who moves first an intensity based measure for information flows across stock exchanges abstract in this paper we propose an innovative measure for information flows between stock exchanges we develop an intensity based information share using russell s 1999 autoregressive conditional intensity model thereby we maintain the irregular nature of financial high frequency data and use durations and timing of price changes to determine the informationally dominant market from our empirical application to us listed canadian stocks we conclude that the home market mostly reflects information first on the basis of a cross sectional analysis we find a positive correlation between the intensity based information share and liquidity

formulating research policy on expert advice abstract national research assessments represent the principal policy used by countries with public university systems to improve the quality of their universities research they typically employ expert panels of local academics to assess journal quality and use such assessments to reward publications we propose a model of how experts assess quality and test this model using data from the recent australian assessment controlling for objective quality we show that experts cognitive biases dominate their assessments consequently such assessments exaggerate the quality of the experts research and understate that of their colleagues our model can explain 95 of the variation in assessments

cultural conflict and merger failure an experimental approach we use laboratory experiments to explore merger failure due to conflicting organizational cultures we introduce a laboratory paradigm for studying organizational culture that captures several key elements of the phenomenon in our experiments we allow subjects in firms to develop a culture and then merge two firms as expected performance decreases following the merging of two laboratory firms in addition subjects overestimate the performance of the merged firm and attribute the decrease in performance to members of the other firm rather than to situational difficulties created by conflicting culture

testing for the long run relationship between nominal interest rates and inflation using cointegration techniques 1989 testing for the long run relationship between nominal interest rates and inflation using cointegration techniques applied economics vol 21 no 4 pp 439 447

credit spreads an empirical analysis on the informational content of stocks bonds and cds this paper explores the dynamic relationship between stock market implied credit spreads cds spreads and bond spreads a general vecm representation is proposed for changes in the three credit spread measures which accounts for zero one or two independent cointegration equations depending on the evidence provided by any particular company empirical analysis on price discovery based on a proprietary sample of north american and european firms and tailored to the specific vecm at hand indicates that stocks lead cds and bonds more frequently than the other way round it likewise confirms the leading role of cds with respect to bonds

aging and productivity among economists economists productivity over their careers and as measured by publication in leading journals declines very sharply with age there is no difference by age in the probability that an article submitted to a leading journal will be accepted rates of declining productivity are no greater among the very top publishers than among others and the probability of acceptance is increasingly related to the author s quality rather than the author s age

one security many markets determining the contributions to price discovery when homogeneous or closely linked securities trade in multiple markets it is often of interest to determine where price discovery the incorporation of new information occurs this article suggests an econometric approach based on an implicit unobservable efficient price common to all markets the information share associated with a particular market is defined as the proportional contribution of that market s innovations to the innovation in the common efficient price applied to quotes for the thirty dow stocks the technique suggests that the preponderance of the price discovery takes place at the new york stock exchange nyse a median 92 7 percent information share although most of the classic paradigms in market microstructure concern a security that trades in a single centralized market such situations are becoming increasingly rare in practice fragmentation the dispersal of trading in a security to multiple sites has emerged as a dominant institutional trend this process is of concern to financial economists and regulators because price information and price discovery the impounding of new information into the security price arguably the most important products of a security market have many attributes of public goods as the process of fragmentation accelerates it may be important to determine where the price information and price discovery are being produced 1 this paper suggests a practical econometric approach to this problem the technique is illustrated with an application to u s equity markets many stocks listed on the new york stock exchange nyse trade concurrently on the regional exchanges and the national association of securities dealers national market system nasd nms since a share of ibm stock is the same security whether purchased on the midwest or pacific exchange this is a particularly clear instance of multiple markets nevertheless the expres

decentralized organizational learning an experimental investigation we experimentally study decentralized organizational learning our objective is to understand how learning members of an organization cope with the con founding effects of the simultaneous learning of others we test the predictions of a stylized rational agent model of organizational learning that provides sharp predictions as to how learning members of an organization might cope with the simultaneous learning of others as a function of fundamental variables e g firm size and the discount factor while the problem of learning while others are learning is quite difficult we find support for the comparative static predictions of the models unique symmetric equilibrium jel c72 d23 d83 if one s own actions are embedded in an ecology of the actions of many others who are simultaneously learning and changing it is not easy to understand what is going on the relationship between the actions of individuals in the organization and overall organiza tional performance is confounded by simultaneous learning of other actors

patterns of research productivity in the business ethics literature insights from analyses of bibliometric distributions in any academic discipline published articles in respective journals represent production units of scientific knowledge and bibliometric distributions reflect the patterns in such outputs across authors or producers closely following the analysis approach used for similar studies in the economics and finance literature we present the first study to examine whether there exists an empirical regularity in the bibliometric patterns of research productivity in the business ethics literature our results present strong evidence that there indeed exists a distinct empirical regularity it is the so called generalized lotka s law of scientific productivity pattern the number of authors publishing n papers is about 1 n c of those publishing one paper we discuss the likely processes that underlie the productivity pattern postulated by the generalized lotka s law we find that the value of the exponent c is equal to about 2 6 for the comprehensive bibliometric data across the two leading business ethics journals the observed research productivity pattern in the business ethics area a relatively young discipline is interestingly very consistent with those found in much older related business disciplines like economics accounting and finance we discuss the general implications of our findings

reputation transmission without benefit to the reporter a behavioral underpinning of markets in experimental focus reputation is a commonly cited check on opportunism but it is often unclear what motivates an agent to report another s behavior when it is easy for the aggrieved individual to move on in a sharply focused laboratory experiment we find that many cooperators pay to report a defecting partner without the possibility of pecuniary benefit when this has the potential to deprive the latter of future gains and to help his next partner we illustrate how a social preference can explain such costly reporting and also discuss evidence for a role of emotions jel c91 d03 d63

the effect of explicit reference points on consumer choice and online bidding behavior sellers often explicitly suggest to buyers that they compare one option to other reference options building on the notion that loss aversion is more pronounced when comparisons are explicit rather than implicit we propose that the mere fact that consumers are explicitly told to make particular comparisons induces more risk averse cautious choice and bidding behavior this proposition was supported in a field experiment involving real online auctions in which comparisons among listings either were done spontaneously by bidders or were encouraged using an explicit instruction to compare the focal auction with adjacent listings results showed that explicit reference points 1 diminished the influence of adjacent auction prices on the focal auction s price 2 led participants to submit fewer lower and later bids 3 increased the incidence of sniping 4 decreased bidding frenzy and 5 decreased the tendency to bid on multiple items simultaneously the impact of explicit comparisons on risk averse behavior was further tested in a very different context using a laboratory choice experiment in that study explicit instructions to compare option sets increased the tendency to choose the compromise low risk and all average alternatives we discuss the theoretical and practical implications of this research

zero as a special price the true value of free products when faced with a choice of selecting one of several available products or possibly buying nothing according to standard theoretical perspectives people will choose the option with the highest cost benefit difference however we propose that decisions about free zero price products differ in that people do not simply subtract costs from benefits but instead they perceive the benefits associated with free products as higher we test this proposal by contrasting demand for two products across conditions that maintain the price difference between the goods but vary the prices such that the cheaper good in the set is priced at either a low positive or zero price in contrast with a standard cost benefit perspective in the zero price condition dramatically more participants choose the cheaper option whereas dramatically fewer participants choose the more expensive option thus people appear to act as if zero pricing of a good not only decreases its cost but also adds to its benefits after documenting this basic effect we propose and test several psychological antecedents of the effect including social norms mapping difficulty and affect affect emerges as the most likely account for the effect

overchoice and assortment type when and why variety backfires almost universally research and practice suggest that a brand that increases its product assortment or variety should benefit through increased market share in this paper we show this is not always the case we introduce the construct assortment type and demonstrate that the effect of assortment size on brand share is systematically moderated by assortment type we define an alignable assortment as a set of brand variants that differ along a single compensatory dimension such that choosing from that assortment only requires within attribute trade offs in contrast we define a nonalignable assortment as a set of brand variants that simultaneously vary along multiple noncompensatory dimensions demanding between attribute trade offs in turn we argue that an alignable assortment can efficiently meet the diverse tastes of consumers thereby increasing brand share but that a nonalignable assortment increases both the cognitive effort and the potential for regret faced by a consumer thereby decreasing brand share we term this effect overchoice across three studies we provide evidence of overchoice and tie the effect to the effort and regret brought about by nonalignability in the process we demonstrate that simplification of information presentation reversibility of choice and a reduction in underlying nonalignability serve to reduce or eliminate this effect

life after takeover economic consequences of takeovers are investigated by analyzing profitability of enterprises acquired a s a direct or indirect white knight consequence of tender offer s target companies pre tender profitability averaged 0 97 percentag e points below peer industry norms nine years after takeover acquir ed lines of business had operating income assets percentages 3 10 poi nts below those of non tender lines with similar industry bases mark et shares and merger accounting methods most of the targets postta keover profit decline stemmed from asset value writeups there is no indication that on average the acquirers raised their targets operat ing profitability net of merger related accounting adjustments copyright 1987 by blackwell publishing ltd

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

news announcements and price discovery in foreign exchange spot and futures markets abstract this paper studies competition in price discovery between spot and futures rates for the eur usd and jpy usd markets around scheduled macroeconomic announcements using both the information shares approach and the common factor component weight approach for futures prices from the chicago mercantile exchange cme as well as deal prices from spot trading on the electronic broking services ebs we gauge how foreign exchange spot and futures markets respond to news surprises the results show that the spot rates provide more price discovery than do the cme futures rates overall however the contribution of the futures rates to price discovery increases in the time surrounding macroeconomic announcement releases

cointegration results of farm incomes and production costs in us agriculture this study analyses the dynamic relationships between farm incomes and production costs in the us agricultural industry by applying the cointegration technique the results provide evidence of long run equilibrium relationships between cash marketings and production costs however the results do not show such relationships between total revenues which include cash marketings and government payments and production costs chief conclusions of this study are that if market forces alone were to guide farmers decisions one could expert long run equilibrium relationships between the cash receipts and costs however government interventions seem to disrupt this equilibrium the results also suggest that production costs can be forecast using cash marketings which are found to be weakly exogenous the error correction model and vector autoregression model are used to estimate and compare simulation performances of the cointegrated system of cash marketings and production costs

a characterization of the price behavior of international dual stocks an error correction approach abstract the purpose of this study was to investigate dominant satellite relationships of dually listed stocks it deals with the interrelations between stocks listed and traded in two international unsynchronized markets the data exhibit first order non stationarity and the series across markets are cointegrated this gives a justification for an error correction model which incorporates a short run adjustment mechanism the model is applied for different day groups the main findings are 1 arbitrage opportunities are generally not available 2 the domestic country usually emerges as the dominant market and the foreign market as the satellite one 3 the adjustment mechanism coefficient is highly significant for most shares 4 different behavioral patterns emerge for middle of the week days as compared with beginning end of week days and 5 the model fits better for the more heavily traded shares

priced and unpriced online markets some online resources are free and others are not but it can be hard to predict which resources are in which category do users pay for web based e mail sometimes they do as in the case of lifetime e mail service from pobox but often they do not as in the case of hotmail from microsoft or gmail from google do users pay for wireless internet access at hotspots historically such access carries a fee as it does at the t mobile hotspots at many airports and hotels but now a number of retail outlets are providing such access without a fee such as panera bread whole foods and recently starbucks do users pay for software many users do pay for a wide variety of commercial software yet other software like the linux operating system and the firefox web browser can be downloaded without charge zero prices offer important benefits even relative to small positive prices for one fee free access reduces transaction costs eliminating the need for billing systems as well as in many cases account setup user names and the like furthermore zero prices seem to create an environment of experimentation and progress for products and consumers lessig 2002 von hippel 2001 finally consumers overwhelmingly favor zero price products even beyond what might be predicted by their ordinary efforts to maximize consumer surplus shampanier mazar and ariely 2007 yet experience in other contexts offers cause for concern although marginal costs may be near zero for many levels of use of online resources costs generally eventually increase as usage nears a capacity constraint given by technological capability or system design more generally experience in other contexts repeatedly reveals overconsumption scarcity and even hoarding when resources are

trends in the publication of empirical economics this paper documents recent trends in the publication of empirical articles in general interest economics journals three measures of journal quality are estimated the author finds substantial differences in publication rates of empirical articles among top tier and second tier journals and shows that the empirical percentages among general interest journals has been converging of late he offers potential explanations for the negative relationship between measured journal quality and empirical publication rates as well as the recent convergence

testing for stationarity and co integration an application to saudi arabian monetary data 1990 testing for stationarity and co integration an application to saudi arabian monetary data applied economics vol 22 no 11 pp 1577 1590

the impact of economics on management abstract this article analyzes the impact of economics on management by examining citations of 71 management journals aer jpe econometrica and qje have the highest impact industrial organization journals also have a particularly large impact the share of economics in management citations drops from 9 91 percent until 1995 to 5 70 percent for 1996 2005 three possible explanations for this decrease are analyzed economics research became more mathematical because management is a younger discipline it grew faster than economics in quantity and quality of research and interdisciplinary spillover of research is slower than the spillover within a discipline only the second explanation is supported by the data

five steps to planning success experimental evidence from us households while financial knowledge has been linked to improved financial behaviour there is lit tle consensus on the value of financial education in part because rigorous evaluation of various programmes has yielded mixed results however given the heterogeneity of financial education pro grammes in the literature focusing on generic financial education can be inappropriate and even mis leading lusardi 2009 and others argue that pedagogy and delivery matter significantly in this paper we design and field a low cost easily replicable financial education programme called five steps covering five basic financial planning concepts that relate to retirement we conduct a field experiment to evaluate the overall impact of five steps on a probability sample of the american population in different treatment arms we quantify the relative impact of delivering the programme through video and narrative formats our results show that short videos and narratives each takes about 3 minutes have sizeable short run effects on objective measures of respondent knowledge moreover keeping informational content relatively constant format has significant effects on other psychological levers of behavioural change effects on self efficacy are significantly higher when videos are used which ultimately influences knowledge acquisition follow up tests of respondents knowledge approximately 8 months after the interventions suggest that between one quarter and one third of the knowledge gain and about one fifth of the self efficacy gain persist thus this simple programme has effects both in the short run and medium run

european economics an analysis based on publications in the core journals abstract in this paper we provide a ranking of european economics institutions and countries based on publications in a core set of 10 economic journals from 1991 to 1996 we find that the three leading universities in europe are the london school of economics tel aviv university and oxford university while the three top ranked countries are the u k france and israel

do your online friends make you pay a randomized field experiment on peer influence in online social networks demonstrating compelling causal evidence of the existence and strength of peer to peer influence has become the holy grail of modern research in online social networks in these networks it has been consistently demonstrated that user characteristics and behavior tend to cluster both in space and in time there are multiple well known rival mechanisms that compete to be the explanation for this observed clustering these range from peer influence to homophily to other unobservable external stimuli these multiple mechanisms lead to similar observational data yet have vastly different policy implications in this paper we present a novel randomized experiment that tests the existence of causal peer influence in the general population one that did not involve subject recruitment for experimentation of a particular large scale online social network we utilize a unique social feature to exogenously induce adoption of a paid service among a group of randomly selected users and in the process develop a clean exogenous randomization of treatment and control groups a variety of nonparametric semiparametric and parametric approaches ranging from resampling based inference to ego level random effects to logistic regression to survival models yield close to identical statistically and economically significant estimates of peer influence in the general population of a freemium social network our estimates show that peer influence causes more than a 60 increase in odds of buying the service due to the influence coming from an adopting friend in addition we find that users with a smaller number of friends experience stronger relative increase in the adoption likelihood due to influence from their peers as compared to the users with a larger number of friends our nonparametric resampling procedure based estimates are helpful in situations of networked data that violate independence assumptions we establish that peer influence is a powerful force in getting users from free to premium levels a known challenge in freemium communities this paper was accepted by sandra slaughter information systems

adding asymmetrically dominated alternatives violations of regularity and the similarity hypothesis an asymmetrically dominated alternative is dominated by one item in the set but not by another adding such an alternative to a choice set can increase the probability of choosing the item that dominates it this result points to the inadequacy of many current choice models and suggests product line strategies that might not otherwise be intuitively plausible

the determinants of price discovery evidence from us canadian cross listed shares abstract we examine the determinants of price discovery for canadian firms cross listed on the main us stock exchanges over the period 1996 2011 sampling at a one minute frequency we compute gonzalo and granger component shares cs and employ a system gmm approach to control for persistence in price discovery and endogeneity between cs and its determinants we find that price discovery is highly persistent and that there is strong evidence of simultaneity between cs and its determinants we conclude that lower relative spreads and higher relative trading activity increase an exchange s contribution to price discovery we also document that it is small trades that drive price discovery particularly since the introduction of decimalization

experimental evidence on the evolution of the meaning of messages in sender receiver games an experiment this paper experimentally investigates the evolution of message meanings when talk is cheap we consider communication between a privately informed sender and a receiver when the sender s message does not affect payoffs directly sender receiver games introduced by jerry green and nancy stokey 1980 and vincent p crawford and joel sobel 1982 provide the simplest stylized environment in which communication is essential communication is the only way to link the receiver s action to the sender s private information in addition sender receiver games have been widely used to study communication in accounting economics finance and political science intuition strongly suggests that effective communication will evolve when the players interests are closely aligned however there is always a nash equilibrium in which the sender randomizes uniformly across all messages such babbling equilibria are proper roger b myerson 1978 blume 1994 and even strategic stability elon kohlberg and jeanfrancois mertens 1986 does not rule out uninformative equilibria in general in response a literature developed that formulates equilibrium selection criteria by appealing to the existence of a commonly understood language matthew rabin 1990 steven a matthews et al 1991 joseph farrell 1993 that can be used to formulate credible deviations from equilibrium unfortunately the selection criteria from this literature are frequently strong enough to remove all equilibria from consideration in addition these arguments are vulnerable to stiglitz s observation in koo cho and david m kreps 1987 that successful deviations from equilibrium may induce further deviations which in turn may undermine the credibility of the original deviations both problems can be avoided by a dynamic approach as in rabin and sobel 1996 we also adopt a dynamic perspective but do not require messages to have a priori meanings instead distinct meanings may emerge endogenously this is important for communication across cultures and for language change 2 we are guided by recent results of blume department of economics university of iowa iowa city ia 52242 dejong department of accounting university of iowa iowa city ia 52242 kim department of economics sung kyun kwan university seoul 110 745 korea sprinkle department of accounting university of wisconsin madison wi 53706 we thank joyce berg vince crawford robert forsythe joel horowitz deirdre mccloskey forrest nelson larry samuelson gene savin joel sobel and especially two anonymous referees for their advice and suggestions we benefitted from comments and discussions resulting from presentations at the 1994 summer meetings of the econometric society the 1996 social learning workshop at suny stony brook the io me gt workshop at the university of iowa the university of bonn the university of bielefeld the center for economic research at tilburg university ohio state university seoul national university and texas a m university we are grateful for financial support from the college of business administration at the university of iowa the ira b mcgladrey institute and the national science foundation

u k and u s trading of british cross listed stocks an intraday analysis of market integration this article analyzes intraday patterns for u k and u s trading of british cross listed stocks for each market the intraday patterns for these stocks closely resemble those of otherwise similar non cross listed stocks there is a 2 hour period each day when cross listed stocks are traded both in new york and in london this overlap is characterized by concentrated trading as private information originating in new york gets incorporated into prices in both markets cross border competition for order flow tends to reduce already declining spreads in london by contrast new york specialists maintain high spreads during the overlap overall the evidence indicates that order flow for cross listed securities is segmented article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the relative impacts of economics journals 1970 1990 our data collection and database assembly efforts were assisted by john p sophocleus mark gwartney michele butler and scott ralston we received extremely valuable computer programming assistance from jon brunson and edward novak constructive comments were receivedfrom two anonymous reviewers financial supportfrom the faculty development committee at salisbury state university is gratefully acknowledged

leading institutional contributors to the elite economic journals given the prestige enjoyed by several economic departments there is a natural curiosity regarding their contributions to the economic literature this article analyses the appearance of all academic institutions worldwide in the eight leading economic journals the blue ribbon eight from 1991 to 2005 we cite those institutions who appear the most and analyse the composition of appearances across all eight journals to assess their degree of diversity while it is tempting to use these measures as a ranking of institutions the analysis is meant to be purely an historical appreciation of the contributions of these admirable institutions

the institutional concentration of authors in top journals of economics during the last two decades this paper addresses the institutional concentration of authors in 15 top economics journals from 1977 to 1997 the concentration of authors phd affiliations is substantially higher than the concentration of authors current affiliations relating input indicators such as population number of universities with economics departments or manpower in economics to publication output reduces the us dominance considerably whereas israel and the united kingdom come out excellently exporters and importers of phds among universities are identified concentration ratios like the herfindahl index lack a clear time trend nevertheless the position of the united states has been weakening in recent years

agent based modeling public choice and the legacy of gordon tullock the future of modeling in public choice may be glimpsed by examining its evolution in economics for problems that are influenced by heterogeneity of actors social networks or emergence the arising of a complex system from simple phenomena such as adam smith s invisible hand economists increasingly are turning to agent based modeling agent based modeling is a form of computational analysis that focuses on agents rather than on aggregates in his long career as a founding scholar of public choice gordon tullock repeatedly followed the agent oriented approach of methodological individualism many of tullock s models are thus highly amenable to further exploration using that method as agent based modeling becomes more and more popular the importance of tullock s work will continue to grow

absorptive capacity and social capital in regional innovation systems the case of the lahti region in finland the recent theories of innovation suggest that there is great potential for innovation in the structural holes and weak links of the innovation system higher absorptive capacity enables an easier

the impact of management incentives in intergroup contests abstract in intergroup contests a manager advises and motivates her group s members her rewards often depend on the subsequent contest expenditure of the members i test whether such incentives undermine the credibility and effectiveness of a manager s efforts in the different experimental treatments the managers either benefit from very high or low expenditure or get a predetermined payment the results show that different management incentives shape the expenditure of the group members even if managers have an advisory role only however group members follow recommendations more closely if management compensation is not linked to contest expenditures

the great crash of 2008 and the reform of economics the 2008 economic crash led to remarkable shifts of opinion among world leaders does this crisis create favourable conditions for the reform and revitalisation of economics itself from a subject dominated by mathematical techniques to a discipline more oriented to understanding real world institutions and actors and why were warnings of financial collapse not heeded recent shortcomings are partly related to the global triumph of market individualist ideology and partly to the exaggerated roles of modelling and quantification these failures of economics are partly peculiar to the discipline and also a result of other wider institutional and cultural forces

first author conditions this paper provides a theoretical explanation for the persistent use of alphabetical name ordering on academic papers in economics in a context in which market participants are interested in evaluating the relative individual contribution of authors it is an equilibrium for papers to use alphabetical ordering moreover it is never an equilibrium for authors always to be listed in order of relative contribution in fact we show via an example that the alphabetical name ordering norm may be the unique equilibrium althoug multiple equilibria are also possible finally we charaterize the welfare properties of the noncooperative equilibrium and show it to produce research of lower quality than is optimal and than would be achieved if coauthors were forced to use name ordering to signal relative contribution

cross function and same function alliances how does alliance structure affect the behavior of partnering firms firms collaborate to develop and deliver new products these collaborations vary in terms of the similarity of the competencies that partnering firms bring to the alliance in same function alliances partnering firms have similar competencies whereas in cross function alliances partners have very different competencies on examining managers view of these alliances we find that on average same function alliances are expected to perform better than cross function alliances holding fixed the level of inputs a game theoretic analysis shows that this apprehension about cross function alliances is consistent with a pareto inferior equilibrium a pareto superior equilibrium however suggests that partners in cross function alliances may invest more in their alliances than those in same function alliances it is also often believed that increasing the number of partnering firms is not conducive for collaborative effort our analysis shows that this belief is correct for same function alliances but not for cross function alliances we test these equilibrium predictions in an experiment where we exogenously vary the type of alliance and the number of partnering firms the experimental results lend support for the pareto superior equilibrium partners in cross function alliances invested more than their counterparts in same function alliances and this difference in investment levels increased with the number of partnering firms we extend our model to consider alliances where firms have an opportunity to learn from their partners and later leverage this knowledge outside the scope of their alliance though such learning increases the resources committed by alliance partners in the learning phase it decreases investment in the subsequent competition and also dampens the overall investment across the two stages in addition an increase in interalliance competition decreases investments in the focal alliance but increases investment in the competition outside the scope of the alliance

cross border listings and price discovery evidence from u s listed canadian stocks we examine the contribution of cross listings to price discovery for a sample of canadian stocks listed on both the toronto stock exchange tse and a u s exchange we nd that priceson the tse and u s exchange are cointegrated and mutually adjusting the u s share of price discovery ranges from 0 2 percent to 98 2 percent with an average of 38 1 percent the u s share is directly related to the u s share of trading and to the ratio of proportions of informative tradeson the u s exchange and the tse and inversely related to the ratio of bid ask spreads with the enhanced globalization of nancial markets the number of non u s rms cross listing shares on a u s exchange has substantially increased attracting non u s listings is now a top priority of the u s stock exchanges at the end of 2000 420 non u s rmswere listed on the new york stock exchange nyse the number of foreign rmslisted on nasdaq waseven higher the popularity of international cross listings has prompted many academic studies on the topic 1 most of these studies focus on the bene ts of international cross listings including the reduced cost of capital and the enhanced liquidity of a rm s stock studiessuch asalexander eun and janakiramanan 1987 1988 and foerster and karolyi 1993 suggest that the cost of capital declines because the portion of the risk premium that compensates for cross border investment barriers dissipates miller 1999 and foerster and karolyi 1999 propose increased investor recognition as another possible explanation several studies examine changes in trading volume and costs due to international cross listing foerster and karolyi 1998 nd that the bid ask spreads in canada decrease after the cross listing of canadian stocks in the united states domowitz glen and madhavan 1998 suggest that the impact of cross listing is complex and depends on the degree of quote transparency that is the extent to which price information is observable in the two markets smith and so anos 1997 examine if cross listing is a zerosum game with increased trading in the united states being oiset by reduced

if you tourist behave irrationally i ll find you abstract when departures from rational behavior can potentially be expected modeling should allow for their identification and their quantification in this regard prices in tourism might have effects that may not be as apparent as economic theory predicts this article incorporates the sticker shock formulation into the mixed logit model without imposing consistency with consumer theory to accommodate any possible positive or negative price effects by allowing the parameters of price and sticker shock term to take any value negative or positive we detect abnormal behaviors in the tourist demand not only is the negative relationship between price and demand inverted for some people but also some tourists might be willing to accept higher than expected prices the non well behaved groups shares are estimated

just another niche in the wall how specialization is changing the face of mainstream economics there is considerable discussion on so called mainstream pluralism that is on the co presence of a variety of research programmes in today s mainstream economics that 1 significantly deviate from the neoclassical core 2 are pursued by different often separate communities of researchers and 3 have their origins outside economics the literature tends to regard mainstream pluralism as a transitory state towards a new post neoclassical mainstream this paper advances a new interpretation it suggests that the changing and fragmented state of mainstream economics is likely to persist over time under the impact of specialization as a self reinforcing mechanism and the creation of new specialties and approaches also through collaboration with researchers from other disciplines

subdiscipline specific journal rankings whither applied economics in light of widespread specialization of research and teaching it seems appropriate to supplement the existing general rankings of economics journals with subdisciplinespeci c rankings that is the primary objective of this paper the availability of subdiscipline speci c rankings also permits both i alternative journal ranking methods for the general discipline that account for the breadth of a journal s impact across specialized elds and ii estimation of the relative weights implicitly associated with each eld in traditional disciplinary journal rankings the results are robust to the exclusion of self citations

the limits of fungibility relational schemata and the value of things four experiments test predictions on endowment and mental accounting effects of a theoretical perspective that stresses the symbolic relational significance for consumer transactions and that posits the placement of qualitative boundaries on fungibility although people accepted proposals to buy objects acquired in market pricing relationships as routine the same proposals in communal sharing authority ranking and equality matching relationships triggered distress and erratically high dollar valuations symbolic ownership history also moderated valuations in a purely market setting and the effects of symbolic relational source of income extended even to spending decisions examination of the model s ordinal predictions revealed stronger effects for equality matching than for authority ranking relationships

the red and the black mental accounting of savings and debt in the standard economic account of consumer behavior the cost of a purchase takes the form of a reduction in future utility when expenditures that otherwise could have been made are forgone the reality of consumer hedonics is different when people make purchases they often experience an immediate pain of paying which can undermine the pleasure derived from consumption the ticking of the taxi meter for example reduces one s pleasure from the ride we propose a double entry mental accounting theory that describes the nature of these reciprocal interactions between the pleasure of consumption and the pain of paying and draws out their implications for consumer behavior and hedonics a central assumption of the model which we call prospective accounting is that consumption that has already been paid for can be enjoyed as if it were free and that the pain associated with payments made prior to consumption but not after is buffered by thoughts of the benefits that the payments will finance another important concept is coupling which refers to the degree to which consumption calls to mind thoughts of payment and vice versa some financing methods such as credit cards tend to weaken coupling whereas others such as cash payment produce tight coupling our model makes a variety of predictions that are at variance with economic formulations contrary to the standard prediction that people will finance purchases to minimize the present value of payments our model predicts strong debt aversion that they should prefer to prepay for consumption or to get paid for work after it is performed such pay before sequences confer hedonic benefits because consumption can be enjoyed without thinking about the need to pay for it in the future likewise when paying beforehand the pain of paying is mitigated by thoughts of future consumption benefits contrary to the economic prediction that consumers should prefer to pay at the margin for what they consume our model predicts that consumers will find it less painful to pay for and hence will prefer flat rate pricing schemes such as unlimited internet access at a fixed monthly price even if it involves paying more for the same usage other predictions concern spending patterns with cash charge or credit cards and preferences for the earmarking of purchases we test these predictions in a series of surveys and in a conjoint like analysis that pitted our double entry mental accounting model against a standard discounting formulation and another benchmark that did not incorporate hedonic interactions between consumption and payments our model provides a better fit of the data for 60 of the subjects the discounting formulation provides a better fit for only 29 of the subjects even when allowing for positive and negative discount rates the pain of paying we argue plays an important role in consumer self regulation but is hedonically costly from a hedonic perspective the ideal situation is one in which payments are tightly coupled to consumption so that paying evokes thoughts about the benefits being financed but consumption is decoupled from payments so that consumption does not evoke thoughts about payment from an efficiency perspective however it is important for consumers to be aware of what they are paying for consumption this creates a tension between hedonic efficiency and what we call decision efficiency various institutional arrangements such as financing of public parks through taxes or usage fees play into this tradeoff a producer developing a pricing structure for their product or service should be aware of these two conflicting objectives and should try to devise a structure that reconciles them

initiating private collective innovation the fragility of knowledge sharing incentives to innovate are a central element of innovation theory in the private investment model innovators privately fund innovation and then use intellectual property protection mechanisms to appropriate returns from these investments in the collective action model public subsidy funds public goods innovations characterized by non rivalry and non exclusivity in using these innovations recently these models have been compounded in the private collective innovation model where innovators privately fund public goods innovations private collective innovation is illustrated in the case of open source software development this paper contributes to the work on this model by investigating incentives that motivate innovators to share their knowledge in an initial situation before there is a community to support the innovation process we use game theory to predict knowledge sharing behavior in private collective innovation and test these predictions in a laboratory setting the results show that knowledge sharing is a coordination game with multiple equilibria reflecting the fragility of knowledge sharing between innovators with conflicting interests the experimental results demonstrate important asymmetries in the fragility of knowledge sharing and in some situations more knowledge sharing than theoretically predicted a behavioral analysis suggests that knowledge sharing in private collective innovation is not only affected by material incentives but also by social preferences such as fairness the results offer general insights into the relationship between incentives and knowledge sharing and contribute to a better understanding of the initiation of private collective innovation

the effects of access to health insurance evidence from a regression discontinuity design in peru in many countries large parts of the population do not have access to health insurance peru has made an effort to change this in the early 2000s the institutional setup gives rise to the rare opportunity to study the effects of health insurance coverage exploiting a sharp regression discontinuity design we find large effects on utilization that are most pronounced for the provision of curative care individuals seeing a doctor leads to increased awareness about health problems and generates a potentially desirable form of supplier induced demand they decide to pay themselves for services that are in short supply

quality perceptions and asymmetric switching between brands rotating indifference curves are used to induce an income effect that favors superior brands at the expense of inferior brands in a discrete choice model when calibrated on scanner panel data the model yields an objective measure of brand quality which is related to the rate of rotation the model also leads to asymmetric responses to price promotions where switching up to high quality brands is more likely than switching down the model is capable of nesting the standard logit model and is similar to a nested logit model when there exists clusters of brands of like quality the model is used to explore a product line pricing decision where profits are maximized subject to the constraint that consumer utility is maintained

the dynamics of price discovery for cross listed shares evidence from australia and new zealand abstract this paper studies the dynamics of price discovery for markets with bilateral cross listings using a sample of four australian stocks cross listed in new zealand and five new zealand stocks cross listed in australia for the period january 2002 to december 2007 we assess hasbrouck 1995 information shares and grammig et al 2005 conditional information shares over time we observe that in both cases the home market is dominant in terms of price discovery however when studying price discovery over time we find that the importance of the australian market the larger of the two markets is increasing for both australian and new zealand domiciled firms finally using panel regression analysis we find that the growth in the importance of the australian market is positively related to the growth in the size of the firm and negatively related to the size of the percentage spread in the australian market implying that as firms grow larger and their cost of trading in australia declines the australian market becomes more informative

incommensurate resources not just more of the same abstract the pricing literature is replete with research that focuses on how consumers respond to sales promotions when both the reference level and the change are expressed in dollar terms i e discounts the psychophysics of pricing suggests that changes in monetary magnitude are not based on their absolute level but rather on their deviation from some reference level or how the change is framed often however a promotion is presented in nonmonetary terms e g a premium when two resources are delivered simultaneously but in different currencies e g receive a free razor with the purchase of a can of shaving cream the marginal value of the nonmonetary incremental benefit may be difficult to evaluate in relation to the focal product or its price therefore the value of the premium may be less likely than a comparable discount to be viewed in a relative sense and thus less likely to suffer from diminishing marginal returns this research explores how people often fail to exhibit the sam

industry structural inefficiency and potential gains from mergers and break ups a comprehensive approach an efficiency indicator of industry configuration allowing for entry exit of firms is presented which accounts for four sources components 1 size inefficiencies arising from firms which can be conveniently split into smaller units 2 efficiency gains realized through merger of firms 3 re allocation of inputs and outputs among firms 4 technical inefficiencies the indicator and its components are computed using linear and mixed integer programming data envelopment analysis models a method to monitor the evolution of these components in time is introduced data on hospitals in australia show that technical inefficiency of hospitals accounts for less than 15 of total industry inefficiency with 40 attributable to size inefficiencies and the rest to potential mergers and re allocation effects

research note the researcher as a consumer of scientific publications how do name ordering conventions affect inferences about contribution credits when researchers from different fields with different norms collaborate the question arises of how name ordering conventions are chosen and how they affect contribution credits in this paper we answer these questions by studying two disciplines that exemplify the two cornerstones of name ordering conventions lexicographical ordering i e alphabetical ordering endorsed in economics and nonlexicographical ordering i e ordering according to individual contributions endorsed in psychology inferences about credits are unambiguous in the latter arrangement but imperfect in the former because alphabetical listing can reflect ordering according to individual contributions by chance we contrast the fields of economics and psychology with marketing a discipline heavily influenced by both based on archival data consisting of more than 38 000 journal articles we show that the three fields have different ordering practices in two empirical studies with 351 faculty and graduate student participants from all three disciplines as well as in a computer simulation we show that ordering practices systematically affect and shape the allocation of perceived contributions and credit whereas strong disciplinary norms in economics and psychology govern the allocation of contribution credits a more heterogeneous picture emerges for marketing this lack of strong norms has detrimental effects in terms of assigned contribution credits

the effect of medicaid premiums on enrollment a regression discontinuity approach abstract this paper estimates the effect that premiums in medicaid have on the length of enrollment of program beneficiaries whether and how low income families will participate in the exchanges and in states medicaid programs depends crucially on the structure and amounts of the premiums they will face i take advantage of discontinuities in the structure of wisconsin s medicaid program to identify the effects of premiums on enrollment for low income families i use a 3 year administrative panel of enrollment data to estimate these effects i find an increase in the premium from 0 to 10 dollars per month results in 1 4 fewer months enrolled and reduces the probability of remaining enrolled for a full year by 12 percentage points but other discrete changes in premium amounts do not affect enrollment or have a much smaller effect i find no evidence of program enrollees intentionally decreasing labor supply in order to avoid the premiums

information shares in the us treasury market abstract this paper highlights the previously neglected role of the futures markets in us treasury price discovery the estimates of 5 and 10 year govpx spot market information shares typically fail to reach 50 from 1999 on the govpx information shares for the 2 year contract are higher than those of the 5 and 10 year maturities but also decline after 1998 relative bid ask spreads number of trades and realized volatility are statistically significant and explain up to 21 of daily information shares in roughly 1 4 of cases when public information is released the futures market gains information share but macroeconomic announcements rarely explain information shares independently of liquidity

costly communication and learning from failure in organizational coordination abstract this paper investigates the coordination failure that arises from combining two small pre existing groups and focuses on the reaction of group members to this change in environment in an experiment small groups were first able to establish a coordination history in a repeated minimum effort game in the second phase two groups with different histories were combined into a larger group unlike most of the previous literature subjects could endogenously choose to communicate in the newly formed group for a small fee while communication proved to be necessary for preventing coordination failure in the newly formed group only every second subject was willing to implement communication particularly subjects from groups with a less efficient coordination experience in the first phase were more likely to realize the potential of coordination failure in the new group and were thus more likely to decide for communication the results may be useful for understanding how groups coordinate in changing environments as they are common in economic contexts

core journals in economics gaines h liner this article ranks core journals in economics using the textbook citation method rankings are produced from citations in graduate level microeconomics macroeconomics and econometrics textbooks textbooks used in the study were chosen through responses from a survey of professors in top tier economics departments the top nine journals or core journals from this study correlate closely in rank with the results of two comparison studies second tier journals identified in this study correlate less closely in rank with second tier journals in comparison studies jel a i introduction between 1970 and 1990 the number of published pages in economics journals more than doubled laband and piette 1994 and during the early 1970s budgets of libraries devoted to journals grew in percentage terms several fold relative to those devoted to books liebowitz and palmer 1984 laband and piette 1994 reported that between 1976 and 1985 at least 55 new economics journals commenced publication although not all journals are considered general interest journals many emphasize the importance of economic theory in their submission instructions to authors with this increased emphasis on research scholars and administrators alike have acquired an increased sensitivity to how journals rank in quality influence or impact the variety of methods used to rank journals departments and authors attests to the increased concern individuals place on such issues the social sciences citation index ssci institute for scientific information 1986 has figured prominently as a source of data in a variety of studies burton and phimister 1995 laband and piette 1994 liebowitz and palmer 1984 and stigler et al 1995 provide recent examples another approach occasionally used in ranking of economics departments involves choosing citation data from the premier core or principal journals departmental rankings are then based on the number of journal articles or pages published by members of their faculty in these journals graves et al 1982 burkitt and baimbridge 1995 conroy et al 1995 scott and mitias 1996 and dusansky and vernon 1998 have used variations of this approach others have surveyed deans and chairpersons for their own rankings of journals see enomoto and ghosh 1993 for one recent example a potential weakness of this approach is that survey respondents can be influenced by recent and not so recent literature on the subject and by each other some earlier studies have attempted to rank journals by their quality see liebowitz and palmer 1984 for a review and beed and beed 1996 for a criticism of attempts to measure journal quality because an objective ranking of journals by their quality is difficult if not impossible most recent studies mentioned above have attempted to rank journals based on their impact or their influence ranking the number of citations to journal articles in other journal articles provides only one path to measuring the potential impact a journal has on individuals and the profession and ultimately the broader community davis 1998 pointed out that the often used ssci data under represent journals that share content with other social sciences a second problem noted is that not all of any journal s citations are identified by citing journal in every case the list is truncated and some portion of a journal s citations are simply entered as all other davis 1998 62 moreover the percentage of citations in the all other category is not necessarily the same from journal to journal this might bias raw counts of citations as well as attempts to adjust for impact by adjusting for the number of pages or the number of characters in the cited journals however these biases tend to have less impact on rankings of core journals than less highly ranked journals in attempts to rank authors of journal articles using ssci data alexander and mabry 1994 noted that the ssci does not include in the counts the second and subsequent authors of multiple author articles

code creation in endogenous merger experiments we study the conflict that can occur in a merger due to firms use of specialized language or code and whether participants accurately forecast this difficulty after creating a shared code to describe different pictures accurately subjects bid for extra payments to join a merged group the two lowest bidders are placed in the merged group values inferred from two different bidding procedures indicate fairly accurate general appraisals of the cost of the merger but the values of those subjects who bid the least and choose to join the merged group are too optimistic reflecting an organizational winner s curse

the deadweight loss of christmas when economists comment on holiday gift giving it is usually to condone the healthy effect of spending on the macroeconomy however an important feature of gift giving is that consumption choices are made by someone other than the final consumer a potentially important microeconomic aspect of gift giving is that gifts may be mismatched with the recipients preferences in the standard microeconomic framework of consumer choice the best a gift giver can do with say 10 is to duplicate the choice that the recipient would have made while it is possible for a giver to choose a gift which the recipient ultimately values above its price for example if the recipient is not perfectly informed it is more likely that the gift will leave the recipient worse off than if she had made her own consumption choice with an equal amount of cash in short gift giving is a potential source of deadweight loss this paper gives estimates of the deadweight loss of holiday gift giving based on surveys given to yale undergraduates i find that holiday gift giving destroys between 10 percent and a third of the value of gifts while these recipients may be unrepresentative of the u s population their gifts are not necessarily unrepresentative holiday expenditures average 40 billion per year implying that a conservative estimate of the deadweight loss of christmas is a tenth as large as estimates of the deadweight loss of income taxation i also explore how deadweight loss and the tendency to give cash gifts vary with the relationship and age difference between giver and recipient i find that gifts from friends and significant others are most efficient while noncash gifts from members of the extended family are least efficient and destroy a third of their value i develop a simple expected utility model to explain the decision to give cash as opposed to in kind gifts the data are consistent with the model cash gifts are most common from the sorts of givers whose noncash gifts have the lowest expected value to recipients given their cost and high variability in recipient valuation

exchange rate expectations and the pricing of chinese cross listed stocks abstract i show that the price discounts of chinese cross listed stocks american depositary receipts adrs and h shares to their underlying a shares indicate the expected yuan us dollar exchange rate the forecasting models reveal that adr and h share discounts predict exchange rate changes more accurately than the random walk and forward exchange rates particularly at long forecast horizons using panel estimations i find that adr and h share investors form their exchange rate expectations according to standard exchange rate theories such as the harrod balassa samuelson effect the risk of competitive devaluations relative purchasing power parity uncovered interest rate parity and the risk of currency crisis

the influence of economics articles on business research analysis of journals and time trends this article examines the influence of economics on business research using citation data the share of economics in citations from business is 10 78 until 1995 but only 6 95 for 1996 2003 four potential explanations for this decline are discussed interdisciplinary spillover of research is slower than within a discipline the increasing use of mathematics in economics made economics less useful for business scholars economics articles are by their nature more long lived than business articles business has grown recently more quickly than economics the data support the second and fourth explanations different research spillover occurs but lasts no more than two years

complementary institutions and economic development an experimental study abstract this paper considers the problem of why societies develop differently a question most recently articulated by acemoglu and robinson 2012 we follow north 1990 in defining institutions as the rules of the game in society the question then becomes why do some societies develop functional institutions while others do not to investigate this question we develop and examine a specific type of dynamic game which we call an institutional game our point is that complementarities among the choices that all societies make as they develop can help to answer this question

coherent arbitrariness stable demand curves without stable preferences economic theories of valuation generally assume that prices of commodities and assets are derived from underlying fundamental values for example in finance theory asset prices are believed to reflect the market estimate of the discounted present value of the asset s payoff stream in labor theory the supply of labor is established by the tradeoff between the desire for consumption and the displeasure of work finally and most importantly for this chapter consumer microeconomics assumes that the demand curves for consumer products chocolates cds movies vacations drugs and so forth can be ultimately traced to the valuation of pleasures that consumers anticipate receiving from these products because it is difficult as a rule to measure fundamental values directly empirical tests of economic theory typically examine whether the effects of changes in circumstances on valuations are consistent with theoretical prediction for example whether labor supply responds appropriately to a change in the wage rate whether compensated demand curves for commodities are downward sloping or whether stock prices respond in the predicted way to share repurchases however such comparative static relationships are a necessary but not sufficient condition for fundamental valuation e g summers 1986 becker 1962 was perhaps the first to make this point explicitly when he observed that consumers choosing commodity bundles randomly from their budget set would nevertheless produce downward sloping demand curves

stockpiling points in linear loyalty programs customers often stockpile reward points in linear loyalty programs i e programs that do not explicitly reward stockpiling despite several economic incentives against it e g the time value of money the authors develop a mathematical model of redemption choice that unites three explanations for why customers seem to be motivated to stockpile on their own even though the retailer does not reward them for doing so these motivations are economic the value of forgone points cognitive nonmonetary transaction costs and psychological customers value points differently than cash the authors capture the psychological motivation by allowing customers to book cash and point transactions in separate mental accounts they estimate the model on data from an international retailer using markov chain monte carlo methods and accurately forecast redemptions during an 11 month out of sample period the results indicate substantial heterogeneity in how customers are motivated to redeem and suggest that the

mistake 37 the effect of previously encountered prices on current housing demand based on contrast effects studies from psychology we predicted that movers arriving from more expensive cities would rent pricier apartments than those arriving from cheaper cities we also predicted that as people stayed in their new city they would get used to the new prices and would readjust their housing expenditures countering the initial impact of previous prices we found support for both predictions in a sample of 928 movers from the psid alternative explanations based on unobserved wealth and taste and on imperfect information are ruled out

new directions for modelling strategic behavior game theoretic models of communication coordination and cooperation in economic relationships author s crawford vp abstract in this paper i discuss the state of progress in applications of game theory in economics and try to identify possible future developments that are likely to yield further progress to keep the topic manageable i focus on a canonical economic problem that is inherently game theoretic that of fostering efficient coordination and cooperation in relationships with particular attention to the role of communication i begin with an overview of noncooperative game theory s principal model of behavior nash equilibrium i next discuss the alternative thinking and learning rationales for how real world actors might reach equilibrium decisions i then review how nash equilibrium has been used to model coordination communication and cooperation in relationships and discuss possible developments

the journals of economics we examine the principal journals of economics with particular attention to the communication between journals as reflected by the network of interjournal citations during 1987 90 and the changes over the past century in the characteristics of the authors and the techniques they have used the numerical results and those of the statistical modeling of these results reinforce the importance of economic theory as an exporter of intellectual influence to applied economics the study includes an examination of the degree of specialization among different subfields of economics a statistical model is presented for measuring the flow of intellectual influence as measured by citations in terms of simple univariate scores

premium levels and demand response in health insurance relative thinking and zero price effects abstract in health care systems with a competitive health insurance market governments or other sponsors e g employers often subsidize premiums to encourage enrolment these subsidies are typically independent of plan choice leaving the absolute premium differences in place so as not to distort consumer choice of plan such subsidies do however change the relative premium differences across plans which according to theories from behavioral economics can affect choice consumers might be sensitive to differences relative to a reference premium relative thinking furthermore consumers might be particularly sensitive to a reference premium of zero zero price effect a relevant range for some subsidized health insurance markets this paper tests these ideas with two sources of evidence we argue that observed equilibria in germany and the u s medicare advantage markets are consistent with a powerful zero price effect resulting in an equilibrium focal pricing at zero this contrasts with the netherlands where equilibrium premiums are well above zero in an empirical test using hypothetical questions in a web based survey in these three countries we also find evidence for both a relative thinking and a zero price effect in the demand for health insurance our findings imply that well designed subsidies can leverage relative thinking to increase demand elasticity for health plans creation of a powerful reference price e g at zero however risks subverting price competition

internal conflict market uniformity and transparency in price competition between teams abstract the way profits are divided within successful teams imposes different degrees of internal conflict we experimentally examine how the level of internal conflict and whether such conflict is transparent to other teams affects teams ability to compete vis a vis each other and consequently market outcomes participants took part in a repeated bertrand duopoly game between three player teams which had either the same or different levels of internal conflict uniform vs mixed profit division was either private pay high conflict each member received her own asking price or equal pay low conflict profits were divided equally we find that internal conflict leads to tacit coordination on high prices in uniform private pay duopolies but places private pay teams at a competitive disadvantage in mixed duopolies competition is softened by transparency in uniform markets but intensified in mixed markets we propose an explanation of the results and discuss implications for managers and policy makers d43 l22 c92

true protection and the real exchange rate in a capital rich developing country some evidence for saudi arabia this paper investigates how alternative measures of the real exchange rate respond to trade policy and terms of trade changes it employs a modelling framework which endogenises the price of non tradeable goods and applies the model to price and real exchange rate data for saudi arabia for the period 1982 92 the results show that the popular propositions about the response of the real exchange rate to terms of trade or trade policy changes do not necessary hold this is a consequence of the measure of the real exchange rate utilized rather than a product of saudi arabia s capital richness