social influence and mne strategic response to political risk a global network approach abstract according to the conventional view of mne host country relations mnes faced with political risk condition their strategic responses on each party s relative power positions or bargaining influence drawing insight from network theory institutional theory and international relations research i argue that firm sensitivity to political risk is contingent upon a complementary concept social influence social influence arises through the mutual embeddedness of mne and host government in a complex global network of nations to test my hypotheses i construct a global network of trade relations that i combine with a unique transaction level dataset from the global petroleum industry my results demonstrate that social influence as modeled by home host structural equivalence moderates the effects of political risk further my findings provide support for a conceptual and empirical distinction between social influence and the traditional bargaining influence examined in the literature

inflation and reputation in many macroeconomic models with rational expectations optimal policy is time inconsistent and therefore announced policy may not be credible this paper models the government s credibility explicitly using kreps and wilson s analysis time consistent optimal government policy emerges as a sequential equilibrium in a repeated game this policy is at least as good as the inconsistent optimal policy and dominates the consistent policy when reputational effects are ignored thus the analysis resolves the problem of specifying a credible optimal policy in such models the results show why attempts to disinflate may lead to recession even with perfectly flexible prices this abstract was borrowed from another version of this item

monetary policy committees individual and collective reputations this paper looks at the incentives of individual members of a monetary policy committee to gain a reputation for inflationary toughness i show a policy maker can have more or less incentive to build a reputation when part of a group but group policy making leads to higher expected social welfare not publishing individuals votes raises the temptation to inflate and lowers expected social welfare if the culture or rules of a central bank puts more weight on senior policy makers the incentive to build a reputation is greater but expected social welfare may be higher or lower

first impressions matter signalling as a source of policy dynamics we provide the first direct empirical support for the importance of signalling in monetary policy by testing two key predictions from a novel structural model first all policymaker types should become less tough on inflation over time and secondly types that weigh output more should have a more pronounced shift voting data from the bank of england s monetary policy committee strongly support both predictions counterfactual results indicate signalling has a substantial impact on interest rates over the business cycle and improves the committee designer s welfare implications for committee design include allowing regular member turnover and transparency regarding publishing individual votes

monetary policy with uncertain central bank preferences this paper considers monetary policy when policy makers preferences are private information i show that in the first period of a two period term all policy makers but the least inflation averse inflate less but respond more to shocks than if there were no private information moderately inflation averse policy makers may reduce their inflation most a tendency toward increased conservatism in their second period increases inflation in the first with t period terms inflation depends solely on the policy maker s time left in office with unchanging preferences and no discounting inflation is lower the longer he has left

the economics of career concerns part i comparing information structures many incentives in organizations arise not through explicit formal incentive contracts but rather implicitly through career concerns this paper models career concerns through agents trying to manipulate the market assessment of their future productivity the information flow from current actions to market assessment is therefore crucial in determining the nature of these incentives improved information may either increase or reduce incentives the impact of information provides a major distinction between the explicit and implicit incentives model the paper derives general results on comparisons of information structures which serve as counterparts to the standard results on information structures in the principal agent model sufficient statistic impact of a blackwell garbling comparison of inclusive information structures 1999 the review of economic studies limited

monetary fiscal policy interactions and commitment versus discretion in a monetary union abstract we consider monetary fiscal policy interactions in a monetary union if monetary and fiscal authorities have different ideal output and inflation targets the nash equilibrium output or inflation or both are beyond the ideal points of all authorities leadership of either authority is better fiscal discretion entirely negates the advantage of monetary commitment the optimal monetary rule is equivalent to discretionary leadership of monetary over fiscal policy agreement about ideal output and inflation creates a monetary fiscal symbiosis yielding the ideal point despite disagreement about the relative weights of the two objectives for any order of moves without fiscal co ordination and without monetary commitment

a theory of ambiguity credibility and inflation under discretion and asymmetric information this paper develops a positive theory of credibility ambiguity and inflation under discretion and asymmetric information the monetary policymaker maximizes his own politically motivated objective function that is positively related to economic stimulation through monetary surprises and negatively related to monetary growth the relative importance he assigns to each target shifts stochastically through time his current preference trade off is known to him but not to the public when choosing the state contingent path of money growth for the present and the future the policymaker compares the benefits from current stimulation with the costs associated with higher future inflation expectations current monetary growth conveys information to the public about future money growth because there is persistence in the policymaker s objectives although expectations are rational information is imperfect because monetary control procedures are imprecise as a result the public cannot correctly distinguish persistent changes of emphasis on different policy objectives from transitory monetary control errors the public becomes aware of changes gradually by observing past monetary growth credibility is defined in terms of the speed with which the public recognizes changes in the objectives of the policymaker credibility is lower the noisier monetary control and the more stable the objectives of the policymaker looser monetary control and a higher degree of time preference on the part of the policymaker induce him to produce higher and more variable monetary growth when the policymaker is free to determine the accuracy of monetary control he does not always choose the most effective control available in spite of the fact that monetary surprises always have an expected value of zero the reason is that ambiguous control procedures enable the policymaker to generate positive surprises when he cares more than on average about economic stimulation he leaves the inevitable negative surprises for periods in which he cares more about inflation prevention this result provides an explanation for the fed s preference for ambiguity recently documented by goodfriend 1986 the policymaker is more likely to pick more ambiguous control procedures the more uncertain his objectives and the higher his time preference the paper also provides a theoretical underpinning for the well documented crosscountry positive correlation between the level and the variability of inflation

signalling with many signals this paper examines a market with asymmetric information where there are many signals available and where both the costs of signaling and the product value may depend on many privately known characteristics under a weak condition on the relationship between the marginal cost of increasing the signals and the product value a separating set exists whereby the value of every seller s product is inferred from the seller s optimal choice of signals the separating set constructed is pareto dominant and corresponds to recently proposed equilibrium notions in signaling and screening models copyright 1987 by the econometric society

incentive compatibility in signaling games with a continuum of types on donne deux resultats utiles pour demontrer l existence et pour caracteriser des equilibres de separation dans des jeux de signalement

institutions sans frontieres international agreements and foreign investment we examine whether the presence of international investment agreements iias negotiated among countries for foreign investor protection lowers political risk faced by multinational enterprises mnes drawing on research from international business political science and international law we argue that iias increase expected future cash flows and hence the value of foreign assets by limiting the ability of host governments to make discriminatory policy changes however the need for iia protection and the ability to benefit from it varies with firm characteristics using detailed transaction level data for sale of petroleum assets in 45 countries we find that mnes pay significantly higher amounts for those protected by iias than similar but unprotected assets an effect moderated by the firm s reserve size and state ownership

medium term cycles and housing is regional integration different drehmann et al drehmann m borio c and tsatsaronis k 2012 characterising the financial cycle don t lose sight of the medium term bis working papers no 380 bank for international settlement

separable but not equal the location determinants of discrete services offshoring activities in this paper we explore the question of why firms offshore particular services to specific geographic locations we draw on research related to the unique characteristics of services in trade and commerce and more recent analyses of the transnational unbundling and spatial dispersion of business processes we move beyond a simple assessment of the cost sensitivity or relative sophistication of offshoring services and develop a typology emphasizing the degree to which offshoring services activities are interactive repetitive or innovative we suggest that the location of offshoring projects will depend on the particular mix of these attributes and test this assertion using a data set of 595 export oriented offshore services projects initiated from 2002 to 2005 by us and uk company parents in 45 developed and developing countries we find that offshore location choices greatly depend on these services characteristics and in sometimes surprising ways and draw implications from our findings for international business theory policy and practice

a repeated game model of monetary union given a policy rule of the common central bank of a monetary union member countries with different preferences about inflation and facing asymmetric shocks have different incentives to secure political intervention in the bank s operation and achieve the temporary benefit of surprise inflation this is modelled as a repeated game and the most cooperative outcome subject to the countries incentive compatibility constraints is found the optimal rule responds flexibly to asymmetric shocks adjusting policy away from the full commitment level toward the discretionary level so as to maintain the worse hit country s incentive to abide by the rule

government intervention in the venezuelan petroleum industry an empirical investigation of political risk two important aspects of political risk analysis that have not received much attention in the literature are a the reasons why multinational firms experience different types of intervention and b the timing of intervention in order to address these issues this research develops a conceptual model of political risk based on the premise that host government intervention is related to specific objectives of the government vis a vis multinational firms information reflecting the attainment of objectives motivates the government to intervene in a given manner the application of this model to the case of the venezuelan petroleum industry from years 1947 to 1976 provides some support for this model and gives insight into the timing of specific types of intervention

is transparency about central bank plans desirable a central bank with private information about its preferences has an incentive to reduce its planned inflation to increase the public s perception of its inflation aversion and lower expected future inflation a regime is said to be transparent if planned inflation is observable and reveals the central bank s preferences and to be non transparent if planned inflation is unobservable and can be only imperfectly inferred from actual inflation a central bank in the non transparent regime is said to become more transparent when actual inflation becomes a better signal of planned inflation i find several results about transparent and non transparent regimes some are novel and some contrast with the results of earlier papers in particular i demonstrate that in a non transparent regime increased transparency need not improve the public s ability to infer a central bank s private information i show that society and central banks are better off with more transparency my numerical results suggest that society and central banks prefer the transparent to the non transparent regimes

optimal degrees of transparency in monetary policymaking den meisten akademikern und politischen entscheidungstragern zufolge ist transparenz in der geldpolitik wunschenswert ich untersuche diese behauptung anhand eines kleinen theoretischen models das das vorausschauende verhalten des privaten sektors hervorhebt transparenz erleichtert es denjenigen die preise festsetzen auf die kunftigen geldpolitischen absichten der zentralbank zu schliesen wodurch die laufende inflation starker auf stabilitatspolitische masnahmen reagiert dies fuhrt dazu dass die zentralbank sich eher auf die inflation als auf die stabilisierung der produktionslucke konzentriert in diesem fall kann transparenz negative folgen haben sie kann sich sogar als eine die geldpolitik verzerrende zwangsjacke herausstellen wenn die zentralbank sich stabilitatspolitischer glaubwurdigkeit erfreut und eine aktive monetare stabilisierungspolitik benotigt wird

the obsolescing bargaining model mnc host developing country relations revisited the traditional bargaining model of mnc host developing country relations has become obsolete today those relations are better understood as the result of a two tier multi party bargaining process tier 1 bargaining between the governments of host and home countries occurs bilaterally or through multilateral institutions it produces macro rules on fdi that affect micro negotiations in tier 2 per the traditional bargaining model the extent of fdi liberalization resulting from tier 1 bargaining varies predictably across home host country pairs and industries suggestions for testing the two tier bargaining model are also presented

credibility and flexibility with independent monetary policy committees independent monetary policy committees are a simple way of attaining relatively low inflation without completely sacrificing an activist role for monetary policy if central bankers types are unknown then for a wide range of parameters an independent committee achieves higher social welfare than either a zero inflation rule or discretionary policy conducted by an opportunistic central banker a key reason for the committee s superior performance is that committee members are relatively likely to opt for low inflation and building a reputation when shocks are small when large shocks hit the economy the incentive to react outweighs the reputationbuilding benefit

managing beliefs about monetary policy under discretion in models of monetary policy discretionary policymaking is typically constrained in its ability to manage public beliefs however when a policymaker possesses private information policy actions serve as signals to the public about unobserved economic conditions and belief management becomes an integral part of optimal discretion policies this article derives the optimal time consistent policy for a general linear quadratic setting the optimal policy is illustrated in a simple new keynesian model where analytical solutions can be derived as well in this model imperfect information about the policymaker s output target leads to lower policy losses

inflation forecast contracts we introduce a new type of incentive contract for central bankers inflation forecast contracts which make central bankers remunerations contingent on the precision of their inflation forecasts we show that such contracts enable central bankers to influence inflation expectations more eectively thus facilitating more successful stabilization of current inflation inflation forecast contracts improve the accuracy of inflation forecasts but have adverse consequences for output on balance paying central bankers according to their forecasting performance improves welfare

repeated signalling games and dynamic trading relationships a seller of a nondurable good repeatedly faces a buyer who is privately informed about the position of his demand curve the seller offers a price in each period the buyer chooses a quantity given the price the quantity demanded reveals information about the buyer an equilibrium is characterized with the feature that buyer types separate completely in the first period this equilibrium uniquely satisfies a modified refinement of the cho kreps criterion despite the immediate separation the buyer distorts his behavior throughout the game the requirement to signal types can raise the utility of all types of informed players copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

from the editors endogeneity in international business research this essay builds on the exposition by thomas et al and focuses on analyzing cause and effect in international business research we attempt to explain how endogeneity problems occur and why they are so prevalent in international business research in a non technical fashion we then discuss the importance of explicitly identifying how the chosen research design best approximates a randomized controlled experiment finally we provide some guidelines on achieving this goal and emphasize the practices that seem most relevant to jibs reviewers in evaluating high quality international business research