the effect of experience on security analyst underreaction abstract we examine if analysts more fully incorporate prior earnings and returns information in their current quarter forecasts as their experience following a firm increases we measure analyst firm specific forecasting experience as the number of prior quarters for which the analyst has issued an earnings forecast for the firm we find that analysts underreact to prior earnings information less as their experience increases suggesting one reason why analysts become more accurate with experience

imported inputs real wage rigidity and devaluation in the small open economy abstract this paper examines the effects of devaluation upon employment in a tradables nontradables model of the small open economy where there is a rigid real wage and imports consist of both intermediate inputs and final goods it is shown that in general economies importing intermediates are not more prone to contraction than those importing only consumption goods a new reason is also uncovered as to why the existence of an initial trade balance deficit increases the likelihood that devaluation will be contractionary

a cost function analysis of import demand for nigeria the article uses a translog cost function to examine the substitution relations among capital labour and imports the results show that capital has a substitute relation with domestic labour and import however labour and import have complementary relationship the implication of this finding is that liberalization policies if pursued vigorously could impart positively on the demand for labour in addition it suggests that economic growth could be enhanced through trade liberalization

management earnings forecasts and value of analyst forecast revisions this study examines the stock price reactions to analyst forecast revisions around earnings announcements to test whether preannouncement forecasts reflect analysts private information or piggybacking on confounding events and news we find that management earnings forecasts influence the timing and precision of analyst forecasts more importantly evidence suggests that prior studies finding of weaker stronger stock price responses to forecast revisions in the period immediately after before the prior quarter earnings announcement disappears once management earnings forecasts are controlled for to the extent that management earnings forecasts are public disclosures our results suggest that the importance of analysts information discovery role documented in prior studies is likely to be overstated this paper was accepted by wei jiang finance

analyst responsiveness and the post earnings announcement drift abstract this study examines the responsiveness of analyst forecasts to current earnings announcements the results show considerable cross sectional variation in analyst responsiveness and suggest that this variation is related to the costs and benefits associated with prompt forecast revisions more importantly this study finds that with responsive forecast revisions more of the market reaction takes place in the event window and less in the drift window suggesting that analyst responsiveness mitigates the post earnings announcement drift and facilitates market efficiency

the elasticity of substitution in india s manufacturing sector abstract using cross section data and the translog cost function this paper examines the substitution possibilities between capital and materials and labor and materials since raw materials might be used to overcome the bottlenecks caused by shortages of physical capital and skilled labor three significant conclusions are a since materials are substitutable for both capital and labor to a considerable extent capital and skilled labor may not be a binding constraint on growth agricultural materials expansion may substitute for these inputs and lead to expansion in the industrial sector b fixed proportion models are not warranted in india without modification and c separability tests showed that materials must be included in the production function

following the leader a study of individual analysts earnings forecasts abstract this paper develops and tests procedures for ranking the performance of security analysts based on the timeliness of their earnings forecasts the abnormal trading volume associated with these forecasts and forecast accuracy our framework provides an objective assessment of analyst quality that differs from the standard approach which uses survey evidence to rate analysts we find that lead analysts identified by our measure of forecast timeliness have a greater impact on stock prices than follower analysts further we find that performance rankings based on forecast timeliness are more informative than rankings based on abnormal trading volume and forecast accuracy we also present evidence that analyst s forecast revisions are correlated with recent stock price performance suggesting that security analysts use publicly available information to revise their earnings forecasts

the decline of discrimination against colored people in south africa 1970 to 1980 abstract the paper analyses the gap in earnings between white and colored people in south africa in 1970 and 1980 the gap is decomposed into its explained and discrimination components and from a model of occupational attainment into wage and job discrimination job discrimination decreased between 1970 and 1980 colored people in younger experience cohorts experienced a significant decline in discrimination between 1970 and 1980 most of which was due to a decline in job descrimination discrimination against those in older experience cohorts appears not to have declined

hyperbolic discounting and the phillips curve using a standard dynamic general equilibrium model we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long run effects on real variables

terrorist attacks analyst sentiment and earnings forecasts we examine whether exogenous and extremely negative events such as terrorist attacks and mass shootings influence the sentiment and forecasts of sell side equity analysts we find that analysts w

real wage rigidities and the new keynesian model most central banks perceive a trade off between stabilizing inflation and stabilizing the gap between output and desired output however the standard new keynesian framework implies no such trade off in that framework stabilizing inflation is equivalent to stabilizing the welfare relevant output gap in this paper we argue that this property of the new keynesian framework which we call the divine coincidence is due to a special feature of the model the absence of nontrivial real imperfections we focus on one such real imperfection namely real wage rigidities when the baseline new keynesian model is extended to allow for real wage rigidities the divine coincidence disappears and central banks indeed face a trade off between stabilizing inflation and stabilizing the welfare relevant output gap we show that not only does the extended model have more realistic normative implications but it also has appealing positive properties in particular it provides a natural interpretation for the dynamic inflation unemployment relation found in the data

canadian imports and exports by origin and destination a semi flexible approach this paper models the geographical composition of canadian foreign trade imports and exports are disaggregated into nine regions that together cover most of the oecd area the author uses both the flexible and the semiflexible versions of the symmetric normalized quadratic functional form the reduction in flexibility allows for large savings in the number of parameters and yet it is not incompatible with the data the author s results suggest that there are significant substitution possibilities in canadian foreign trade and that trade diversion towards the united states and efta is likely to be important in the event of increased e c protectionism

competitive industrial policy and macro performance has south korea outperformed taiwan taiwan adopted a competitive industrial policy before south korea but pursued it more cautiously according to orthodox theory taiwan s less interventionist policy should have increased its initial per capita income lead over south korea in fact the income gap narrowed and income distribution improved relatively in south korea casting doubt on the orthodox criticism of south korean industrial policy but some qualification of the south korean success is in order the south korean gains were achieved at the cost of greater consumption fore gone and greater concentration of economic power than in the case of taiwan moreover the crucial post 1985 taiwanese economic slow down was partly due to economic maturation as well as to tardy financial reform and to the opportunities created by the chinese diaspora for taiwanese firms to invest abroad

import demand for india a translog cost function approach most developing countries depend heavily on imported resources in the form of raw materials or supplemental capital to increase their per capita income however most of the conventional macromodels have neglected the factor input aspect of imports these models have depicted the aggregate producing sector as employing primary factors capital and labor to produce a single final output which is used to satisfy domestic and foreign demands imports are generally treated as either final goods or intermediate goods despite this in the literature there does exist a keen awareness of the role of imports as a factor of production in an earlier study on india for 1959 60 macdougall emphasizes the gravity of the scarcity of imported resources for the indian manufacturing sector claiming that many factories are today lying partially idle through lack of imported supplies one third of the industries covered appear to be working at only 60 percent of capacity or less 2 in their seminal study chenery and strout lend further support to the notion that imports are productive inputs by stating that the inflow of external resources has become virtually a separate factor of production whose productivity and allocation provide one of the central problems for a modern theory of development 3 more recently some studies have been conducted which use u s and canadian data to examine the role of imports as a factor of production 4 these studies find that imports and capital services are complementary inputs for the united states and for canada 5 unfortunately there are no studies on the role of imports as a factor input for developing countries which examine the degree of substitutability or complementarity between imports and domestic primary factors in this paper we propose to estimate the demand for imports as a factor of

real wage rigidities and the cost of disinflations this paper analyzes the cost of disinflations under real wage rigidities in a micro founded new keynesian model the conventional view is that real wage rigidities can be a useful mechanism to generate a slump in output after a credible disinflationary policy because they prevent the immediate adjustment of inflation this view is flawed since it depends on analyzing the model in a linearized framework once nonlinearities are taken into account the results change both qualitatively and quantitatively disinflations actually lead to a permanently higher level of output and real wage rigidities increase the output during the adjustment to the new steady state

analyst characteristics timing of forecast revisions and analyst forecasting ability abstract we first examine whether analysts with certain characteristics that prior research has identified are related to superior forecasting ability systematically time their forecast revisions later in the fiscal quarter we then examine whether this superior ability persists after controlling for the timing advantage by using relative forecast error a measure that largely eliminates the timing advantage of recent forecasts using a sample of quarterly earnings forecast revisions over the 20 year period from 1990 to 2009 we find that analysts with more firm specific and general experience and more accurate prior period forecasts analysts employed by larger brokerage firms and analysts who follow fewer industries and companies tend to revise forecasts later in the quarter we also find that analyst characteristics that are positively correlated with revision timing are negatively related to relative forecast errors these results are consistent with analyst characteristics being useful proxies for analyst forecasting ability and analysts with greater ability revising forecasts later in the quarter

changes in uk monetary policy rules and discretion in practice abstract in october 1992 following sterling s departure from the exchange rate mechanism britain adopted a new framework for monetary policy that comprised two components first an explicit target for inflation and second institutional changes designed to give greater influence to the bank of england by increasing the transparency and openness of the process by which interest rates are set this paper analyses those changes from the perspective of the debate on rules versus discretion and argues that an appropriate design of institutional arrangements can provide incentives for central bankers to pursue the first best state contingent monetary policy

contractionary devaluation substitution in production and consumption and the role of the labor market using a demand determined model involving both consumption goods imports and home goods with imported inputs this paper shows that the condition under which devaluation reduces demand for home goods and thus aggregate output if real exports are fixed basically depends on the sign of one plus the weighted sum of the price elasticities of demand for imported consumer goods and of derived demand for imported inputs this model includes cooper s and krugman taylor s models as special cases and shows that substitution substantially lessens the possibility of contactionary devaluation however these results are dependent on the assumptions regarding the labor market and monetary policy if wages are indexed or are determined in a labor market with labor supply dependent on real wages then output and the balance of payments again become inversely related in these circumstances devaluation alone cannot cure a balance of payments deficit a contraction of aggregate demand is required relative to an unsustainable initial level devaluation should be judged in terms of its longer run impact rather than whether it is contractionary also increased borrowing to avoid a contractionary devaluation is neither relevant nor feasible in many cases

the role of imports from the newly industrializing countries in u s production this paper examines the relationship among u s imports from the nics imports from developed countries capital and labor in the production of goods for final demand import demand and substitution elasticities are estimated for the period 1960 80 u s imports from the nics are found to be complements with both labor and imports from industrialized countries this indicates that the substitution effect resulting from a reduction in the price of imports from the nics would lead to a net increase in employment multilateral tariff cuts by the united states would increase the demand for nic goods despite a reduction in their preferential tariff margins

the demand for imports in korea a production analysis approach abstract balance of trade problems in the united states and other highly industrialized countries have resulted in cries for korea to liberalize its import policies this paper uses a translog cost function to investigate korea s demand for imports and the effects of trade liberalization on the demand for the country s domestic inputs this study suggest that the domestic inputs and imports are substitutes and that as the proportion of investment goods in korea s gdp increases the demand for imports will also increase thus further liberalization of korea s import policies could present short run problems in the domestic input markets

do weather induced moods affect the processing of earnings news we investigate whether unpleasant environmental conditions affect stock market participants responses to information events we draw from psychology research to develop a new prediction that weather induced negative moods reduce market participants activity levels exploiting geographic variation in equity analysts locations we find compelling evidence that analysts experiencing unpleasant weather are slower or less likely to respond to an earnings announcement relative to analysts responding to the same announcement but experiencing pleasant weather price association tests find evidence consistent with reduced activity due to weather induced moods delaying equilibrium price adjustments following earnings announcements we also use our analyst based research design to re examine an existing prediction that unpleasant weather induces investor pessimism and find evidence of both analyst pessimism and reduced activity in the presence of unpleasant weather together our study provides new evidence that both extends and reaffirms findings of a relation between unpleasant weather and market activities and contributes to the broader psychology and economics literature on the impact of weather induced mood on labor productivity this article is protected by copyright all rights reserved

the timing and value of forecast and recommendation revisions abstract this paper evaluates the information content of analysts one quarter ahead earnings forecast revisions and recommendation revisions at various points in event time relative to earnings announcement dates across three sets of tests we find that the revisions are least informative in the week after earnings announcements and that the information content of revisions generally increases over event time we find a sharp increase in the information content of upward forecast revisions and recommendation upgrades in the week before earnings announcements but we do not find a similar increase for downward revisions or for recommendation downgrades

the timing of and incentives for annual earnings forecasts near interim earnings announcements abstract security analysts anticipate and respond to interim earnings announcements when they revise their annual earnings forecasts analysts avoid revising for two weeks before an interim announcement and more frequently revise immediately after an announcement as expected revision activity after an interim announcement is greater if absolute unexpected interim earnings are larger if there are more competing analysts and if unexpected interim earnings are negative unexpectedly analysts are reluctant to revise their forecasts early in the fiscal year these findings carry implications for research designs that use analyst forecasts

optimal monetary policy with relative price distortions this paper analyzes optimal monetary policy in a sticky price model with calvo type staggered price setting in the paper the optimal monetary policy maximizes the expected utility of a representative household without having to rely on a set of linearly approximated equilibrium conditions given the distortions associated with the staggered price setting it shows that the complete stabilization of the price level is optimal in the absence of initial price dispersion while optimal inflation targets respond to changes in the level of relative price distortion in the presence of initial price dispersion

the macroeconomics of trade liberalization abstract this paper analyzes the short run macroeconomic consequences of trade liberalization in ldcs it is shown that linkages between the tradables and nontradables sectors the effect of imported inputs on the economy s productive structure and certain patterns of factor substitution can go a long way toward explaining the perverse contractionary effects frequently seen in liberalization programs

production theory technological change and the demand for imports aggregate import demand functions for switzerland 1948 1976 are estimated jointly with the supply and or demand functions for domestic outputs and inputs joint estimation not only yields more efficient estimates than single equation methods but it also ensures that the derived demand and supply functions are consistent with the underlying technology two specifications are examined one of them stressing the smallness and openess of the swiss economy as well as its flexible immigration policy the generalized leontief functional form is used in both cases special attention is devoted to the interpretation of the estimated price elasticities and various hypotheses of technological change are tested for

inflation targeting a new framework for monetary policy he world s central bankers and their staffs meet regularly in venues from basle to washington to share ideas and discuss common problems perhaps these frequent meetings help explain why changes in the tactics and strategy of monetary policymaking such as the adoption of money growth targets in the 1970s the intensification of efforts to reduce inflation in the 1980s and the recent push for increased institutional independence for central banks tend to occur in many countries more or less simultaneously whatever their source major changes in the theory and practice of central banking are of great importance for both individual countries and the international economy in this article we discuss a new strategy for monetary policy known as inflation targeting which has sparked much interest and debate among central bankers and monetary economists in recent years this approach is characterized as the name suggests by the announcement of official target ranges for the inflation rate at one or more horizons and by explicit acknowledgment that low and stable inflation is the overriding goal of monetary policy other important features of inflation targeting include increased communication with the public about the plans and objectives of the monetary policymakers and in many cases increased accountability of the central bank

do security analysts improve their performance with experience we investigate if sell side security analysts generate more accurate quarterly earnings forecasts and more profitable stock recommendations as their experience following a specific firm increases we measure firmspecific experience as the number of prior quarters for which the analyst has issued an earnings forecast for the firm if analysts improve their forecasting performance with repetition as suggested by the learning by doing lbd model an analyst s earnings forecasts will become more accurate with experience prior empirical work provides mixed evidence on whether analysts exhibit individual forecasting performance differences e g butler and

constructing confidence intervals using the bootstrap an application to a multi product cost function a multi product cost function system is estimated for 387 banks in states that allow branch banking the bootstrap resampling method is used to construct confidence intervals for marginal costs output cost elasticities economies of scale and scope and allen elasticities of substitution confidence intervals for these measures are usually constructed using a first order variance approximation under a normality assumption but such confidence intervals are inexact if the measures are not normally distributed or the variance approximations are imprecise we find that the bootstrap standard error estimates can differ significantly from the usual estimates furthermore we use the bootstrap to expand the analysis of cost function regularity properties copyright 1990 by mit press

a symmetric normalized quadratic gnp function and the u s demand for imports and supply of exports this paper reports estimates of a gnp function for the united states using data covering most of the postwar period and it introduces a new functional form the symmetric normalized quadratic variable profit function which is a natural extension of recent work by diewert and wales this functional form allows convexity in prices and concavity in fixed inputs to be imposed globally empirical results indicate that the demand for imports is less price elastic than the supply exports that an increase in labor endowment favors trade and that a deterioration of the terms of trade mostly hurts labor

does devaluation cause stagflation the traditional view that devaluation tends to increase domestic real income and output has been challenged in recent years on the grounds that trade flows including factor imports are relatively insensitive to exchange rate changes especially in developing countries this paper presents a simple macro economic model in which devaluation influences real income and output both through the cost of imported inputs on the supply side of the economy and through exports imports and expenditures on the demand side statistical estimates of the structural parameters of the model for a group of ten industrial and developing countries are used to show that the demand effects dominate the cost effects in most cases thus supporting the traditional view that devaluation has positive real effects in these countries in the short to medium run est ce que la devaluation engendre la stagflation le point de vue conventionnel veut que la devaluation tende a accroitre le niveau du revenu et de la production domestiques c est un point de vue qui a ete remis en question ces dernieres annees parce que dit on les flux de commerce international y compris les flux d importation de facteurs de production semblent relativement insensibles aux changements dans le taux de change ce memoire developpe un modele macro economique simple dans lequel la devaluation influence le niveau de revenu et de production en termes reels via le co ut des facteurs de production importes du cote de l offre et via les exportations les importations et les niveaux de depenses du c6te de la demande les auteurs utilisent la calibration statistique des parametres structurels du modele pour un groupe de dix pays industrialises et en voie de developpement pour montrer que les effets du cot6 de la demande dominent les effets de cofuts dans la plupart des cas voila qui supporte le point de vue traditionnel qui veut que la devaluation ait un impact positif reel dans les pays devaluateurs a court et a moyen tenne

inflation targeting as a means of achieving disinflation in this paper we take an analytical approach to examine possible adverse effects of the use of inflation targeting as a disinflation regime the idea is that a strict interpretation of an inflation target may preserve inflationary distortions after price stability is attained we show that such a policy not only creates a slump in output but may increase macroeconomic volatility substantially in a model in which wages are subject to a taylor staggering structure

staggered wages and output dynamics under disinflation we study the output costs of a reduction in monetary growth in a dynamic general equilibrium model with staggered wages the money wage is fixed for two periods and is chosen according to intertemporal optimisation agents have labour market monopoly power we show that the introduction of microfoundations helps to resolve the puzzle raised by directly postulated models namely that disinflation in staggered pricing models causes a boom in our model disinflation whether unanticipated or anticipated unambiguously causes a slump

on inflation and output with costly price changes a simple unifying result this paper determines the real effects of credible disinflation when price setting is staggered the results are surprising a fairly quick disinflation causes a boom this finding suggests that nominal price rigidity alone does not explain why disinflation is costly in actual economies this abstract was borrowed from another version of this item

degrees of processing and changes in the cyclical behavior of prices in the united states 1869 1990 price indices for periods before the second world war place more weight on less processed products than do their postwar counterparts to an extent that exaggerates the change over time in the composition of aggregate output prices of less processed products are especially procyclical in levels and inflation rates thus comparisons between historical and postwar series can give biased measures of changes in the cyclical behavior of the aggregate price level also changes in the behavior of the aggregate price level must be distinguished from changes in the behavior of prices of given products subject to a given degree of processing

diffusion of development the late industrializing model and greater east asia diffusion of development the late industrializing model and greater east asia author s alice h amsden source the american economic review vol 81 no 2 papers and proceedings of the hundred and third annual meeting of the american economic association may 1991 pp 282 286 published by american economic association stable url http www jstor org stable 2006870 accessed 15 01 2010 13 30

inefficiency in analysts earnings forecasts systematic misreaction or systematic optimism a rational analysis of analyst behavior predicts that analysts immediately and without bias incorporate information into their forecasts several studies document analysts tendency to systematically underreact to information underreaction is inconsistent with rationality other studies indicate that analysts systematically overreact to new information or that they are systematically optimistic this study discriminates between these three hypotheses by examining the interaction between the nature of information and the type of reaction by analysts the evidence indicates that analysts underreact to negative information but overreact to positive information these results are consistent with systematic optimism in response to information the literature on financial analysts defines the phrase forecast inefficiency to mean forecasts that fail to accurately incorporate new information on a timely basis and or that are biased these forecasts have also been described as irrational or suboptimal prior studies report inefficiency in analysts forecasts finding that they are upwardly biased and inaccurately reflect available information some studies conclude from this that analysts underreact to information other studies conclude that analysts overreact if markets treat analysts forecasts as both rational and statistically optimal then inefficient forecasts could have important implications for the efficiency of pricing in securities markets in this paper we reexamine the apparent tendency of analysts to misinterpret earnings information the intent of this study is to discriminate between three hypotheses 1 that analysts systematically underreact to new earnings information 2 that analysts systematically overreact to new earnings information and 3 that analysts are systematically optimistic in their reactions for hypotheses 1 and 2 the direction of the misinterpretation i e underor overreaction is independent of the nature of the information received in contrast hypothesis 3 predicts that analysts are optimistic in interpreting

a cost function analysis of import demand and growth in south africa abstract this study investigates the substitutability relationships among capital labor and imported inputs for south africa utilizing the estimates obtained from an aggregate cost function our results are consistent with the hypothesis that capital is a substitute for both domestic labor and imports but that labor and imports are complementary inputs this latter result suggests that relaxing south african trade restrictions may have a positive impact in both the long and the short run on the demand for domestic labor other results suggest that the reduction of market impediments may also positively impact the production of investment goods and economic growth