the turning black tide energy prices and the canadian dollar the authors revisit the relationship between energy prices and the canadian dollar in the amano and van norden 1995 equation which shows a negative relationship such that higher real energy prices lead to a depreciation of the canadian dollar

payment schemes and gender in germany the authors estimate the determinants of five types of variable payment schemes using panel data on german establishments in 1994 and 1996 women were disproportionately included in schemes based on individual productivity and on profit sharing but not in those based on work group productivity this pattern seems inconsistent with the claim that women are sorted due to their shorter expected tenure instead the authors argue the critical issue may be that women have a greater need for flexibility between work and home than men do collective bargaining coverage and other industrial relations variables are shown to be influential determinants interacting with gender

spillover effects of germany s final demand on southern europe we use data from the world input output database to fit a closed multiregional input output model in order to estimate the size of spillover effects of germany s final demand on gdp employment and the trade balance in southern european countries we find that spillover effects are rather small germany alone will hardly make a significant contribution to the external adjustment process in the european south

do central banks respond to exchange rate movements a structural investigation abstract we estimate a small scale structural general equilibrium model of a small open economy using bayesian methods our main focus is the conduct of monetary policy in australia canada new zealand and the uk we consider generic taylor type rules where the monetary authority reacts in response to output inflation and exchange rate movements we perform posterior odds tests to investigate the hypothesis whether central banks do target exchange rates the main result of this paper is that the central banks of australia and new zealand do not whereas the bank of canada and the bank of england do include the nominal exchange rate in its policy rule this result is robust for various specification of the policy rule we also find that terms of trade movements do not contribute significantly to domestic business cycles

the role of the exchange rate in monetary policy rules for a country that chooses not to permanently fix its exchange rate through a currency board or a common currency or some kind of dollarization the only alternative monetary policy that can work well in the long run is one based on the trinity of i a flexible exchange rate ii an inflation target and iii a monetary policy rule while not often put into this threepart format the desirability of such a monetary policy in an open economy is in my view the clear implication of three corresponding strands of recent monetary research i research on fixed exchange rates regimes including the influential 1995 article the mirage of fixed exchange rates by maurice obstfeld and kenneth rogoff and the many analyses of the breakdown of fixed exchange rate regimes in the late 1990 s ii research on the practical success with inflation targeting by ben bernanke et al 1999 and iii research on the benefits of simple monetary policy rules see e g taylor 1999a this clear policy implication however does not end the debate about how exchange rates should be taken into account in formulating monetary policy even if one excludes capital controls and sterilized exchange market intervention from consideration because they are not effective or attractive ways to de link exchangerate movements from the domestic interest rate a crucial question remains how should the instruments of monetary policy the interest rate or a monetary aggregate react to the exchange rate should policymakers avoid any reaction and focus instead on domestic indicators such as inflation and real gdp or is the rule of thumb that a substantial appreciation of the real exchange rate furnishes a prima facie case for relaxing monetary policy as characterized by obstfeld and rogoff 1995 p 93 a better monetary policy rule or perhaps policymakers should heed the obstfeld rogoff warning that substantial departures from ppp purchasing power parity in the short run and even over decades make such a policy reaction to the exchange rate undesirable more generally if one accepts the trinity concept of monetary policy in an open economy then what is the role of the exchange rate in the monetarypolicy rule

on the economic rationale for codetermination law abstract this paper develops a positive efficiency economic case for codetermination law resting on the correction of labor and capital market and organizational failures a legally mandated codetermination structure is shown to provide employee checks on several structural incentives for management opportunism codetermination is shown to offer advantages for technical efficiency skill development and knowledge generation through its protection of specific human capital investments financial markets cannot enforce codetermination due to a set of free rider problems

services linkages and the value added content of trade services trade constitute roughly one third of trade on a value added basis and much of this is concentrated in margin services transport logistics linked to trade in goods however producer services are also part of the value added contained in traded goods this is especially true in high income countries where services account for roughly 70 percent of value added working with data a set of global social accounting matrices spanning intermittent years from 1992 to 2007 this paper examines the services embodied in trade on a value added basis this includes not only the direct and indirect contribution of services to value added contained in a given country s exports but also the extent to which third country value added in services through intermediate linkages of imported goods and services are also embodied in production and trade this exercise serves to highlight not only the importance of non tradables in trade but also by extension the importance that productivity foreign affiliates sales and trade and investment in services may hold for interdependence and cross border linkages

september 11th and the earnings of muslims in germany the moderating role of education and firm size abstract while available evidence suggests that the events of september 11th negatively influenced the relative earnings of employees with arab background in the us it is not clear that they had similar effects in other countries our study for germany provides evidence that the events also affected the relative earnings of muslims outside the us however the results show that there was no uniform effect on all types of muslims across all types of firms accounting for moderating factors a significantly negative effect can primarily be found for low skilled muslims employed in small and medium sized firms this conforms to theoretical expectations moreover we demonstrate that defining appropriate treatment and control groups is crucial for identifying the effects

racial earnings differentials and performance pay this paper presents an information model in which workers receiving output based pay experience less racial earnings discrimination than those receiving time rates and supervisory evaluations tests using the national longitudinal survey of youth reveal no racial wage differential among male workers paid output based pay while confirming a significant differential among those paid time rates in addition the racial wage differential among those receiving bonus pay usually based on supervisory evaluations tends to be larger than for those not receiving such bonuses while both racial earnings differences and payment methods have generated enormous literatures the two subjects rarely interact this paper argues that the observed racial earnings gap should be narrower among those receiving output based pay such as piece rates and commissions when discriminating in earnings the intensity of racial preferences must be greater when an owner or manager confronts a standardized measure of productivity than when effort is subjectively evaluated and those evaluations are used to set earnings more important use of a standardized measure of productivity makes the practice of discrimination more transparent and this improved information increases the probability of detection the increased probability of detection raises the expected cost of racial discrimination and should be associated with a reduction in its extent our empirical estimates confirm that output based pay is associated with reduced racial earnings discrimination

prejudice and wages an empirical assessment of becker s the economics of discrimination we test the predictions from becker s 1957 seminal work on employer prejudice and find that relative black wages a vary negatively with the prejudice of the marginal white in a state b vary negatively with the prejudice in the lower tail of the prejudice distribution but are unaffected by the prejudice of the most prejudiced persons in a state and c vary negatively with the fraction of a state that is black our estimates suggest that one quarter of the racial wage gap is due to prejudice with nontrivial consequences for black lifetime earnings

the copula garch model of conditional dependencies an international stock market application abstract modeling the dependency between stock market returns is a difficult task when returns follow a complicated dynamics when returns are non normal it is often simply impossible to specify the multivariate distribution relating two or more return series in this context we propose a new methodology based on copula functions which consists in estimating first the univariate distributions and then the joining distribution in such a context the dependency parameter can easily be rendered conditional and time varying we apply this methodology to the daily returns of four major stock markets our results suggest that conditional dependency depends on past realizations for european market pairs only for these markets dependency is found to be more widely affected when returns move in the same direction than when they move in opposite directions modeling the dynamics of the dependency parameter also suggests that dependency is higher and more persistent between european stock markets

religion and economy religion has a two way interaction with political economy with religion viewed as a dependent variable a central question is how economic development and political institutions affect religious participation and beliefs with religion viewed as an independent variable a key issue is how religiosity affects individual characteristics such as work ethic honesty and thrift and thereby influences economic performance in this paper we sketch previous studies of this two way interaction but focus on our ongoing quantitative research with international data

gender piece rates and wages evidence from matched employer employee data why are women disproportionately on piece rates we investigate three possible explanations 1 women are more likely to be on piece rates because they have a shorter expected tenure than men 2 a greater demand for flexibility between work and home attracts women to work place technologies suitable for variable pay based on individual performance 3 women prefer piece rates because they are subject to less wage discrimination when objective performance measures are available the weight of our empirical evidence supports the third hypothesis the unexplained gender wage gap is substantially smaller in the piece rate regime than in the time wage regime copyright 2004 oxford university press

green industrial policy green growth requires green technologies production techniques that economize on exhaustible resources and emit fewer greenhouse gases the availability of green technologies both lowers social costs in the transition to a green growth path and helps achieve a satisfactory rate of material progress under that path the theoretical case in favour of using industrial policy to facilitate green growth is quite strong economists traditional scepticism on industrial policy is grounded instead on pragmatic considerations having to do with the difficulty of achieving well targeted and effective interventions in practice while these objections deserve serious attention i argue that they are not insurmountable a key objective of this paper is to show how the practice of industrial policy can be improved by designing institutional frameworks that counter both informational and political risks

orchestrating impartiality the impact of blind auditions on female musicians a change in the audition procedures of symphony orchestras adoption of blind auditions with a screen to conceal the candidate s identity from the jury provides a test for sex biased hiring using data from actual auditions in an individual fixed effects framework we find that the screen increases the probability a woman will be advanced and hired although some of our estimates have large standard errors and there is one persistent effect in the opposite direction the weight of the evidence suggests that the blind audition procedure fostered impartiality in hiring and increased the proportion women in symphony orchestras

when does the stock market listen to economic news new evidence from copulas and news wires we study association between macroeconomic news and stock market returns using the statistical theory of copulas and a new comprehensive measure of news based on textual review and classification of news wires we find the impact of economic news on equity returns to be nonlinear and asymmetric in particular controlling for economic conditions and surprises associated with releases of economic data we find that the market reacts strongly and negatively to the most unfavourable macroeconomic news but appears to largely discount the good news further the most unfavorable news creates price drift and we document that selling stocks short in the wake of unusually bad news yields annual abnormal gross returns greater than four percent

the dependence structure between the canadian stock market and the usd cad exchange rate a copula approach this paper investigates the dependence structure between the real canadian stock returns and the real usd cad exchange rate returns using the symmetrized joe clayton sjc copula function we estimate the sjc copula with monthly data over the period 1995 1 to 2006 12 our results show significant asymmetric static and dynamic tail dependence between the real stock returns and the real exchange rate returns such that the two returns are more dependent in the left than in the right tail of their joint distribution we explain this asymmetric dependence in terms of an asymmetric interest rate policy by canadian monetary authorities in response to changes in the real exchange rate during sub periods of falling and rising commodity prices le texte analyse la structure de dependance entre les rendements reels sur les actions canadiennes en bourse et les taux de rendements reels sur le taux de change entre le canada et les etats unis en utilisant la fonction a copule symetrisee joe clayton sjc on calibre cette fonction a l aide de donnees mensuelles pour la periode allant de 1995 1 a 2006 12 les resultats montrent une dependance asymetrique statique et dynamique significative entre les rendements reels sur les actions et les taux de rendements reels sur le taux de change telle que les deux rendements reels sont davantage dependants l un de l autre a l extremite gauche qu a l extremite droite de leur distribution conjointe on explique cette dependance asymetrique en termes d une politique asymetrique du taux d interet par les autorites canadiennes en reponse aux changements dans le taux de change reel durant les sous periodes de prix croissants et decroissants des denrees

downside and upside risk spillovers between exchange rates and stock prices abstract we examined downside and upside risk spillovers from exchange rates to stock prices and vice versa for a set of emerging economies we characterized the dependence structure between currency and stock returns using copulas and computed downside and upside value at risk and conditional value at risk we documented a positive relationship between stock prices and currency values in emerging economies with respect to the us dollar and the euro with downside and upside spillover risk effects transmitted both ways finally we also documented asymmetries in upside and downside risk spillovers and asymmetric differences in the size of risk spillovers when the domestic currency values against the us dollar and the euro our results consistent with flight to quality phenomena have implications for downside and upside risk management of international investor portfolios in emerging markets

why do markets move together an investigation of u s japan stock return comovements this article explores the fundamental factors that affect cross country stock return correlations using transactions data from 1988 to 1992 we construct overnight and intraday returns for a portfolio of japanese stocks using their nyse traded american depository receipts adrs and a matched sample portfolio of u s stocks we find that u s macroeconomic announcements shocks to the yen dollar foreign exchange rate and treasury bill returns and industry effects have no measurable influence on u s and japanese return correlations however large shocks to broadbased market indices nikkei stock average and standard and poor s 500 stock index positively impact both the magnitude and persistence of the return correlations stock return cross country covariances play a key role in international finance changes in these covariances affect the volatility of portfolios and asset prices as these covariances increase one expects that a fewer domestic risks are internationally diversifiable so portfolio volatility increases b the risk premium on the world market portfolio increases 1 c the cost of capital increases for individual firms and d the domestic version of the capm becomes increasingly inadequate 2 despite the important economic consequences of changes in cross country covariances the determinants of the levels and dynamics of these covariances have been little studied from an academic

cross of euros the eurozone currently confronts severe short run macroeconomic adjustment problems and a deficient institutional architecture that has to be reformed in the longer run europe s efforts at economic and monetary union are historically unprecedented however the gold standard provides lessons regarding what will and won t work macroeconomically and politically in the short run while us history provides long run lessons regarding appropriate institutional structures the latter also suggests that institutional reform only happens at times of great crisis and that it cannot be taken for granted the eurozone s leaders may therefore ultimately have to take heed of the lessons of history regarding currency union breakups