state characteristics and the location of foreign direct investment within the united states a conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the united states is developed and estimated the authors results for 1981 83 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively more foreign direct investment in addition higher wages deterred foreign direct investment while higher unemployment rates attracted it surprisingly higher unionization rates were associated with increased foreign direct investment overall higher taxes deterred foreign direct investment however more extensive transportation infrastructures and larger promotional expenditures were associated with increased foreign direct investment copyright 1991 by mit press

testing for nonlinear dependence in daily foreign exchange rates the purpose of this article is to investigate whether daily changes in five major foreign exchange rates contain any nonlinearities although the data contain no linear correlation evidence indicates the presence of substantial nonlinearity in a multiplicative rather than additive form further examination reveals that a generalized autoregressive conditional heteroskedasticity model can explain a large part of the nonlinearities for all five exchange rates copyright 1989 by the university of chicago

the out of sample success of term structure models as exchange rate predictors a step beyond abstract a large literature suggests that standard exchange rate models cannot outperform a random walk forecast and that the forward rate is not an optimal predictor of the spot rate however there is evidence that the term structure of forward premia contains valuable information for forecasting future spot exchange rates and that exchange rate dynamics display nonlinearities this paper proposes a term structure forecasting model of exchange rates based on a regime switching vector equilibrium correction model which is novel in this context our model significantly outperforms both a random walk and to a lesser extent a linear term structure vector equilibrium correction model for four major dollar rates across a range of horizons

the value relevance of reputation for sustainability leadership this study investigates whether the market valuation of the two summary accounting measures book value of equity and net income is higher for firms with reputation for sustainability leadership when compared to firms that do not enjoy such reputation the results are interpreted through the lens of a framework combining signalling theory and resource based theory according to which firms signal their commitment to sustainability to influence the external perception of reputation a firm s reputation for being committed to sustainability is an intangible resource that can increase the value of a firm s expected cash flows and or reduce the variability of its cash flows our findings are according to expectations and show that the net income of firms with good sustainability reputation has a higher valuation by the market when compared to their counterparts

what will consumers pay for social product features the importance of ethical consumerism to many companies worldwide has increased dramatically in recent years ethical consumerism encompasses the importance of non traditional and social components of a company s products and business process to strategic success such as environmental protectionism child labor practices and so on the present paper utilizes a random utility theoretic experimental design to provide estimates of the relative value selected consumers place on the social features of products

forecasting real exchange rates abstract considerable evidence supports the view that real exchange rates do not have unit roots but rather show mean reversion this is the first paper to present systematic results on if and how this mean reversion is useful for forecasting real rates longer time horizons improve the performance of the estimated forecast models relative to the benchmark driftless random walks longer estimation periods particularly improve performance relative to the benchmark the forecasting ability in simple statistical models seems genuine but the models resolve only a small part of the uncertainty regarding the revolution of real exchange rates

foreign investment and spillover efficiency in an underdeveloped economy evidence from the mexican manufacturing industry abstract in this paper we consider the question whether differences in technical efficiency of mexican plants in part derive from spillover efficiency associated with foreign direct investment we use labour productivity as a measure of technical efficiency and relate this to capital intensity labour quality and scale of production we measure the degree of competition by different concentration indices and the final factor determining efficiency is the presence of foreign subsidiaries if there is a positive relation between efficiency of domestic plants and the foreign participation of various industries we conclude that there is a spillover of technical efficiency the empirical evidence from the study indicates that this is the case

a new framework integrating environmental effects into technology evaluation this study aims to propose a framework considering both economic issues and environmental effects in technology evaluation in order to provide firms decision makers a useful reference in adopting technologies that will enable them to fulfill corporate social responsibilities and get competitive advantages at the same time recently the demands for technology evaluation have increased with the flourishing development of technology licensing technology transaction or joint venture on the one hand and with the pressing needs of environmental protection for human beings sustainable development on the other hand under such conditions it thus goes without saying that firms decision makers are propelled to take into account both economic benefits and environmental effects in evaluating technologies by choosing low or nonpolluting technologies for manufacturing products although technology evaluation is not a new and emerging subject currently besetting scholars in the field of management previous research on this topic has unwittingly left behind the pressing issue of environmental effects based on this observation this study purports to develop a new framework for technology evaluation by taking both economic benefits and environmental perspectives into consideration in it we seek to demonstrate that our proposed framework will not only be a workable model but also can serve as a useful point of reference for technology appraisers and firms decision makers

target zones and exchange rate dynamics this paper develops a simple model of exchange rate behavior under a target zone regime it shows that the expectation that monetary policy will be adjusted to limit exchange rate variation affects exchange rate behavior even when the exchange rate lies inside the zone and is thus not being defended actively somewhat surprisingly the analysis of target zones turns out to have a strong formal similarity to problems in option pricing and investment under uncertainty

interest rates and currency prices in a two country world abstract this paper is a theoretical study of the determination of prices interest rates and currency exchange rates set in an infinitely lived two country world which is subject both to stochastic endowment shocks and to monetary instability formulas are obtained for pricing all equity claims nominally denominated bonds and currencies and these formulas are related to earlier closely related results in the theories of money finance international trade

competitive consequences of interfirm collaboration how joint ventures shape industry profitability recent international business research on international joint ventures focuses on how firms can use such ventures for knowledge access and learning to enhance their competitiveness thereby increasing competition in the industry by contrast research in industrial organization economics has observed that firms can also use joint ventures in various ways to attenuate competition in this paper we join these two streams of research to investigate the conditions under which joint ventures reduce or enhance competition by empirically testing the effects of different types of joint ventures on industry profitability our results suggest that joint ventures can be pro competitive or anti competitive depending on whether or not they are formed between competing firms represent foreign market entry and operate in relatively concentrated industries our paper shows the importance of adopting a contingent approach to evaluating the competitive implications of joint ventures and it also points to the value of reinvigorating international business research on the competitive context and consequences of interfirm collaboration

toward a theoretical model of voluntary overcompliance abstract we explain why some firms voluntarily overcomply with environmental regulation in our model all consumers value environmental quality but differ in their willingness to pay which depends on their income levels publicly available information on environmental performance of firms enables consumers to identify clean firms firms participate in a two stage duopoly game where they first choose their levels of cleaning technology and next engage in price competition the market gets segmented by income levels a minimum standard binding on the dirty firm has the effect of improving the performance of the cleaner firm a subsidy obtains the same competitive outcome

can the markov switching model forecast exchange rates abstract a markov swirching model is fit for 18 exchange rates at quarterly frequencies the model fits well in sample for many exchange rates by the mean squared error criterion the markov model does not generate superior forecasts to a random walk or the forward rate there appears to ne some evidence that the forecasts of the markov model are superior at predicting the direction of change of the exchange rate

customer regulatory and competitive pressure as drivers of environmental innovation we develop an economic analysis in order to examine the effects of consumer regulatory and competitive pressure on firm investments in environmentally friendly production specifically we ask why do firms vary in their levels of environmental innovation under what conditions are such pressures effective in bringing about environmental innovation we first consider a monopolist who faces the twin pressures of reduced customer demand and regulatory penalties as a result of its emissions in response to these pressures the firm has the opportunity to make a costly investment in reduction of emissions secondly we consider a competitive scenario in which two firms compete for environmentally sensitive customers solving our model we find that pressure has the intended effect as long as the firm s initial level of emissions is below a certain threshold if the emissions are above this threshold we find that pressure might have an adverse effect on the firm s environmental investment and that subsidies that support environmental innovation can be a better alternative we also show that competition over environmentally sensitive customers can improve the effectiveness of environmental pressures

purchasing power parity over two centuries trends and nonlinearity in two recent contributions lothian and taylor and cuddington and liang produced empirical evidence that annual data for the dollar sterling real exchange rate spanning two centuries exhibited a non linear deterministic trend this trend could be proxying harrod balassa samuelson effects lothian and taylor showed that a linear stationary autoregressive mode which embodied a cubic trend implied much faster mean reversion of the real exchange rate to shocks than a model that excluded the trend this article shows that both non linearity and a deterministic trend can be allowed for in a theoretically appealing manner and that the fitted models provide a parsimonious explanation of both the dollar sterling and franc sterling real exchange rates over the two centuries of data generalized impulse response function analysis of the models demonstrates that the speed of adjustment to shocks can be even faster when trends are considered

long memory in foreign exchange rates using the geweke porter hudak test we find evidence of long memory in exchange rate data this implies that the empirical evidence of unit roots in exchange rates may not be robust to long memory alternatives fractionally integrated autoregressive moving average arfima models are estimated by both the time domain exact maximum likelihood ml method and the frequency domain approximate ml method impulse response functions and forecasts based on these estimated arfima models are evaluated to gain insight into the long memory characteristics of exchange rates some tentative explanations of the long memory found in the exchange rates are discussed

firm specific assets and the link between exchange rates and foreign direct investment foreign direct investment fdi theory and empirical studies have generated mixed support for a link between exchange rates and fdi this paper argues that exchange rate movements may affect acquisition fdi because acquisitions involve firm specific assets which can generate returns in currencies other than that used for purchase using data on japanese acquisitions in the united states across three digit sic industries from 1975 to 1992 maximum likelihood estimates from discrete dependent variable models support the hypothesis that real dollar depreciations make japanese acquisitions more likely in u s industries particularly those which more likely have firm specific assets copyright 1997 by american economic association

accounting for endogeneity when assessing strategy performance does entry mode choice affect fdi survival firms choose strategies based on their attributes and industry conditions therefore strategy choice is endogenous and self selected empirical models that do not account for this and regress performance measures on strategy choice variables are potentially misspecified and their conclusions incorrect i highlight how self selection on hard to measure or unobservable characteristics can bias strategy performance estimates and recommend an econometric technique that has been developed to account for this effect although this concern applies to a wide range of strategy questions to demonstrate its effect i empirically examine if entry mode choice acquisition versus greenfield influences foreign direct investment survival in specifications that do not account for self selection i find that greenfield entries have survival advantages compared to acquisitions this confirms previous findings however the significance of this effect disappears once i account for self selection of entry mode in the empirical estimates the results confirm that estimates from models that do not account for self selection of strategy choice can lead to incorrect or misleading conclusions

currency fluctuations in the post bretton woods era the international monetary landscape that has emerged since the felling of bretton woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float this system has relatively flexible exchange rates between major countries active central bank intervention in the market for the major currencies and predominantly fixed exchange rates relative to the dollar or to some basket of currencies for less developed countries and newly industrializing nations the majority of research on currency markets since the early 1970s has focused on the characteristics of flexible exchange rates under this hybrid regime my thesis is that this research has been unsuccessful the proportion of monthly or quarterly exchange rate changes that current models can explain is essentially zero even after the fact forecasts that use actual values instead of forecasted values of the explanatory variables cannot explain major currency movements over the post bretton woods era this result is quite surprising since exchange rate changes would be entirely unpredictable only in very special cases of the theoretical models discussed as the discussion below will argue it is not a general implication of market efficiency that exchange rates follow a random walk process 1

purchasing power parity over two centuries abstract this paper re examines the purchasing power parity hypothesis for the dollar sterling exchange rate using the two centuries of data from lothian and taylor lt 1996 real exchange rate behavior the recent float from the perspective of the past two centuries journal of political economy 104 3 488 509 unlike lt we conclude that the dollar sterling rer is nonstationary implying a rejection of the long run ppp hypothesis the differences in our conclusions are explained by 1 sensitivity of adf unit root tests to the choice of lag length and or 2 the presence of significant time trends in the adf or phillips perron unit root test equations

reexamining the expected effect of available resources and firm size on firm environmental orientation an empirical study of uk firms an emergent body of literature examined why some firms apply some environmental initiatives while other firms do not take responsibility for their natural environment thus firm environmental orientation responsiveness and performance are linked in the literature to several variables unfortunately the relationship between firm environmental orientation and either available resources or firm size showed mixed results and inconclusive evidence therefore the aim of this paper is to show empirically how available resources and firm size can explain differences in firm environmental responsiveness and environmental performance econometric results of environmental responsiveness using the logistic regression model demonstrated that firm size does appear to add something unique in explaining differences in environmental responsiveness while available resource can be safely dropped from the model however econometric analysis of environmental performance using the maximum likelihood random effects model showed strong evidence that available resources and firm size are significant predictors of firm environmental performance

testing long horizon predictive ability with high persistence and the meese rogoff puzzle a well known puzzle in the international finance literature is that a random walk predicts exchange rates better than economic models meese and rogoff 1983a b and 1988 this paper offers a potential explanation for this finding when exchange rates and fundamentals are highly persistent long horizon forecasts of economic models are asymptotically biased by the estimation error in the parameter that measures the persistence when this bias outweighs the benefits from exploiting economic information the random walk model will forecast better this happens even if the economic model is the true data generating process the reason is that a random walk model imposes a unit root rather than estimates it the paper thus proposes a test for equal predictive ability in the presence of highly persistent variables when applied to the meese rogoff exercise this test shows that the poor forecasting ability of economic models does not imply that the models are not a good description of the data

foreign investment and productive efficiency the case of mexico this paper examines whether the relative performance of firms within mexican manufacturing industries varies systematically with the presence of foreign subsidiaries it also analyzes how foreign entry influences the technological structure in host country industries the findings suggest that 1 foreign presence in an industry is positively correlated with structural efficiency and 2 foreign entry is related to structural changes only in the modern part of the industries the most important source of spillover efficiency is found to be in the competitive pressure induced by the foreign firms i introduction a widely held view among economists studying foreign investment is that one of the important contributions to the host country is likely to stem from external effects or spillovers the spillovers can be of different kinds the foreign firms may influence the productivity and growth of the domestically owned firm they may change the nature and evolution of concentration they may alter financing marketing and technological and managerial practices in the industries that they enter et cetera because of great methodological difficulties in investigating these effects empirically in addition to lack of data few empirical investigations appear in the literature three available econometric studies deal with the influence of foreign investment on the technical efficiency of host country firms one focuses on australia caves 1974 one on canada globerman 1979 and one on mexico blomstrom and persson 1983 all three find some support for the spillover benefit hypothesis but none of the studies analyzes the nature of spillover efficiency in depth the present paper is an attempt to identify through what mechanisms the spillover efficiency of foreign investment takes place by analyzing the effects of foreign investment on the productive efficiency of the industrial structure in mexico we will examine whether the relative performance of firms within an industry varies systematically with the presence of foreign subsidiaries we will also analyze the impact of foreign investment on structural change that is how foreign entry influences the technological structure in host country industries

time varying parameters and the out of sample forecasting performance of structural exchange rate models varying parameter estimation techniques based on recursive application of the kalman filter are used to improve the predictive performance of a class of monetary exchange rate models i find that allowing estimated parameters to vary over time enhances the models forecasting performance for the dollar pound dollar mark and dollar yen exchange rates contrary to earlier results in the literature ex post forecasts for the dollar mark rate compare favorably with those obtained from the naive random walk forecasting rule

the dynamics of foreign direct investments in land and pollution accumulation following the recent increase of foreign direct investments in land this paper studies their possible effects on the development of a local economy to this aim we use a two sector model external and local with heterogeneous agents external investors and local land owners we assume that both sectors are negatively affected by pollution but only the external sector is polluting the local government can tax the external sector s production activities to finance environmental defensive expenditures we first examine the equilibria that emerge in the model from the dynamics of pollution and physical capital and then investigate the conditions for the coexistence of the two sectors and the impact of the external sector on the revenues of the local population using numerical simulations we show that a revenue increasing path may occur only if the pollution tax is high enough and the impact of the external sector on pollution is low enough otherwise foreign direct investments may end up impoverishing the local population

foreign exchange market interventions and the exchange rate in the long run this article examines whether foreign exchange market interventions conducted by the bank of japan are important for the dollar yen exchange rate in the long run we rely on a re examination of the empirical performance of a monetary exchange rate model this is basically not a new topic however we focus on two new questions first does the consideration of periods of massive interventions in the foreign exchange market uncover a potential long run relationship between the exchange rate and its fundamentals second do forex interventions support the adjustment towards a long run equilibrium value our results suggest that taking periods of interventions into account within a monetary model does improve the goodness of fit of an identified long run relationship to a significant degree furthermore forex interventions increase the speed of adjustment towards long run equilibrium in some periods particularly in periods of coordinated forex interventions our results indicate that only coordinated inter

size location and agglomeration of inward foreign direct investment fdi in the united states halvorsen t size location and agglomeration of inward foreign direct investment fdi in the united states regional studies since the late 1970s a range of economic development policies to attract foreign direct investments fdis have been tried out despite a policy reorientation from a large size bias to policies also favouring smaller investments little empirical work has been performed on the determinants of investment size this paper presents empirical evidence on how the size of fdis is determined by agglomeration and other state level factors the results indicate that fdi agglomeration and urbanization affect investment size and that taxes markets labour land and the concentration of scientific knowledge are important determinants in the size composition of fdi halvorsen t le montant la localisation et l agglomeration de l investissement direct etranger ide aux etats unis regional studies depuis la fin des annees 1970 on met en vigueur toute une serie de politiques de developpeme

the monetary exchange rate model as a long run phenomenon abstract pure time series based tests fail to find empirical support for monetary exchange rate models in this paper we apply pooled time series estimation on a forward looking monetary model resulting in parameter estimates which are in compliance with the underlying theory based on a panel version of the engle and granger engle r f granger c w j 1987 co integration and error correction representation estimation and testing econometrica 55 251 276 two step procedure we find that the residuals of the panel based estimated monetary model are stationary this indicates that on a pooled time series level there is cointegration between the exchange rate and the macroeconomic fundamentals of this monetary model

strategic formulation and communication of corporate environmental policy statements uk firms perspective this paper suggests that most of the ftse listed firms in the united kingdom use corporate environmental policy statements ceps to communicate their strategic intent of what environmental and social targets to attain and broad guidelines of how they will progressively achieve all the required changes and new developments in this paper we link the contents of ceps of a sample of ftse listed firms from the chemical pharmaceutical and food industry that are committed to develop business excellence to the voluntary participation in the environmental benchmarking exercise and the various levels of environmental performance therein the findings suggest that in contrast to their non participating counterparts the strategic focus of the participating firms transcends from simply mitigating any potential damages that their operations might have on the environment to business process reengineering and building new implementation capabilities however not all of the participating firms achieved excellence in their environmental performance the high performing firms outweighed their counterparts on their emphasis on technological competence and competitiveness and interestingly the average performing firms would use the strategic emphasis on social responsibility to compensate for their mediocre technological competence

action characteristics as predictors of competitive responses a central question in competitive dynamics is whether a competitive response can be predicted this study links various characteristics of actions with the total number and the time lag of competitors responses the hypothesized relationships were tested with a sample of competitive moves among u s airlines the results suggested that responses are influenced by the characteristics of the actions that evoked them specifically the total number of competitors affected by an action and the importance to these competitors of the markets under attack by the action increase the number of competitive responses strategic as opposed to tactical actions or actions which require substantial implementation efforts reduce the number and delay the timing of rivals counteractions finally contrary to prediction competitors who have a high stake in the markets under attack by a competitive move react slowly

a fractional cointegration analysis of purchasing power parity a generalized notion of cointegration called fractional cointegration is introduced to examine the long run purchasing power parity ppp hypothesis by allowing deviations from equilibrium to follow a fractionally integrated process the fractional cointegration analysis can capture a wider range of mean reversion behavior than standard cointegration analyses this gain is flexibility in modeling subtle mean reverting dynamics is found to be important for a proper evaluation of long run ppp empirical results based on historical data for the 1914 1989 period show that ppp reversion exists and can be characterized by a fractionally integrated process in three out of five countries studied the results support ppp as a long run phenomenon though significant short run deviations from ppp can exist

the manufacturing sector s environmental motives a game theoretic analysis what motivates manufacturing companies to make costly investments in producing in an environmentally clean manner the traditional argument is that such behaviour is value reducing and that therefore firms must be forced by regulation to invest in green production processes a counter argument is that firms have an incentive to make environmental investments in an attempt to attract green consumers and investors hence gaining competitive advantage over their rivals in this paper we employ a game theoretic approach that demonstrates that competing firms incentives to make voluntary investments in environmental clean up are affected by the size of the investment costs and the extent of consumer and investor green awareness we argue that an increase in green behaviour can be induced by a combination of governmental subsidies for firms that invest in environmentally clean production processes together with an education program that promotes green awareness amongst consumers investors and the managers themselves

mode size and location of foreign direct investments and industry markups abstract several studies find that inward foreign direct investment fdi raises host industries competition and productivity using aggregate fdi measures the monetary flows or the change in the industries foreign production share yet fdi flows are composed of many individual heterogeneous investments reflecting this heterogeneity i ask how the average traits of the individual investments that constitute the fdi flow further affect the host while the results show that inward fdi does heighten competition for us manufacturing industries in 1987 1991 price cost markups fall even more when foreign investments locate further away from incumbent industry which is consistent with endogenous location choice

revisiting the persistence of real exchange rates abstract in this paper we provide new and robust evidence that panel regressions significantly reduce the estimated half lives of real exchange rates in a sample of 21 countries these results are obtained under dynamic panel models that control for non purchasing power parity ppp equilibria small sample bias does not have a significant impact on half lives since the increase in the half life arising from the bias is more than compensated by the decrease of the half life due to the control of non ppp equilibria among the two sources of non ppp equilibria i e first the balassa samuelson effect and second smooth shifts in mean we find that under a heterogeneous panel model the first source results in a larger reduction of half lives

foreign direct investments environmental externalities and capital segmentation in a rural economy this paper examines the possible effects of external investment inflows on the development of local rural economies taking into account two recurrent features of many developing countries capital market segmentation and environmental externalities to investigate this issue we examine a model with two sectors the local sector and the external sector physical capital accumulation in the latter sector is driven by foreign direct investments while in the former sector it follows a solow type accumulation mechanism we assume that the production activity of the external sector damages the environment while the local sector relies on natural resources in this context we give the conditions under which capital inflows can promote diversification of host economy while improving welfare of local populations if these conditions are not satisfied external investments fuel a welfare reducing process for the local community and a self enforcing growth of the external sector at the expense of the local one

exchange rate theory and practice this volume grew out of a national bureau of economic research conference on exchange rates held in bellagio italy in 1982 in it the world s most respected international monetary economists discuss three significant new views on the economics of exchange rates rudiger dornbusch s overshooting model jacob frenkel s and michael mussa s asset market variants and pentti kouri s current account portfolio approach their papers test these views with evidence from empirical studies and analyze a number of exchange rate policies in use today including those of the european monetary system

the relation between price and marginal cost in u s industry an examination of data on output and labor input reveals that some u s industries have marginal cost well below price the conclusion rests on the finding that cyclical variations in labor input are small compared with variations in output in booms firms produce substantially more output and sell it for a price that exceeds the costs of the added inputs the paper documents the disparity between price and marginal cost where marginal cost is estimated from annual variations in cost it considers a variety of explanations of the findings that are consistent with competition but none is found to be completely plausible

real exchange rates and switching regimes abstract we suggest that the real exchange rate between the major currencies in the post bretton woods period can be described by a stationary 2 state markov switching ar 1 model based on the forecast performance we find that this model outperforms two competing models where the real exchange rate is nonstationary we also find that the existence of different regimes as in the markov switching model is consistent with the common finding of unit roots in real exchange rates

greenfield vs acquisition the strategy of japanese investors in the united states multinational firms can enter a foreign market by taking over existing local firms acquisitions or by setting up new ventures greenfield investments surprisingly there has been limited empirical work on this topic this paper examines the determinants of this choice by looking at japanese entries into the united states by focusing on firms of one country entering a single market we are able to separate the impact of a firm s strategy from that of the characteristics of the target industry or country this paper tests simultaneously a number of competing hypotheses the results suggest that acquisitions are used by japanese investors with weak competitive advantages while investors with strong advantages find that greenfield investments are a more efficient way to transfer these advantages to the u s acquisitions are also chosen to enter industries with either very high or very low growth rates when entry is at a scale that is large relative to the parent and when entry is into a different industry the japanese investor s previous experience of the u s market its financial situation and its status as a follower in an oligopolistic industry have no statistically significant impact on the entry mode neither do u s stock market conditions

purchasing power parity over two centuries strengthening the case for real exchange rate stability a reply to cuddington and liang cuddington and liang 2000 purchasing power parity over two centuries journal of international money and finance 19 751 755 examine the long span of sterling dollar real exchange rate data of lothian and taylor 1996 real exchange rate behavior the recent float from the perspective of the past two centuries journal of political economy 104 488 509 and claim to reject long run purchasing power parity by fitting time trends or by considering very high order autoregresssive representations this reply demonstrates however that the central claims of lothian and taylor are in fact strengthened by the implications of cuddington and liang s analysis in that while the economic importance of introducing trend terms is slight this leads to a faster estimated speed of mean reversion c 2000 elsevier science ltd all rights reserved jel classification f31 f41 c22

entry modes for direct investment determined by the composition of firm specific skills when undertaking direct investment in a foreign country a firm can choose between different modes of entry broadly speaking an investor may either acquire an existing firm or set up a new venture i e perform a greenfield investment the mainstream perspective on this choice stipulates that takeovers are less risky than greenfield investments but yield a lower expected rate of return cf caves 1982 consequently a firm would become more willing to perform greenfield investments as greater capabilities and international experience increase its ability to handle risks according to dubin 1976 and stopford 1976 firms with a large and geographically diversified portfolio of already established subsidiaries have a greater propensity to undertake greenfield investment the greater a firm s diversification in terms of industries and the faster its growth indicating less knowledge and experience per unit of activity the greater the propensity to use takeovers in the last decades however there has been a marked tendency towards more takeovers and less greenfield investments see un 1992 this is hardly consistent with the conventional view as the bulk of direct investment is established by a relatively small number of multinational corporations which continuously upgrade their experience and capabilities rather the riskiness as well as expected profitability of alternative modes of entry depend on the nature of skills and capabilities this analysis distinguishes between organizational and managerial skill on the one hand and skill which is related to specific technology on the other com

banking on currency forecasts how predictable is change in money abstract the paper examines the predictive performance of four structural exchange rate models using both parametric and nonparametric techniques error correction versions of the models are fit so that plausible long run elasticities can be imposed on the fundamental variables of each model a variety of model evaluation statistics are reported our findings confirm that fundamental exchange rate models forecast no better than a random walk model for short term prediction horizons for longer horizons error correction terms can explain exchange rate movements significantly better than a no change forecast for a subset of the models and currencies we consider

measuring business cycle time the business cycle analysis of arthur f burns and wesley c mitchell and the national bureau of economic research presumed that aggregate economic variables evolve on a time scale defined by business cycle turning points rather than by months or quarters do macroeconomic variables appear to evolve on an economic rather than a calendar time scale evidence presented here suggests that they do however the estimated economic time scales are only weakly related to business cycle time scales providing evidence against the view underlying traditional business cycle analysis copyright 1987 by university of chicago press

is there a homogeneous causality pattern between oil prices and currencies of oil importers and exporters although the link between oil prices and dollar exchange rates has been frequently analyzed a clear distinction between prices and nominal exchange rate dynamics and a clarification of the issue of causality has not been provided in addition previous studies have mostly neglected nonlinearities which for example may stem from exogenous oil price shocks using monthly data for various oil exporting and oil importing countries this study contributes to the clarification of those issues we discriminate between long run and time varying short run dynamics using a markov switching vector error correction model in terms of causality the results differ between the economies under observation but suggest that the most important causality runs from exchange rates to oil prices with a depreciation of the dollar triggering an increase in oil prices on the other hand changes in nominal oil prices are responsible for ambiguous real exchange rate effects mostly through the price differential and partly also through a direct influence on the nominal exchange rate overall the fact that the adjustment pattern frequently differs between regimes underlines the fact that the relationships are subject to changes over time suggesting that nonlinearities are an important issue when analyzing oil prices and exchange rates

evidence on purchasing power parity from univariate models the case of smooth transition trend stationarity recent research has found that trend break unit root tests derived from univariate linear models do not support the hypothesis of long run purchasing power parity ppp for us dollar real exchange rates in this paper univariate smooth transition models are utilized to develop unit root tests that allow under the alternative hypothesis for stationarity around a gradually changing deterministic trend function these tests reveal statistically significant evidence against the null hypothesis of a unit root for the real exchange rates of a number of countries against the us dollar however restrictions consistent with long run ppp are rejected for some of the countries for which a rejection of the unit root hypothesis is obtained

the purchasing power parity debate originally propounded by the 16th century scholars of the university of salamanca the concept of purchasing power parity ppp was revived in the interwar period in the context of the debate concerning the appropriate level at which to re establish international exchange rate parities broadly accepted as a long run equilibrium condition in the post war period it first was advocated as a short run equilibrium by many international economists in the first few years following the breakdown of the bretton woods system in the early 1970s and then increasingly came under attack on both theoretical and empirical grounds from the late 1970s to the mid 1990s accordingly over the last three decades a large literature has built up that examines how much the data deviated from theory and the fruits of this research have provided a deeper understanding of how well ppp applies in both the short run and the long run since the mid 1990s larger datasets and nonlinear econometric methods in particular have improved estimation as deviations narrowed between real exchange rates and ppp so did the gap narrow between theory and data and some degree of confidence in long run ppp began to emerge again in this respect the idea of long run ppp now enjoys perhaps its strongest support in more than 30 years a distinct reversion in economic thought

new evidence on nominal exchange rate predictability abstract the meese rogoff puzzle one of the well known puzzles in international economics concerns the weak relationship between nominal exchange rates and market fundamentals the purpose of this paper is to show that market fundamentals do in fact matter in forecasting nominal exchange rates in particular we emphasize the importance of the harrod balassa samuelson effect in modeling deviations from purchasing power parity based on the post bretton woods period we provide solid out of sample evidence that rejects the random walk forecast model at medium term and long term forecast horizons we also find mild evidence for out of sample predictability of nominal exchange rates over the short term

transactions costs and nonlinear adjustment in real exchange rates an empirical investigation eolquilibrium models of real exchange rate determination in the presence of transactions costs imply a nonlinear adjustment process toward purchasing power parity ppp conventional cointegration tests which ignore the effect of transactions costs may be biased against the long run ppp hypothesis our results using both monthly data for the interwar period and annual data spanning two centuries clearly reject the linear framework in favor of an exponential smooth transition autoregressive process the systematic pattern in the estimates of the nonlinear models provides strong evidence of mean reverting behavior for ppp deviations and helps explain the mixed results of previous studies

environmental marketing a source of reputational competitive and financial advantage corporate reputation is an intangible asset that is related to marketing and financial performance the social economic and global environment of the 1990 shas resulted in environmental performance becoming an increasingly important component of a company sreputation this paper explores the relationship between reputation environmental performance and financial performance and looks at the contingencies that impact environmental policy making

the mystery of the multiplying marks a modification of the monetary model fair ray and dwight jaffee methods of estimation for markets in disequilibrium econometrica 40 may 1972 497 514 fair ray and harry kelejian methods of estimation for markets in disequilibrium further study econometrica 42 jan 1974 177 190 goldfeld stephen and richard quandt estimation in a disequilibrium model and the value of information journal of econometrics 3 nov 1975 325 348 hausman jerry the effects of wages taxes and fixed costs on women s labor force participation journal of public economics 14 oct 1980 161 194 mcdonald john and robert moffitt the uses of tobit analysis this review 62 may 1980 318 321 maddala g s and forrest nelson maximum likelihood methods for models of markets in disequilibrium econometrica 42 nov 1974 1013 1030 moffit robert and kenneth kehrer the effect of tax and transfer programs on labor supply the evidence from the income maintenance experiments in ronald ehrenberg ed research in labor economics vol 4 greenwich conn jai press 1981 nelson forrest censored regression models with unobserved stochastic censoring thresholds journal of econometrics 6 nov 1977 309 327 oi walter labor as a quasi fixed factor journal of political economy 70 dec 1962 538 555 rosen harvey and richard quandt estimation of a disequilibrium aggregate labor market this review 60 aug 1978 371 379 tobin james estimation of relationships for limited dependent variables econometrica 26 jan 1958 24 36