Bilateral and Third‐Country Exchange Rate Effects on Multinational Activity

In an earlier paper, we showed that bilateral exchange rates are important determinants of multinational activity of both the US and Japan and that increases in the bilateral and third‐country exchange rates exert opposing effects on bilateral multinational activity. Furthermore, the signs of the exchange rate coefficients differ between Japan and the US. In this paper, we formulate a three‐country model with coexisting exporters and multinational firms that engage in Cournot competition to rationalize these effects. In this model, we identify two counteracting effects which govern the bilateral and third‐country effects of an exchange rate increase on bilateral multinational activity. Our theoretical framework is flexible enough to explain the Japanese as well as the US patterns of exchange rate effects and it allows us to identify those factors that are responsible for the respective differences.     

Feintuning im Recht der Lebensversicherung zu § 169 Abs. 5 VVG – Neues zum Stornoabzug bei Einmalbeitr?gen sowie zu separaten Abschlusskostenvereinbarungen

The first part of this article deals with surrender charges. Due to the incredible increase of single premium life assurances this already written off instrument came back to discussion. The increase is based on the high income within the range of life assurances compared to interest income for safe investments. Speculations against to the collective of insured become possible as the right of the policyholder to notice a life assurance at any time, §?168 VVG, is inalienable, even concerning single premium assurances. Alerted by that, the Federal Financial Supervisory Authority (??BaFin??) demands appropriate surrender charges within the single premium matters. However, literature prefers a surrender charge caused by capital market which is consolidated into a lump sum to the amount of 0,2 per cent regarding the total payment of interest, for each year by which the single premium contract is going to be terminated before expiring after 10 years. This point of view can basically be followed. For reasons of principle consideration, the surrender charge must certainly be determined significantly lower than proposed, namely with 0,1 per cent each year. De lege ferenda, the alternative to make restrictions to the right to give notice for single premium assurances may be taken into consideration. The second part of this article deals with acquisition costs. The regional court of Rostock considers a separate agreement relating to cost averaging??whereby the policyholder must continue to pay the instalments for the acquisition costs even after the termination of the life assurance??to be a ??Umgehungsgesch?ft?? (evasive transaction) to §?169 V 2 VVG and is for that reason void. This cannot be followed. A?thoroughly interpretation of the provision shows that it does not prohibit the result, namely the deduction of the surrender value below the value which is determined by §?169 III VVG. The result is rather then prohibited when it is achieved by the non-transparent way of a set off of the costs with the paid assurance premium. That point of view of the regional court of Rostock is therefore contra legem. As the right to modify law is reserved to the legislative authority, it is well advised to observe the actual development for a certain period of time. In regard to that result the policyholder is not made vulnerable. Oftentimes, the liability for consulting activities of the insurer and his intermediaries will interfere in his favour.     

Das auch noch? Deflation als Folge der Finanzkrise

Zusammenfassung  Der weltweite Nachfrageeinbruch im Gefolge der Finanzkrise l?sst befürchten, dass die Preise auf breiter Front sinken. Dem scheint die Geldpolitik jedoch mit verschiedenen Instrumenten begegnen zu k?nnen. Welche M?glichkeiten haben die Zentralbanken über die traditionelle Geldpolitik hinaus? Was lehrt uns das japanische Beispiel? Welche makro?konomische Strategie ist jetzt angebracht? Prof. Dr. Peter Kalmbach, 69, war bis 2005 Hochschullehrer für Wirtschaftswissenschaft mit dem Schwerpunkt Verteilungstheorie und Verteilungspolitik an der Universit?t Bremen.     

Building Societies

The following articles appeared in ‘The Guardian’ on 9 May 1983, and are reproduced by kind permission of the Editor. They examine how the position of building societies has changed, how well the societies are coping with this and how adequate and efficient the services that the building societies offer their customers are now proving.     

The impact of B Corp certification on financial stability: Evidence from a multi-country sample

B Corps are firms certified by the non-profit B Lab for pursuing both economic and non-economic goals. Whether B Corps realize a higher financial performance has met mixed evidence. Drawing on the stability-change framework, we ask whether B Corp certification is associated with the level and volatility of financial performance. Also, expecting a greater focus on non-economic activities after certification, equity ratio may decline as shareholders may question the increased non-economic focus. Using nearest neighbor propensity score matched pair method, we draw on a multi-country sample of 355 B Corps and 623 non-B Corps. Our findings are not encouraging. B Corp certification does not provide financial gains nor financial stability, and equity ratio declines and becomes more volatile following certification. Our findings paint a gloomy picture of limited economic benefits and declining participation of equity holders following B Corp certification.     

$$\mathcal{D}$$-optimal Minimum Support Mixture Designs in Blocks

An easy method to construct efficient blocked mixture experiments in the presence of fixed and/or random blocks is presented. The method can be used when qualitative variables are involved in a mixture experiment as well. The resulting designs are -optimal in the class of minimum support designs. It is illustrated that the minimum support designs are more efficient than orthogonally blocked mixture experiments presented in the literature and only slightly less efficient than -optimal designs.     

Can Capital Income Taxes Survive? And Should They?

The article surveys some main results in the theory of capitalincome taxation in the open economy; reviews recent trends ininternational taxation and discusses alternative blueprintsfor fundamental capital income tax reform from the perspectiveof an open economy faced with growing mobility of capital incometax bases. (JEL code: H21, H25)     

Disaggregate Real Exchange Rate Behaviour

In this paper, we re-examine the “PPP Puzzle” using sectoral disaggregated data. Specifically, we first analyse the mean reversion speeds of real exchange rates for a number of different sectors in 11 industrial economies and then focus on relating these rates to variables identified in the literature as key determinants of CPI-based real exchange rates, namely: the trade balance, productivity and the mark up. In particular, we seek to understand to what extent the relationships existing at the aggregate level are borne out at the disaggregate level. We believe that this analysis can help shed light on the PPP puzzle.