Cross-section dependence and the monetary exchange rate model – A panel analysis

This paper tackles the issue of cross-section dependence for the monetary exchange rate model in the presence of unobserved common factors using panel data from 1973 until 2007 for 19 OECD countries. Applying a principal component analysis we distinguish between common factors and idiosyncratic components and determine whether non-stationarity stems from international or national stochastic trends. We find evidence that the common factors are I(1) while the idiosyncratic components are I(0). This finding indicates that cross-member cointegration exists and non-stationarity in exchange rates and fundamentals is mainly driven by common international trends. We find evidence that the common factors of the exchange rates and fundamentals are cointegrated. In addition, the estimated long-run coefficients of this common international relationship are in line with the suggestions of the monetary model with respect to income and money.     

Long-run money demand in OECD countries: what role do common factors play?

This article examines the long-run money demand function for 11 OECD countries from 1983Q1 to 2006Q4 using panel data. The distinction between common factors and idiosyncratic components using principal component analysis allows for the detection of cross-member cointegration and the determination as to whether national or international sources are responsible for the non-stationarity of money and its determinants. Indeed, the finding that the common factors are I(1) while the idiosyncratic components are I(0) indicates that cross-member cointegration may exist and non-stationarity in the variables is primarily driven by common international trends. Furthermore, it is found that the impact of income on money demand is positive, whereas it is negative for the interest rate, exchange rate and stock prices. Except for the income elasticity of money demand, all estimated long-run coefficients are larger for the common factors of the variables than for the variables themselves. This article provides evidence that the exchange rate is an important determinant of money demand, whereas the results for the stock prices are ambiguous. Finally, the results of a panel-based error-correction model suggest that several domestic money stocks converge to a common international equilibrium relationship between the common factors.     

Confidence bounds for the sensitivity lack of a less specific diagnostic test, without gold standard

We consider the problem of comparing two diagnostic tests based on a sample of paired test results without true state determinations, in cases where the second test can reasonably be assumed to be at least as specific as the first. For such cases, we provide two informative confidence bounds: A lower one for the prevalence times the sensitivity gain of the second test with respect to the first, and an upper one for the sensitivity of the first test. Neither conditional independence of the two tests nor perfectness of any of them needs to be assumed. An application of the proposed confidence bounds to a sample of 256 pairs of laboratory test results for toxigenic Clostridium difficile provides evidence for a dramatic sensitivity gain through first appropriately culturing C. difficile from stool samples before applying an enzyme-immuno-assay.     

Modeling Energy and Development: An Evaluation of Models and Concepts

Most global energy models are developed by institutes from developed countries, focusing primarily on issues that are important in industrialized countries. Evaluation of the results for Asia of the IPCC/SRES models shows that broad concepts of energy and development, the energy ladder and the environmental Kuznets curve, can be observed in the results of the models. However, improvements can be made in modeling the issues that underlie these concepts, like traditional fuels, electrification, economic structural change, income distribution, and informal economies. Given the rapidly growing importance of energy trajectories of developing countries for global sustainability, the challenge for the future is to develop energy models that include all these aspects of energy and development.     

Reputation and lying aversion in the die roll paradigm: Reducing ambiguity fosters honest behavior

This paper examines reputation as motive for lying aversion. In a control treatment, participants roll a six-sided die and report the outcome, which the experimenter cannot observe. In a digital die treatment, the outcome of the die roll is determined randomly on the computer. Contrary to prior literature, we reduce ambiguity in the digital die treatment by making observability common knowledge. We find that partial lying and full lying disappear when the experimenter can track participants' behavior. This result can be explained by reputational costs: Participants care about how they are viewed by the experimenter and abstain from lying.     

Trustmarks: Strategies for exploiting their full potential in e-commerce

Internet-based commerce has undergone explosive growth over the past decade and is expected to keep growing. With the increasing popularity of online marketplaces, trust is seen as a key foundation for consumers’ willingness to purchase, in particular, from unknown sellers. While trust has been examined in various contexts, limited focus has been placed on the importance of displaying institutional trust assurances such as trustmarks on retailers’ websites. We conducted two studies into how the use of trustmarks impacts consumer trust, consumer risk perceptions, and, consequently, influences consumer purchase intentions. The results of the two studies suggest that the use of trustmarks increases consumer online trust and purchase intentions, as well as reducing their perceived risk. We use these results to inform managerial decision making in e-commerce, particularly for marketers and e-retailers. We provide three important managerial lessons to be learned from our insights. Our implications are important not only for mature e-commerce markets to create a competitive advantage but also for growing and emerging e-commerce markets, where new retailers are trying to establish trust among their consumers to increase market share.