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Unionism and Peer-Referencing
Get PDFThis study assesses the 'fair-wage-effort' hypothesis, by examining (a) the relationship between relative wage comparisons and job satisfaction and quitting intensions, and (b) the relative ranking of stated effort inducing-incentives, in a novel dataset of unionised and non-unionised European employees. By distinguishing between downward and upward-looking wage comparisons, it is shown that wage comparisons to similar workers exert an asymmetric impact on the job satisfaction of union workers, a pattern consistent with inequity-aversion and conformism to the reference point. Moreover, union workers evaluate peer observation and good industrial relations more highly than payment and other incentives. In contrast, non-union workers are found to be more status-seeking in their satisfaction responses and less dependent on their peers in their effort choices The results are robust to endogenous union membership, considerations of generic loss aversion and across different tenure profiles. They are supportive of the individual egalitarian bias of collective wage determination and self-enforcing effort norms
From Bretton Woods to inflation targeting: financial change and monetary policy evolution in Europe
Get PDFDifferent ‘monetary architectures’ are distinguished, as a background to a discussion of the change in developed country monetary policy frameworks from fixed exchange rates under the Bretton Woods international monetary system to, ultimately, formal or informal inflation targeting. The introduction and experience of monetary targets in the 1970s is considered, followed by an analysis of the changes in countries’ monetary architectures, with particular reference to money and bond markets and to France and Italy, in the 1980s. Exchange rate targeting in Europe in the 1980s and
1990s is examined, followed by the changes in central bank independence in the 1990s. This leads to a discussion of the introduction of inflation targeting, and the issues raised for inflation targeting by the financial crisis of the late 2000s
An investigation of customer order flow in the foreign exchange market
Get PDFThis paper examines the effect that heterogeneous customer orders flows have on exchange rates by using a new, and the largest, proprietary dataset of weekly net order flow segmented by customer type across nine of the most liquid currency pairs. We make several contributions.
Firstly, we investigate the extent to which customer order flow can help to explain exchange rate movements over and above the influence of macroeconomic variables. Secondly, we address the issue of whether order flows contain (private) information which explain exchange rates changes. Thirdly, we look at the usefulness of order flow in forecasting exchange rate
movements at longer horizons than those generally considered in the microstructure literature.
Finally we address the question of whether the out-of-sample exchange rate forecasts generated by order flows can be employed profitably in the foreign exchange market
Modeling U.S. Inflation Dynamics: A Bayesian Nonparametric Approach
Get PDFThis paper uses an infinite hidden Markov model (IIHMM) to analyze U.S. inflation
dynamics with a particular focus on the persistence of inflation. The
IHMM is a Bayesian nonparametric approach to modeling structural breaks.
It allows for an unknown number of breakpoints and is a flexible and attractive
alternative to existing methods. We found a clear structural break during the
recent financial crisis. Prior to that, inflation persistence was high and fairly
constant
Multi-agent contracting with countervailing incentives and limited liability
Get PDFWe consider a principal who deals with a privately informed agent protected by
limited liability in a correlated information setting. The agent's technology is such that the fixed cost declines with the marginal cost (the type), so that countervailing incentives may arise. We show that, with high liability, the first-best outcome can be effected for any type if (1) the fixed cost is non-concave in type, under the contract that yields the smallest feasible loss to the agent; (2) the fixed cost is not very concave in type, under the contract that yields the maximum sustainable loss to the agent.
We further show that, with low liability, the first-best outcome is still implemented
for a non-degenerate range of types if the fixed cost is less concave in type than some
given threshold, which tightens as the liability reduces. The optimal contract entails pooling otherwise
Local Currency Pricing, Foreign Monetary Shocks and Exchange Rate Policy
Get PDFThe implications of local currency pricing (LCP) for monetary regime choice are analysed for a country facing foreign monetary shocks. In this analysis expenditure switching is potentially welfare reducing. This contrasts with the existing LCP literature, which focuses on productivity shocks and thus analyses a world where expenditure switching is welfare enhancing. This paper shows that, when home and foreign producers follow LCP, expenditure
switching is absent and a floating rate is preferred by the home country. But
when only home producers follow LCP, expenditure switching is present and a
fixed rate can be welfare enhancing for the home country
A Bootstrap Neural Network Based Heterogeneous Panel Unit Root Test: Application to Exchange Rates
Get PDFThis paper proposes a bootstrap artificial neural network based panel unit root
test in a dynamic heterogeneous panel context. An application to a panel of bilateral
real exchange rate series with the US Dollar from the 20 major OECD countries
is provided to investigate the Purchase Power Parity (PPP). The combination of
neural network and bootstrapping significantly changes the findings of the economic study in favour of PPP
Financial liberalisation and industrial development in Malawi
Get PDFIt has been suggested that financial liberalisation may be a key policy to promote
industrialisation as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalisation on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis
above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalisation has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful
On the FDI-attracting property of privatizatio
Get PDFIn this paper, we provide an explanation of why privatization may attract foreign investors willing to enter a regional market. Privatization turns the formerly-public firm into a less aggressive competitor since profit-maximizing output is lower than the welfaremaximizing
one. The drawback is that social welfare generally decreases. We also investigate
tax/subsidy competition for FDI and put forward its potentially positive role. On the
one hand, it may reduce the negative impact on welfare of an FDI-attracting privatization. On the other hand, it may prevent a welfare-reducing investment by the foreign firm. This sheds light on the substitute/complementary relationship between the two policies and the
two objectives of governments
Future of the Clean Development Mechanism in Tackling Climate Change
Get PDFUsing a theoretical framework, we explain the impact of the Clean Development
Mechanism (CDM) on emissions in Annex I and non-Annex I countries. We show that on
one hand, emissions in the non-Annex I country decline because of abatement sponsored
by the Annex I country under the CDM; on the other hand, emissions may increase
because (i) the Annex I country increases emissions in its own country, and (ii) the
non-Annex I country crowds out the bene ts from the CDM projects by increasing
its domestic emissions. For the CDM to be e¤ective in reducing global emissions, we
show that partial Certi ed Emissions Reduction credits should be given to the Annex I country that sponsors CDM projects in the non-Annex I country. We also suggest
that the CDM Executive Board should not allow the CDM projects to be hosted by
non-Annex I countries that are too conscious about their emission levels