Real-time forecasts of economic activity for Latin American economies

Macroeconomic policy decisions in real-time are based on the assessment of current and future economic conditions. Crucially, these assessments are made difficult by the presence of incomplete and noisy data. The problem is more acute for emerging market economies, where most economic data are released infrequently with a (sometimes substantial) lag. This paper evaluates nowcasts and forecasts of real GDP growth using five models for ten Latin American countries. The results indicate the flow of monthly data helps to improve forecast accuracy, and the dynamic factor model consistently produces more accurate nowcasts and forecasts relative to other model specifications, across most of the countries we consider.     

Open economy forecasting with a DSGE-VAR: Head to head with the RBNZ published forecasts

We construct a DSGE-VAR model for competing head to head with the long history of published forecasts of the Reserve Bank of New Zealand. We also construct a Bayesian VAR model with a Minnesota prior for forecast comparison. The DSGE-VAR model combines a structural DSGE model with a statistical VAR model based on the in-sample fit over the majority of New Zealand’s inflation-targeting period. We evaluate the real-time out-of-sample forecasting performance of the DSGE-VAR model, and show that the forecasts from the DSGE-VAR are competitive with the Reserve Bank of New Zealand’s published, judgmentally-adjusted forecasts. The Bayesian VAR model with a Minnesota prior also provides a competitive forecasting performance, and generally, with a few exceptions, out-performs both the DSGE-VAR and the Reserve Bank’s own forecasts.     

MEGA‐EVENTS AND TOURISM: THE CASE OF BRAZIL

Mega‐sporting events such as the Fédération Internationale de Football Association (FIFA) World Cup are expensive affairs. Host countries often justify the spending required to stage these events by predicting that mega‐events will draw large numbers of tourists. This paper analyzes monthly foreign tourist arrivals into Brazil between 2003 and 2015 and finds that the 2014 FIFA World Cup increased foreign tourism by roughly 1 million visitors. This number far exceeded expectations, but we show that roughly a quarter of this increase in foreign tourism was caused by the fortuitous advancement of Argentina's national team, and potential hosts should not count on the event to consistently produce out‐sized tourism figures. We conclude that on‐field results can greatly influence FIFA World Cup tourism. (JEL L83, F14)     

Normative target‐based decision making

This paper relates normative expected‐utility decision making to target‐based decision making, and introduces a new quantity, the aspiration equivalent. We show that using the aspiration equivalent as a target provides a new method for choosing between lotteries that is consistent with expected‐utility maximization. Furthermore, we show that the aspiration‐equivalent target provides a win–win situation for executive–manager delegation. This result furnishes a new link between normative decision analysis and target‐based decision making. Copyright © 2005 John Wiley & Sons, Ltd.     

Does fiscal redistribution discourage local public investment?

This paper studies the determinants of regional (oblast‐level) public investment in transitional Russia, focusing on the effects of federal fiscal redistribution. A model of local government expenditure in the presence of regional asymmetries shows that revenue redistribution from wealthy to poor regions discourages local public investment. Random‐ and fixed‐effects estimation of regional panel data for 1994–97 supports the existence of a disincentive effect from fiscal redistribution on regional public investment, which varies according to a region's federal status and wealth: non‐republics have a lower propensity to invest out of transfers than out of own income, as do regions with above‐median per capita income. Republics reduce public investment more than current spending in response to higher federal taxation. Russia's ‘asymmetrical federalism’ thus creates different fiscal incentives for different types of regions.     

Decomposing productivity growth and divergence: an index number approach

We propose a cross-country productivity growth decomposition that allows us to quantify the industry-level contributors to an aggregate productivity growth differential. We deploy this cross-country decomposition to quantify—for the first time—the disaggregate contributors to the divergence in market sector productivity growth between Australia and New Zealand. The results suggest that large contributions to the divergence arise from differences in labour growth across the two countries and that cross-country structural differences are large, and generally act to reduce the divergence. Most of the industries are found to add to the divergence, with particularly large contributions coming from differences across the mining and wholesale trade industries. The views expressed in the paper are entirely my own, and do not necessarily reflect those of the Reserve Bank of New Zealand. I would like to thank Les Oxley and Kevin Fox for useful comments on earlier drafts. All errors and omissions are my own.     

Security transaction taxes: issues and evidence

In reaction to the financial crisis, increased attention has recently been given to security transaction taxes (STTs) as a means of (1)?raising revenue for a variety of possible purposes and/or (2)?helping to curb financial market excesses. This paper reviews existing theory and evidence on the efficacy of an STT in fulfilling those tasks, on its potential impact, and on key issues to be faced in designing taxes of this kind.     

The carnivalesque and event evolution: a study of the Beltane Fire Festival

This paper centres on the Beltane Fire Festival in Edinburgh, Scotland. The objectives are to: first, identify the stages of the festival’s evolution and their respective characteristics; second, distinguish features corresponding to the carnivalesque; and, finally, examine the changes in event evolution, particularly regulatory interventions, and their effect. A qualitative approach comprising interviews with internal and external festival stakeholders was utilised. It is argued that there are three stages in the festival’s evolution: revival and early development; development and regulation; and, maturation. The characteristics of these evolutionary stages are identified. As the festival has developed and been subject to increasing regulation, features of the carnivalesque have been reduced.     

Jardine Matheson & Company: The Role of External Organization in a Nineteenth-Century Trading Firm

Jardine Matheson & Company, a Hong Kong conglomerate foundedin 1832, has survived political upheaval and global and regionaleconomic crises, transforming itself several times. From theirbeginnings in the commission business, William Jardine and JamesMatheson developed a reputation for sound financial managementthat furthered their trading relationships and supported theirfirm's expansion from agency house to managing agent to investmenthouse between 1832 and 1885. Fundamental to Jardine Matheson'ssuccess was the strategic decision to eschew speculation andto concentrate on building a pattern of relationships withinand outside the business that would foster the flow of information,the knowledge with which to interpret it, the ability to influenceothers, and a reputation for probity that would attract andretain trading partners.     

Dueling Jackpots: Are Competing Lotto Games Complements or Substitutes?

This paper considers the relationship that exists between two lottery products offered simultaneously in the same state, a smaller lottery game run by the individual state and a larger multi-state game run in coordination with other states. The primary issue is whether the two different products should be considered substitutes or complements for one another. The question is considered from two different perspectives that lead to a conclusion that while the two products do tend to be complements to one another, overall the individually run state lottery games experience a reduction in sales from the presence of the multi-state game.