Bond risk premiums and optimal monetary policy

The bond yield dynamics implied by a welfare-maximizing monetary policy and its credibility are explored in general equilibrium. Credibility is captured by a regime change from discretion to commitment. The policy determines the optimal output and inflation responses to a source of inflation risk. Bond yields contain compensations for this risk that depend on the policy. Credibility improvements reduce the exposure to inflation risk and bond risk premiums decline. A model calibration implies lower yield spreads, less volatile yields, and reduced deviations from the expectations hypothesis under commitment. The model suggests an explanation for changes in yield dynamics in the U.S. across different policy regimes.     

Disability,social inclusion and the marketing of tourist attractions

The participation of persons with a disability (PWDs) in tourism has received growing academic interest in recent years. This paper contributes to a reflection on how accessible tourism relates to the sustainable development paradigm. To investigate this relationship, it goes beyond the question of PWDs’ access to tourism services, and adopts an inclusiveness perspective. Inclusion is examined in terms of legislation, marketing and imagery, and representations of PWDs as consumers embedded within social units – and families in particular. These dimensions are explored empirically in a study of visitor attractions in Cornwall (England) based on a quantitative and qualitative content analysis of brochures and websites. The study shows that the marketing materials of Cornish visitor attractions mainly focus on access, and the imagery used largely projects quasi invisibility or provides ambiguous messages. Communication with PWDs rarely addresses the family unit, making the family tourism experience intangible in the pre-trip phase. These results point at weaker implementation of inclusiveness, which corroborates previous findings of watered down definitions of rights to tourism under neo-liberal ideologies and economic crises. The paper discusses implications for social inclusion and highlights avenues for future research.     

Social Capital and Economic Growth in Europe: Nonlinear Trends and Heterogeneous Regional Effects

Most of the literature focused on the social capital‐growth nexus has followed the one‐size‐fits‐all approach, neglecting that regional disparities might modify this relationship. This article analyses the role of two social capital indicators on the growth of 237 European regions in the period 1995–2007 by implementing non‐parametric regression, which relaxes the linearity assumption and allows the data to give the underlying functional form. The results show that social capital effects on growth are nonlinear. Parameter heterogeneity could also be examined, showing heterogenous effects across regions and over time. In particular, social capital is mostly negative in regions from Eastern and Central Europe during the first years of transition from socialism to market economies. However, this pattern has changed in the more recent period.     

Impacts of peers’ unethical behavior on employees’ ethical intention: Moderated mediation by Machiavellian orientation

Research suggests a direct negative relationship between peers’ unethical behavior and employees’ ethical intention. But several possible mechanisms might explain this relationship in more detail. For example, Machiavellianism is a personality trait characterized by interpersonal manipulation and the use of unethical means to achieve certain self‐interested ends, whether useful or pleasant. This article adopts an Aristotelian understanding of philia, related to three goods on which human relationships rest: useful, pleasant, and honest. We propose that Machiavellianism, a self‐interested, pragmatic personality orientation, might explicate the relationship between peers’ unethical behavior and ethical intention. The results of a structural equation model applied to a sample of 436 banking employees in Spain reveals that Machiavellianism partially mediates the relationship between peers’ unethical behavior and employees’ ethical intention. We also find that with a greater level of peers’ unethical behavior, the negative effect of Machiavellianism on ethical intention increases, and that when peers’ unethical behavior is nonexistent, the negative effect of Machiavellianism on ethical intention disappears. These findings advance current literature by revealing that unethical peers can indirectly influence ethical intention, through shaping Machiavellianism. Our study is also the first to show that pairing high Machiavellians with ethical peers can help to cancel out the negative influence of Machiavellianism on ethical intention.     

Should smart investors buy funds with high past returns?

We fully characterize the equilibria in a gme between a fundmanager of unknown ability who control the riskiness of hisportfolio and investors who only observe realized returns. Wederive two types of equilibria. The first one is such that (i)investors invest in the fund if the realized return falls withinsome interval, i.e., is neither too low nor too high, (ii) agood manager picks a portfolio of minimal riskiness and (iii)a bad manager picks a portfolio with higher risk, "gambling"on a lucky outcome. The second type of equilibrium is more traditional:(i) investors invest in the fund if the observed return is largerthan some threshold, and (ii) good and bad managers choose thesame risk level.     

Informational efficiency: ranking markets

Summary. The paper studies informational properties of three types of imperfectly competitive markets: a one-signal speculative market (OSS market) in which agents have only private information about the fundamental value (v) of the risky asset traded, a two-signal speculative market (TSS market) in which agents have private information about both v and the asset supply, and a market in which agents are endowed with both information about v and shares of the risky asset traded. In this last market (JA market), agents have joint activities: they trade for both speculative and hedging purposes. It is shown that (i) the JA market and the OSS market are the most and the least efficient, respectively, and (ii) the levels of informational efficiency in the three markets are inversely correlated with the intensities with which traders use their private information about the fundamental value of the asset. Received May 28, 1999; revised version: May 28, 1999     

Information salience,investor sentiment,and stock returns: The case of British soccer betting

Soccer clubs listed on the London Stock Exchange provide a unique way of testing stock price reactions to different types of news. For each firm, two pieces of information are released on a weekly basis: experts' expectations about game outcomes through the betting odds, and the game outcomes themselves. The stock market reacts strongly to news about game results, generating significant abnormal returns and trading volumes. We find evidence that the abnormal returns for the winning teams do not reflect rational expectations but are high due to overreactions induced by investor sentiment. This is not the case for losing teams. There is no market reaction to the release of new betting information although these betting odds are excellent predictors of the game outcomes. The discrepancy between the strong market reaction to game results and the lack of reaction to betting odds may not only be the result from overreaction to game results but also from the lack of informational content or information salience of the betting information. Therefore, we also examine whether betting information can be used to predict short-run stock returns subsequent to the games. We reach mixed results: we conclude that investors ignore some non-salient public information such as betting odds, and betting information predicts a stock price overreaction to game results which is influenced by investors' mood (especially when the teams are strongly expected to win).