially across regions, while a range of specifications is desirable to check robustness. Accordingly, in this paper we test the implicit pooling assumption in earlier multivariate work on Early Warning Systems using both logit and binary recursive tree specifications separately for crises in Asia and Latin America, as well as the pooled sample. Results suggest markedly different crisis determinants across regions, implying global samples are inappropriate.     

The cluster approach in the innovation development strategy of foreign countries

Foreign experience in carrying out cluster policy and the scales of distribution and the variety of cluster structure types abroad are considered and generalized. The main attention is given to innovation directivity as the key factor of increasing regional and national economic competitiveness. The important role of the state in formation of effective cluster policy providing substantial improvement in the business climate and stimulating the priority development of high-tech fields is placed in strong relief. The next issue of the journal will contain an article about the situation in Russia (Ed.).     

Socio-demographic risks of the long-term development of the Russian economy

Key risks and threats of the long-term development of the Russian economy, originating from the social sphere, are revealed and analyzed. The article focuses on human capital development and replenishment problems, as well as on the social effects of these problems on education, health conditions, labor migration, and pension provision.     

When Do Analysts Adjust for Biases in Management Guidance? Effects of Guidance Track Record and Analysts’ Incentives

Prior research indicates that analysts do not fully adjust for the general downward bias in earnings guidance issued by management. We report the results of two experiments designed to investigate how guidance track record and analysts’ incentives jointly explain the extent to which analysts adjust for guidance bias. Our results suggest that analysts with accuracy incentives adjust for management’s track record of downwardly biased guidance when the bias is relatively small (one cent), but those with relationship incentives do not. Furthermore, the difference in adjustment is larger when the bias track record is inconsistent than when it is consistent. Also, when guidance bias is larger (two cents) relative to smaller (one cent), analysts with relationship incentives partially adjust, as they appear to strike a balance between accuracy and their desire to please management. These findings hold implications for investors, regulators, and the interpretation of prior research.     

Transparency and the regulatory process in Europe and the United States: two research priorities

Transparency research related to the regulatory process would benefit most from two types of empirical studies. One batch of studies, described in the fifth section of this essay, would focus on the American states and the member states of the European Union to identify the factors that determine whether regulatory processes are more transparent and whether transparency is successful in improving regulations and the regulatory process. In other words, we need comparative state (for the US) and member state (for the EU) studies to develop metrics for the quality of regulations and the role of transparency is advancing or weakening the quality of regulations at the state (for the US) and member state (for the EU) level. The second batch of studies, described in the sixth section of this essay, would explore who uses the information currently provided at the levels of transparency currently available in regulatory processes at the European Union and federal government of the United States. Who benefits from transparency and how are they using the available transparency mechanisms?     

Estimating Central Bank Preferences under Commitment and Discretion

This paper explains U.S. macroeconomic outcomes with an empirical New Keynesian model in which monetary policy minimizes the central bank’s loss function. The presence of expectations in the model forms a well‐known distinction between two modes of optimization, termed commitment and discretion. The model is estimated separately under each policy using maximum likelihood over the Volcker–Greenspan–Bernanke period. Comparisons of fit reveal that the data favor the specification with discretionary policy. Estimates of the loss function weights point to an excessive concern for interest rate smoothing in the commitment model but a more balanced concern relative to inflation and output stability in the discretionary model.