does speculation impact what factors determine oil futures prices abstract recent studies provide contradictory evidence about the impact of speculation on commodity prices rather than directly evaluating this relationship we instead use a novel approach to assess if speculation can inform our choice of factor inclusion in modelling oil futures

the electoral impact of economic conditions who is held responsible a variety of recent research has dealt with the impact of economic conditions on congressional elections the underlying assumption of this research has been that the effects of economic fluctuations are distributed evenly across members of the president s party by focusing on subgroups of congressional candidates we demonstrate that the importance of economic conditions varies widely specifically we show that the aggregate electoral margins of incumbents are far more responsive to economic conditions than are those for nonincumbents and that among in party incumbents the relationship is stronger among those with higher levels of tenure further we demonstrate that the previous lack of individual level confirmation of the aggregate relationship has been due to a failure to control for the contextual effects implied by our conditional aggregate analysis with controls for district incumbency we find a relationship between retrospective personal financial condition and vote choice that mirrors the aggregate relationship between retrospective performance of the national economy and congressional vote totals

commodity price risk management and fiscal policy in a sovereign default model abstract commodity prices are an important driver of fiscal policy and the business cycle in many developing and emerging market economies we analyze a dynamic stochastic small open economy model of sovereign default featuring endogenous fiscal policy and stochastic commodity revenues the model accounts for a positive correlation of commodity revenues with government expenditures and a negative correlation with tax rates we quantitatively document the extent to which the utilization of different financial hedging instruments by the government contributes to lowering the volatility of different macroeconomic variables and their correlation with commodity revenues an event analysis illustrates how financial hedging instruments moderate fiscal adjustment in response to significant falls in the price of commodities we evaluate the conditional and unconditional welfare gains for the representative household generated by financial derivatives and commodity indexed bonds

index investment and financialization of commodities the authors found that concurrent with the rapidly growing index investment in commodity markets since the early 2000s prices of non energy commodity futures in the united states have become incr

explosive oil prices spectacular oil price increases occur on a regular basis the most recent one is dated july 2008 this paper puts forward the notion that extreme oil price movements of this type can be described as temporary explosive the paper applies a forward recursive unit root tests and finds evidence of explosive behavior in the following periods 1990 1991 2005 2006 and 2007 2008 currently existing oil price models are not capable of appropriately describing this type of behavior a thorough discussion of the underlying reasons of these price hikes indicates these oil price episodes even though extreme are mainly fundamentally explained this finding is insufficiently acknowledged in the literature on speculative oil price bubbles thus policy interventions as response to extreme movements of this kind need to be very carefully thought through

index investment and the financialization of commodities the authors found that concurrent with the rapidly growing index investment in commodity markets since the early 2000s prices of non energy commodity futures in the united states have become increasingly correlated with oil prices this trend has been significantly more pronounced for commodities in two popular commodity indices this finding reflects the financialization of the commodity markets and helps explain the large increase in the price volatility of non energy commodities around 2008

unemployment and the democratic electoral advantage this article calls into question the conventional wisdom that incumbent parties are rewarded when unemployment is low and punished when it is high using county level data on unemployment and election returns for 175 midterm gubernatorial elections and 4 presidential elections from 1994 to 2010 the analysis finds that unemployment and the democratic vote for president and governor move together other things being equal higher unemployment increases the vote shares of democratic candidates the effect is greatest when republicans are the incumbent party but democrats benefit from unemployment even when they are in control the explanation for these findings is that unemployment is a partisan issue for voters not a valence issue and that the democratic party owns unemployment when unemployment is high or rising democratic candidates can successfully convince voters that they are the party best able to solve the problem

oil shocks and external balances abstract we provide estimates of the effects of demand and supply shocks in the global crude oil market on several measures of oil exporters and oil importers external balances including the oil trade balance the non oil trade balance the current account capital gains and changes in net foreign assets nfa first we show that the effect of oil demand and supply shocks on the merchandise trade balance and the current account which depending on the source of the shock can be large depends critically on the response of the non oil trade balance our results provide evidence of an intermediate degree of international financial integration second we document the presence of large and systematic valuation effects in response to these shocks valuation effects overall tend to cushion the effect of oil demand and supply shocks on the nfa positions of oil exporters and oil importers third we quantify the overall importance of global business cycle demand shocks as well as oil market specific demand and supply shocks for external balances

speculation in the oil market the run up in oil prices since 2004 coincided with growing investment in commodity markets and increased price co movement among different commodities we assess whether speculation in the oil market played a role in driving this salient empirical pattern we identify oil shocks from a large dataset using a dynamic factor model this method is motivated by the fact that a small scale vector autoregression is not informationally sufficient to identify the shocks the main results are as follows i while global demand shocks account for the largest share of oil price fluctuations speculative shocks are the second most important driver ii the increase in oil prices over the last decade is mainly driven by the strength of global demand however speculation played a significant role in the oil price increase between 2004 and 2008 and its subsequent collapse iii the co movement between oil prices and the prices of other commodities is mainly explained by global demand shocks our results support the view that the recent oil price increase is mainly driven by the strength of global demand but that the financialization process of commodity markets also played a role

valuation of marginal co2 abatement options for electric power plants in korea the electricity generation sector in korea is under pressure to mitigate greenhouse gases as directed by the kyoto protocol the principal compliance options for power companies under the cap and trade include the application of direct co2 emission abatement and the procurement of emission allowances the objective of this paper is to provide an analytical framework for assessing the cost effectiveness of these options we attempt to derive the marginal abatement cost for co2 using the output distance function and analyze the relative advantages of emission allowance procurement option as compared to direct abatement option real option approach is adopted to incorporate emission allowance price uncertainty empirical result shows the marginal abatement cost with an average of 14 04 ton co2 for fossil fueled power plants and confirms the existence of substantial cost heterogeneity among plants which is sufficient to achieve trading gains in allowance market the comparison of two options enables us to identify the optimal position of the compliance for each plant sensitivity analyses are also presented with regard to several key parameters including the initial allowance prices and interest rate the result of this paper may help korean power plants to prepare for upcoming regulations targeted toward the reduction of domestic greenhouse gases

the impacts of structural oil shocks on macroeconomic uncertainty evidence from a large panel of 45 countries abstract using local projection methods this paper employs monthly panel data from 1989 to 2017 to examine both linear and nonlinear impulse responses of macroeconomic uncertainty to structural shocks to global oil production aggregate demand oil market specific demand and speculative demand in a large group of 45 economies we find that both oil supply and demand shocks are important drivers of uncertainty there is strong evidence that the impacts of oil price shocks on macroeconomic uncertainty are regime dependent and contingent on the states of investor sentiments and perceived volatility in financial markets the responses of economic uncertainty to oil shocks especially demand side shocks appear to experience a dramatic change in the post global financial crisis period

the myth of financial innovation and the great moderation financial innovation is widely believed to be at least partly responsible for the recent financial crisis at the same time there are empirical and theoretical arguments that support the view that changes in financial markets in particular innovations in consumer credit and home mortgages played a role in the great moderation this article questions empirical evidence supporting this view especially the behaviour of aggregate home mortgages changed less during the great moderation than is typically believed a remarkable change we do find is that monetary tightenings became episodes during which financial institutions other than banks increased their mortgages holdings

uncovering long term relationships between oil prices and the economy a time varying cointegration analysis abstract establishing the relation between oil price movements and macroeconomic performance is of great importance for firms and policymakers alike prior studies established this relation using the assumption that the long run relation is intertemporally constant however there is much recent evidence demonstrating that this assumption may not hold in practice to address this issue and go beyond the restrictive time invariant environment we employ the use of the time varying cointegration framework of bierens and martins 2010 we present evidence of the long run oil economy relation evolving over the 1974 2015 period with major events such as the gulf war and the financialisation of commodity markets proving to be driving forces across the u s european and g7 economies considered

preferences for domestic fuel analysis with socio economic factors and rankings in kolkata india abstract the choice of domestic fuel is a matter of great concern for households and policy makers in india this paper investigates the demand for domestic fuels when households face four choices fuelwood coal kerosene and lpg the study is based on a survey of 500 households in kolkata india the demand estimates are conducted using a two stage process where the first stage investigates choice and the second the quantity used determinants of fuel demand are identified and their relative importance shown extending the study the paper also analyses the choice of the main cooking fuel in terms of the households stated rankings of six fuels for five attributes the policy discussion indicates that subsidies have less potential to reduce polluting fuels such as coal and fuelwood due to weak cross price elasticities while increased availability of lpg and potentially also increased awareness of indoor air pollution have greater prospect

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

running for office again evidence from portuguese municipal elections using a data set that covers all portuguese mainland municipalities for the period 1979 2005 this study performs an empirical analysis of the economic determinants of mayors decisions to run for another term in office the literature on the subject is mainly centered on the united states and as far as we know there are no papers addressing the economic factors influencing those choices

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

what do we learn from the price of crude oil futures summary despite their widespread use as predictors of the spot price of oil oil futures prices tend to be less accurate in the mean squared prediction error sense than no change forecasts this result is driven by the variability of the futures price about the spot price as captured by the oil futures spread this variability can be explained by the marginal convenience yield of oil inventories using a two country multi period general equilibrium model of the spot and futures markets for crude oil we show that increased uncertainty about future oil supply shortfalls under plausible assumptions causes the spread to decline increased uncertainty also causes precautionary demand for oil to increase resulting in an immediate increase in the real spot price thus the negative of the oil futures spread may be viewed as an indicator of fluctuations in the price of crude oil driven by precautionary demand an empirical analysis of this indicator provides evidence of how shifts in the uncertainty about future oil supply shortfalls affect the real spot price of crude oil copyright 2010 john wiley sons ltd

limits to arbitrage in electricity markets a case study of miso abstract we study the case of financial traders in the midwest electricity market where they are expected to arbitrage price differences that result in inefficiencies using exogenous variation in financial trading from the financial crisis and a period of high transaction costs we show speculators had only a weak effect moreover while arbitrage was restricted by transaction costs imposed by regulation some financial players bet in exactly the opposite direction of the pricing gap sustaining large losses while doing so we show this is consistent with price manipulation intended to increase the value of a related instrument that bets on local price differences ftrs

a comparison of the effects of exogenous oil supply shocks on output and inflation in the g7 countries a comparison of the effects of exogenous shocks to global crude oil production on seven major industrialized economies suggests a fair degree of similarity in the real growth responses an exogenous oil supply disruption typically causes a temporary reduction in real gdp growth that is concentrated in the second year after the shock inflation responses are more varied the median cpi inflation response peaks after three to four quarters exogenous oil supply disruptions need not generate sustained inflation or stagflation typical responses include a fall in the real wage higher short term interest rates and a depreciating currency with respect to the dollar despite many qualitative similarities there is strong statistical evidence that the responses to exogenous oil supply disruptions differ across g7 countries for suitable subsets of countries homogeneity cannot be ruled out a counterfactual historical exercise suggests that the evolution of cpi inflation in the g7 countries would have been similar overall to the actual path even in the absence of exogenous shocks to oil production consistent with a monetary explanation of the inflation of the 1970s there is no evidence that the 1973 1974 and 2002 2003 oil supply shocks had a substantial impact on real growth in any g7 country whereas the 1978 1979 1980 and 1990 1991 shocks contributed to lower growth in at least some g7 countries jel e31 e32 q43

time varying persistence in real oil prices and its determinant abstract we provide empirical evidence for pronounced time variation in the persistence of real oil prices in particular we find episodes of mild explosiveness next to periods with random walk and also mean reverting behavior we address the question whether dynamic persistence can be directly related to macro financial variables spot futures spreads spill over effects from commodities and global real economic activity alongside these variables we use a large data set of more than one hundred fifty potential determinants featuring for example further oil related variables production and inventories and key macroeconomic series for the g7 countries by using model averaging techniques we robustly account for the inherent model uncertainty when dealing with such many potential explanatory variables as it turns out the one and only significant measure to explain time varying oil price persistence is the index of global real economic activity by kilian 2009 other variables related to e g supply shocks or speculation are however insignificant in line with recent findings we argue that fundamentals rather than speculation were the drivers of the explosive oil price in the 2000s

intergovernmental political competition in american federalism many policies in the united states are jointly determined by federal and state actions in the game theoretic model offered here politicians in both the state and national governments seek credit for providing goods desired by the public and avoid blame for the taxes necessary to provide the goods in line with peterson s 1995 theory of functional federalism the level of government that is better able to supply particular goods and services tends to take the lead in their provision even to the extent of fully crowding out much less efficient governments however under a broad set of circumstances both state and national politicians seek credit via public spending and their joint provision leads to a relative oversupply of public goods and services and thus to overtaxation under joint provision states vary in their responses to changing federal spending patterns based both on the causes of the national changes and on state characteristics

gubernatorial midterm slumps this article studies gubernatorial midterm slumps in u s state legislative elections we employ a regression discontinuity design which allows us to rule out the hypothesis that the midterm slump simply reflects a type of reversion to the mean generated by simple partisan swings or the withdrawal of gubernatorial coattails or anticipatory balancing our results show that the party of the governor experiences an average seat share loss of about 3 5 percentage points we also find evidence suggesting that a large share of the variation in gubernatorial midterm slumps can be accounted for by 1 crude partisan balancing and 2 referendums on state economic performance with approximately equal weight given to each

cross country differences in the effects of oil shocks abstract we compare the macroeconomic consequences of several types of oil shocks across a set of industrialized countries that are structurally very diverse with respect to the role of oil and other forms of energy in the economy the results crucially depend on the underlying source of the oil price shift when a rise in oil prices is caused by increased global economic activity or a rise in oil specific demand almost all countries experience respectively a temporary increase and transitory decline of real gdp the role of oil and other forms of energy cannot explain the differences in the effects of both shocks across countries in contrast this role is very important to explain asymmetries in the effects of exogenous oil supply shocks whereas net oil and energy importing countries typically face a permanent fall in economic activity the impact is insignificant or even positive in net energy exporting countries in addition countries that improved their net energy position the most over time became less vulnerable to oil supply shocks relative to other countries

an empirical analysis of the relationship between oil prices and the chinese macro economy using the quarterly data from the first quarter of 1996 to the fourth quarter of 2014 this paper studies the relationship between oil prices and the chinese macro economy we find output and interest rate respond significantly to oil price shocks further analysis reveals that the positive response of output to oil price shocks is attributed to the influences of oil price shocks on exports the oil price shocks have both longer and deeper effects on the exports of state owned enterprises than on those of foreign investment enterprises moreover the response of exports to oil price shocks is symmetric finally oil prices are found to be useful for forecasting the china s exports in the periods shorter than about two years

policy oriented voting in response to economic issues this study explores the hypothesis that voting in response to economic problems is policy oriented voters concerned about unemployment ore predicted to give greater support to democratic candidates while those concerned about inflation are predicted to vote more republican in light of evidence from previous research this study investigates the electoral effects of inflation and unemployment as 1 problems directly experienced by the individual and 2 problems deemed serious for the nation as a whole support is strongest for the unemployment side of the hypothesis voters personally affected by unemployment gave a modest boost to democratic candidates in virtually every election and in years of high unemployment the large percentage of voters who fell it was a serious national problem voted heavily democratic as well this study concludes by discussing the important implications these findings have for our understanding of how economic conditions influence voting behavior in american national elections

commodity prices interest rates and the dollar this paper sheds light on recent fluctuations in commodity prices we investigate whether a decline in real interest rates and the us dollar contributes to higher commodity prices and whether commodity prices display overshooting behavior in response to changes in real interest rates we analyze the behavior of real prices of crude oil food metals and industrial raw materials the analysis is based on structural var models estimated on quarterly data over the period 1990q1 2007q4 our results suggest that commodity prices increase significantly in response to reductions in real interest rates moreover oil prices and prices of industrial raw materials tend to display overshooting behavior in response to such interest rate changes the evidence also suggests that a weaker dollar leads to higher commodity prices shocks to interest rates and the dollar are found to account for substantial shares of fluctuations in commodity prices

exogenous oil supply shocks how big are they and how much do they matter for the u s economy abstract the paper proposes a new measure of exogenous oil supply shocks the timing the magnitude and the sign of this measure may differ greatly from current state of the art estimates it is shown that only a small fraction of the observed oil price increases during oil crisis periods can be attributed to exogenous oil production disruptions exogenous oil supply shocks cause a sharp drop of u s real gdp growth after five quarters rather than an immediate and sustained reduction in economic growth and a spike in cpi inflation after three quarters overall exogenous oil supply shocks made remarkably little difference for the evolution of the u s economy since the 1970s although they did matter for some historical episodes

effects of consumer subsidy on household fuel switching from coal to cleaner fuels a case study for anthracites in korea the korean coal industry is in a transition under low carbon policy through the steady reduction of coal production since consumer subsidy for the consumption of anthracites briquette in low income households caused a distortion in domestic coal market the so called coupon program will be the first target in energy reform policy in order to induce fuel switching from anthracites to alternative clean energy this paper tries to identify various factors that influence households fuel switching decision disutility from briquette consumption is also considered as an important factor using the 2007 census data on briquette consuming households it is found that the coupon program provides an adverse effect to switching fuels to clean energy while the disutility of briquettes is positively associated with the probability of fuel switching however the empirical finding suggests that the policy alone attempting to remove coupon program may fail to switch fuels unless the cost of boiler changes is substantially reduced through the provision of accessible networks to alternative energy sources it indicates that reform policy for consumer subsidy must be understood in line with more comprehensive regional energy plans to resolve energy poverty issue

economic voting and multilevel governance a comparative individual level analysis an important component of incumbent support is the reward punishment calculus of economic voting previous work has shown that clarity of responsibility within the central state government conditions national economic effects on incumbent vote choice where clarity is high low economic effects are greater less this article advances the clarity of responsibility argument by considering the effect of multilevel governance on economic voting in institutional contexts of multilevel governance the process of correctly assigning responsibility for economic outcomes can be difficult this article tests the proposition that multilevel governance mutes effects of national economic conditions by undermining responsibility linkages to the national government individual level data from the comparative study of electoral systems module 1 are used to test this proposition results demonstrate that economic voting is weakest in countries where multilevel governance is most prominent findings are discussed in light of the contribution to the economic voting literature and the potential implications of multilevel governance

partisan cycles in congressional elections and the macroeconomy in the postwar united states the president s party has always done worse in the midterm congressional elections than in the previous congressional election republican administrations exhibit below average and democratic administrations above average economic growth in the first half of each term whereas in the latter halves the two see equal growth our rational expectations model is consistent with these two regularities in presidential elections voters choose between two polarized candidates they then use midterm elections to counterbalance the president s policies by strengthening the opposition in congress since presidents of different parties are associated with different policies our model predicts a spurious correlation between the state of the economy and elections our predictions contrast with those of retrospective voting models in which voters reward the incumbent if the economy is doing well before the election our model performs empirically at least as well as and often better than alternative models

a duration model of irreversible oil investment theory and empirical evidence the aim of this paper is to analyse the implications of the theory of irreversible investment under uncertainty for investment in oil fields on the united kingdom continental shelf ukcs we consider the problem of an operator who owns a licence to develop and extract oil from a field of known capacity an intertemporal optimization model in discrete time is developed to derive decision rules for the timing of the irreversible development investment and for the optimal rate of extraction model simulation is then used to describe the properties of the numerical solutions the predictions of the theory on the determinants of the irreversible investment decision are then examined using statistical duration analysis data on the length of the time period between discovery and development are available for individual fields on the ukcs we measure the duration of the irreversible investment gestation lag for each field and test the model by assessing the significance of the theoretical variables in explaining the significance of such a lag both our theoretical model and our empirical results suggest the importance of a nonlinear interaction of the level of oil prices and the volatility of oil prices in determining the development lag the simulation of our theoretical model shows a nonlinear impact of oil price volatility on the trigger level of oil prices our empirical results suggest that the effect of price volatility is a function of the expected price level with increased price volatility having a positive impact on the duration of investment appraisal when expected prices are low and a negative impact when they are high

monetary policy with sectoral trade offs we formulate a two sector new keynesian economy that features sectoral heterogeneity along three main dimensions price stickiness consumption goods durability and the inter sectoral trade of input materials the combination of these factors deeply affects inter sectoral and intra sectoral stabilization in this context we examine the welfare properties of simple rules that adjust the policy rate in response to the output gap and alternative measures of final goods price inflation aggregating durable and non durable goods prices depending on the relative frequency of sectoral price setting may induce a severe bias due to factor demand linkages the cost of production in one sector is influenced by price setting in the other sector of the economy as a result measures of aggregate inflation that weigh sectoral price dynamics based on the relative degree of price rigidity do not allow the central bank to keep track of the effective speeds of sectoral price adjustment

the time path of scarcity rent in the theory of exhaustible resources there is now a consensus in the literature on resource economics that a depletable resource should command a price in excess of its marginal extraction cost simply to reflect the opportunity cost of using a unit of it today rather that conserving it for the future but how this excess is to change along an optimal or competitive equilibrium path of resource use is still an unresolved question this might at first seem puzzling since according to the fundamental theorem of economics of exhaustible resources or hotelling i 93 i rule on an optimal path price minus marginal extraction cost also termed interchangeably as scarcity rent user cost or royalty should steadily grow over time at the social rate of discount however the literature contains sharply contrasting views on the subject for example kay and mirrlees 1975 have argued that since along an optimal path the scarcity rent grows exponentially as a finite stock of a resourcexnears exhaustion then situations in which the resource stock is still very large and yet the price greatly exceeds the marginal extraction cost should indicate that the price is significantly above its optimal level and that the resource is overconserved in stark contrast to this view heal i976 has argued that as the resource stock nears exhaustion the difference between price and marginal cost or what he termed social cost of extraction falls monotonically to zero hanson i980 analyses the same model as heal s but unlike heal who assumes the unit extraction cost to be convex he postulates it to be concave and yet like heal concludes that the scarcity rent will be monotonically declining over time solow and wan i976 analyse a still different situation where resource deposits differ in quality and the unit extraction cost increases as higher grade deposits are exhausted and extraction proceeds to lower grades they show that along an optimal path the shadow price of a resource must rise at the real rate of interest despite differential extraction costs but that the difference between price and the marginal extraction cost or what they call degradation charge declines monotonically over time to zero these sharply differing conclusions suggest that far from being resolved the question of how scarcity rent changes over time is much in want of a close scrutiny the need for such a scrutiny becomes even stronger once it is noted

implied volatility surface predictability the case of commodity markets abstract recent literature seek to forecast implied volatility derived from equity index foreign exchange and interest rate options using latent factor and parametric frameworks motivated by increased public attention borne out of the financialization of futures markets in the early 2000s we investigate if these extant models can uncover predictable patterns in the implied volatility surfaces of the most actively traded commodity options between 2006 and 2016 adopting a rolling out of sample forecasting framework that addresses the common multiple comparisons problem we establish that for energy and precious metals options explicitly modeling the term structure of implied volatility using the nelson siegel factors produces the most accurate forecasts

severed linkages distorted accountability in uneven regimes though a general consensus exists regarding the significance of perceived performance in voters evaluations of incumbent governments much of the research underlying this consensus has been carrie

economic and referendum voting a comparison of gubernatorial and senatorial elections we compare vote choice in senate and gubernatorial elections from 1986 and 1990 with two retrospective voting hypotheses the national referendum hypothesis and an economic retrospective hypothesis despite the similarities between the office of u s senator and governor same constituency high levels of campaign spending highly visible candidates etc we find that different types of retrospective evaluations are used with respect to vote choice as members of the national legislative branch senators fortunes are linked to the success or failures of the president in contrast governors as state executives are held accountable for perceived state economic conditions while senators escape unscathed from the same general economic evaluations these findings shed some light on the nature of vote choice in a political system complicated by federalism and separation of powers

dynamic responsiveness in the u s senate id evelop a theory of dynamic responsiveness that suggests that parties that win elections choose candidates who are more extreme and parties that lose elections choose candidates who are more moderate moreover the size of past victories matters close elections yield little change but landslides yield large rc hanges in the candidates offered by both parties i test this theory by analyzing the relationship between republican vote share in u s senate elections and the ideology of candidates offered in the subsequent election the results show that republican democratic victories in past elections yield candidates wh oa re more less conservative in subsequent elections and the effect is proportional to the margin of victory this suggests that parties or candidates pay attention to past election returns one major implication is that parties may remain polarized in spite of their responsiveness to the median voter

expectations and commodity price dynamics the overshooting model monetary policy has important effects on agricultural commodity prices because though they are flexible other goods prices are sticky this paper formalizes the argument by applying the dornbusch overshooting model a decline in the nominal money supply is a decline in the real money supply in the short run it raises the real interest rate which depresses real commodity prices they overshoot their new equilibrium in order to generate an expectation of future appreciation sufficient to offset the higher interest rate these real effects which vanish in the long run also result from a decline in the money growth rate

which determinant is the most informative in forecasting crude oil market volatility fundamental speculation or uncertainty abstract this paper aims to identify the most informative determinant in forecasting crude oil market volatility we use a new garch class model based on mixed data sampling regression and the dynamic model averaging combination method to examine the predicting power of the determinants we integrate both the global economic policy uncertainty gepu indices and several national economic policy uncertainty epu indices with traditional determinants such as global oil demand supply and speculation our analysis suggests that the epu indices comprehensively integrate the information contained in other determinants specifically gepu indices and the u s s epu index have superior predictive powers for west texas intermediate spot oil volatility this finding highlights the importance of epu indices implying that they are key factors to consider when determining crude oil market volatility

strategic politicians and unresponsive voters t0 resolve the paradoxical finding that economic conditions and presidential popularity powerfully relate to quadrennial movement in the house vote but explain little individual voting variation jacobson and kernell have advanced their strategic politicians model of midterm elections purportedly the early year political environment helps determine how many of a party s strong potential contenders risk challenging incumbents voters in turn respond to the quality of candidates before them in november and thus indirectly reward the party favored by this early year environment despite its current prominence however the theory does not stand up to empirical investigation a time series equation of midterm outcomes regressed on early year national conditions does not fare particularly well when contrasted with comparable equations assuming direct effects voting furthermore challenger quality has only a weak influence on individual voters subordinate in fact to the effects of economic attitudes and presidential evaluations

macroeconomic forecasting using diffusion indexes this article studies forecasting a macroeconomic time series variable using a large number of predictors the predictors are summarized using a small number of indexes constructed by principal component analysis an approximate dynamic factor model serves as the statistical framework for the estimation of the indexes and construction of the forecasts the method is used to construct 6 12 and 24 monthahead forecasts for eight monthly u s macroeconomic time series using 215 predictors in simulated real time from 1970 through 1998 during this sample period these new forecasts outperformed univariate autoregressions small vector autoregressions and leading indicator models

oil shocks and aggregate macroeconomic behavior the role of monetary policy a recent paper by bernanke gertler and watson 1997 suggests that monetary policy could be used to eliminate any recessionary consequences of an oil price shock this paper challenges this conclusion on two grounds first we question whether the federal reserve actually has the power to implement such a policy for example we consider it unlikely that additional money creation would have succeeded in reducing the fed funds rate by 900 basis points relative to the values seen in 1974 second we point out that the size of the effect that bernanke gertler and watson attribute to oil shocks is substantially smaller than that reported by other researchers primarily due to their choice of a shorter lag length than that used by other researchers we offer evidence in favor of the longer lag length employed by previous research and show that under this specification even the aggressive federal reserve policies proposed would not have succeeded in averting a downturn