some empirical evidence on the effects of shocks to monetary policy on exchange rates this paper investigates the effects of shocks to u s monetary policy on exchange rates we consider three measures of these shocks orthogonalized shocks to the federal funds rate orthogonalized shocks to the ratio of nonborrowed to total reserves and changes in the romer and romer index of monetary policy in sharp contrast to the literature we find substantial evidence of a link between monetary policy and exchange rates specifically according to our results a contractionary shock to u s monetary policy leads to i persistent significant appreciations in u s nominal and real exchange rates and ii significant persistent deviations from uncovered interest rate parity in favor of u s interest rates

general linear formulations of stochastic dominance criteria abstract we develop and implement linear formulations of general n th order stochastic dominance criteria for discrete probability distributions our approach is based on a piece wise polynomial representation of utility and its derivatives and can be implemented by solving a relatively small system of linear inequalities this approach allows for comparing a given prospect with a discrete set of alternative prospects as well as for comparison with a polyhedral set of linear combinations of prospects we also derive a linear dual formulation in terms of lower partial moments and co lower partial moments an empirical application to historical stock market data suggests that the passive stock market portfolio is highly inefficient relative to actively managed portfolios for all investment horizons and for nearly all investors the results also illustrate that the mean variance rule and second order stochastic dominance rule may not detect market portfolio inefficiency because of non trivial violations of non satiation and prudence

planning of renewables schemes deliberative and fair decision making on landscape issues instead of reproachful accusations of non cooperation abstract the main issues related to successful implementation policies concern the socio economic institutions that are conditional to planning in the energy policy domain but also in the domain of spatial planning successful investments and the siting of renewable power plants eventually determine the success rate of national efforts in establishing renewable capacity central planning usually has several objectives and these often have a detrimental effect on the goal of renewable energy application current problems related to implementation decisions concerning wind power schemes are an example to those who will be faced by other renewable power plants notably biomass regarding community acceptance of wind power schemes the visual evaluation of the impact of wind power on the values of the landscape is by far the most dominant factor in explaining opposition or support type of landscape fully overshadows other attitudinal attributes as well as other visual and scenic factors such as the design of wind turbines and wind farms and the number and the size of turbines planning regimes and decision making practices that really enhance the implementation processes of renewable energy require strong ecological modernization this means institutional changes that create involvement and trust of actors at the actual implementation level local opposition cannot be explained by the egotistical motives of local residents when the inclination to behave according to supposed backyard motives is investigated the scale to measure this phenomenon appears to indicate commitment to equity issues and fairness of decision making hence for wind power local involvement to represent the local values of site specific landscapes is crucial for other renewables the source specific features are different but conflicts can be expected as well because the fairness of implementation decisions will be equally significant

international evidence on the demand for money one of the current questions in the literature on the demand for money is whethe r the adjustment of actual to desired money holdings is in nominal or real terms this paper describes a simple procedure that can be used to test the nominal against the real hypothesis the test is carried out for twenty seven countries the paper also tests the structural stability of the demand for money equations and the correctness of th e dynamic specification the results are strongly in favor of the nom inal adjustment hypothesis there is however some evidence of moder ate structural instability before and after 1973 the instability doe s not affect the conclusion that the nominal adjustment hypothesis do minates the real adjustment hypothesis copyright 1987 by mit press

does greater trade openness reduce inflation further evidence using panel data techniques abstract in this article we estimate the relation between inflation and trade openness q j econ 108 1993 869 the higher the gains in terms of product in generating an inflationary surprise the greater the incentives will be for the government to effect such a surprise

portfolio analysis using stochastic dominance relative entropy and empirical likelihood this study formulates portfolio analysis in terms of stochastic dominance relative entropy and empirical likelihood we define a portfolio inefficiency measure based on the divergence between given probabilities and the nearest probabilities that rationalize a given portfolio for some admissible utility function when applied to a sample of time series observations in a blockwise fashion the inefficiency measure becomes a likelihood ratio statistic for testing inequality moment conditions the limiting distribution of the test statistic is bounded by a chi squared distribution under general sampling schemes allowing for conservative large sample testing we develop a tight numerical approximation for the test statistic based on a two stage optimization procedure and piecewise linearization techniques a monte carlo simulation study of the empirical likelihood ratio test shows superior small sample properties compared with various generalized method of moments tests an application analyzes the efficie

gains from diversification on convex combinations a majorization and stochastic dominance approach by incorporating both majorization theory and stochastic dominance theory this paper presents a general theory and a unifying framework for determining the diversification preferences of risk averse investors and conditions under which they would unanimously judge a particular asset to be superior in particular we develop a theory for comparing the preferences of different convex combinations of assets that characterize a portfolio to give higher expected utility by second order stochastic dominance our findings also provide an additional methodology for determining the second order stochastic dominance efficient set

an asset allocation puzzle comment the purpose of this note is to look at the rationale behind popular advice on portfolio allocation among cash bonds and stocks we argue that the typical investment advice is not inconsistent with the behavior of risk averse expected utility maximizers we propose an additional solution to the asset allocation puzzle posed by niko canner et al 1997 who argue that popular advice contradicts financial theory because it is inconsistent with the capital asset pricing model capm mutual fund separation theorem the capm asserts that investors should hold the same selection of risky assets while popular advice is that investors should hold a proportion of bonds to stocks that increases with risk aversion using mean variance mv analysis and the capm canner et al show that recommended portfolios are far from optimal and that losses from the apparent failure of optimization are not substantial however they failed to explain the popular advice within an economic model we offer a rational model based on stochastic dominance to demonstrate that all popular financial advice portfolios belong to the efficient set for all risk averse investors using the historical annual real returns on bonds and stocks in canner et al we cannot ascertain that investment advisors indeed offer bad advice rather we maintain that acting as agents for numerous clients advisors recommend portfolios that are not inefficient for all risk averse investors i overview

openness and inflation a general equilibrium model of a small open economy is developed to analyse the optimal rate of inflation under discretion once agents welfare is the sole policy objective it is possible to show that openness and inflation no longer have a simple inverse relationship a greater degree of openness may lead the policy maker to want to exploit the short run phillips curve more aggressively even if involves a smaller short run benefit because changes in export demand affect the terms of trade inflation can then be higher in a more open economy

testing commitment models of monetary policy evidence from oecd economies in ation rates in a number of oecd follow a common trend over the past four decades in ation starts out low in the 1960s rises for a time before peaking in the 1970s or early 1980s and then falls back to initial levels this similarity in the behavior of trend in ation suggests that any explanation of long run in ation trends ought to apply across oecd countries ireland 1999 shows that a simple time inconsistency model of monetary policy modifled to allow for a time varying nairu can explain long run trends in u s in ation in this paper we show that this result cannot serve as an explanation of the common trend in oecd in ation as it flts the data only in the u s we investigate two important variants of the hypothesis i that time inconsistency was an important component of central bank behavior in earlier decades but has become less signiflcant in recent years and ii that time inconsistency problems drive u s in ation which afiects in ation rates in other countries as a result of central bankers attempts to manage nominal exchange rate movements vis a vis the u s dollar we flnd that the flrst hypothesis flts the data no better than the baseline model we flnd some support for the international spillovers version of the model but the behavior of non u s central bankers with respect to domestic unemployment rates is not well described by the time inconsistency mechanism

does it pay to be ethical evidence from the ftse4good abstract the empirical mean variance evidence comparing the performance of socially responsible investments sri and conventional investments suggests that there is no significant difference between the two this paper re examines the problem in the context of marginal conditional stochastic dominance mcsd which can accommodate any return distribution or concave utility function our results provide strong evidence that there is a financial price to be paid for socially responsible investing indices composed of socially responsible firms are mcsd dominated by trademarked indices composed of conventional firms as well as by indices carefully matched by size and industry with the firms in the sri indices zero cost portfolios created by shorting the sri index and using the proceeds to invest in the conventional index generate higher average returns lower variance and higher skewness than either of the two indices standing alone they also mcsd dominate the sri and conventional indices standing alone

almost stochastic dominance and stocks for the long run abstract the geometric mean argument and the recently developed almost stochastic dominance criterion have been employed to make the case for stocks for the long run we show that almost stochastic dominance and the geometric mean argument do not necessarily support long run investment in equities in fact for standard preferences bonds may be preferred to stocks for the long run while stocks are preferred for shorter horizons

openness and inflation a new assessment romer 1993 uses a barro gordon type model to argue that openness puts a check on the government s incentive to engage in unanticipated inflation because of induced exchange rate depreciation 2 therefore in the absence of precommitment in monetary policy more open economies will tend to have lower inflation rates romer finds that empirically over a large sample of countries and over a broad time frame average inflation rates are lower in smaller more open economies this relationship is significant quantitatively large and robust moreover these findings suggest that models in which the absence of precommitment in monetary policy leads to inefficiently high average levels of inflation are essential to understanding inflation in most of the world this comment suggests that the negative link between inflation and openness romer found may be largely driven by the responses of severely indebted countries sics to the debt crisis of the 1980s figures i and ii show the scatterplots of the logarithms of average inflation and openness for the subperiods 1973 to 1981 predebt crisis and 1982 to 1990 the debt crisis period different groups of countries are separated according to their indebtedness level 3 the solid lines in the figures represent the predicted value of inflation obtained from a regression of openness on inflation for the countries in each group as the scatterplots show there is indeed a strong negative relation between openness and inflation among sics during the debt crisis

linear tests for decreasing absolute risk aversion stochastic dominance we develop and implement linear formulations of convex stochastic dominance relations based on decreasing absolute risk aversion dara for discrete and polyhedral choice sets our approach is based on a piecewise exponential representation of utility and a local linear approximation to the exponentiation of log marginal utility an empirical application to historical stock market data suggests that a passive stock market portfolio is dara stochastic dominance inefficient relative to concentrated portfolios of small cap stocks the mean variance rule and nth order stochastic dominance rules substantially underestimate the degree of market portfolio inefficiency because they do not penalize the unfavorable skewness of diversified portfolios in violation of dara this paper was accepted by james smith decision analysis

what drives people s opinions of electricity infrastructure empirical evidence from ireland abstract across the eu significant infrastructure investment is needed in both generation from renewable energy sources res and the electricity grid to meet the european targets on emission reduction and res expansion experiences show however that citizens may object to new energy infrastructure in their localities which may cause delays in achieving the targets to avoid delays it is crucial to understand what drives people s opinions to explore people s opinions of different electricity generation and transmission technologies in ireland we conducted a nationally representative survey concerning the drivers we distinguish between socio demographics technology specific perceptions and energy policy preferences our results show that people generally have positive views of res technologies while this indicates that irish citizens agree to move towards cleaner electricity sources we find reluctance amongst people to have these technologies located close to their places of residence we find that across most technologies the tradeoff people make between economic and environmental policy objectives drives their opinions of and their tendencies to oppose technology developments the significance of most socio demographic variables however is largely technology dependent this highlights that policy makers need to understand how people make tradeoffs between policy objectives and how these tradeoffs relate to their opinions of different technologies

does globalization affect growth evidence from a new index of globalization the study develops an index of globalization covering its three main dimensions economic integration social integration and political integration using panel data for 123 countries in 1970 2000 it is analysed empirically whether the overall index of globalization as well as sub indexes constructed to measure the single dimensions affect economic growth as the results show globalization indeed promotes growth the dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries although less robustly information flows also promote growth whereas political integration has no effect

international evidence on tradables and nontradables inflation abstract using 1970 1985 sectoral data for the oecd we find that inflation in nontradable goods exceeds inflation in tradables we identify a demand shift towards nontradables and faster growth of total factor productivity in the tradable goods sector as the prime causes of the differential inflation in addition disinflation attempts and the exchange rate regime appear to have exerted significant influence on the relative inflation rate

a note on romer s openness inflation relation the responsiveness of as and ad to economic openness and monetary policy temple 2002 empirically challenges romer s 1993 negative openness inflation relation on empirical grounds this article links economic openness to the slopes of aggregate supply as and aggregate demand ad to explain why the openness inflation relation can be ambiguous starting with a widely used assumption initiated by romer 1993 that more open economies face greater output inflation tradeoffs we demonstrate that greater output inflation tradeoffs in more open economies reflected in the steeper as induce policymakers to adopt more aggressive optimal monetary policy reflected in the flatter ad empirical results from 15 developed countries data support our theoretical explanation on the recent empirical failure in finding the negative openness inflation relation

wind power implementation the nature of public attitudes equity and fairness instead of backyard motives abstract public attitudes anywhere in europe show moderate to strong support for the implementation of renewable energy nevertheless planning wind power developments appears to be a complicated matter in most countries the problems that have to be dealt with during decision making processes on the siting of wind turbines are usually referred to as mere communication problems however public attitudes towards wind power are fundamentally different from attitudes towards wind farms this gap causes misunderstandings about the nature of public support for renewables in particular where planners easily assume support for renewables can be generated by information campaigns emphasising the environmental benefits whereas opposition to renewable energy schemes can be explained by a selfish not in my backyard attitude both explanations used by planners authorities and unfortunately by many scholars are falsified furthermore policies that still take this common knowledge for granted can have negative consequences for the implementation rates of renewables visual evaluation of the impact of wind power on landscape values is by far the dominant factor in explaining why some are opposed to wind power and others are supporting it moreover feelings about equity and fairness appear the determinants of backyard motives instead of selfishness

testing for marginal changes in income distributions with lorenz and concentration curves asymptotically distribution free statistical tests for comparing absolute and relative lorenz and concentration curves are provided the procedures do not require independent samples and can be used to test for marginal changes in income distributions the tests are illustrated using a large sample of tax returns that have been randomly selected for audit by the internal revenue service the tests reveal the marginal effects of systematic underreporting of income and tax liabilities on the u s income distribution copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

nimby or not exploring the relevance of location and the politics of voiced opinions in renewable energy siting controversies local protests against renewable energy facilities have added fuel to the debate about the so called nimby not in my back yard effect this paper identifies six variables that can hamper the comparison between different public perception studies and offers two broad conclusions on aggregate proximity does have strong influence on public attitudes to proposed projects but the nature strength and spatial scale of this effect may vary according to local context and value of the land residents of stigmatised places are more likely to welcome facilities that are relatively green while people who derive a more positive sense of identity from particular rural landscapes are likely to resist such potential developments especially if they also live there secondly the fear of being branded a nimby and the positive ethics associated with the notion of renewable are both likely to colour the responses of many interviewees these aspects need to be clarified and accounted for in analyses of elicited responses both quantitative and qualitative if we are to improve our understanding of the social construction of individual attitudes in siting conflicts

almost marginal conditional stochastic dominance marginal conditional stochastic dominance mcsd developed by shalit and yitzhaki 1994 gives the conditions under which all risk averse individuals prefer to increase the share of one risky asset over another in a given portfolio in this paper we extend this concept to provide conditions under which most and not all risk averse investors behave in this way instead of stochastic dominance rules almost stochastic dominance is used to assess the superiority of one asset over another in a given portfolio switching from mcsd to almost mcsd amcsd helps to reconcile common practices in asset allocation and the decision rules supporting stochastic dominance relations a financial application is further provided to demonstrate that using amcsd can indeed improve investment efficiency

ranking income distributions a large variety of policy questions involve choices between social states and a consequent ordering of the feasible alternatives when these social states are related to the levels of welfare experienced by individuals or households two central issues stand out in determining the relative desirability of different social outcomes one of these is the essentially positive exercise of achieving comparability between households with different characteristics such as composition or preferences operating in different environments for example facing different price structures the other concerns the normative judgments implicit in the evaluation of alternative allocations of resourcesthe emphasis placed on inequality between households and the extent to which greater inequality can be compensated by higher average living standards this paper focuses on the second of these issues and in doing so we abstract from the problem of household comparability by considering a population of n households identical in all respects except for their incomes the question of ordering social states then becomes one of ranking income distributions over a group of anonymous households or individuals borrowing the usual assumptions imposed on consumer preferences we may suppose that a social ordering of income distributions can be represented by a welfare function 2

mean gini analysis in r d portfolio selection abstract to date no single model has been published which fully satisfies the needs for a practical r d project selection technique some earlier models cannot handle risk well while others do not provide efficient portfolios this paper will present a model adapted from the literature of financial portfolio optimization which provides a practical means of developing preferred portfolios of risky r d projects the method is simple and highly intuitive requiring estimation of only two parameters the expected return and the gini coefficient the gini coefficient essentially replaces the variance in the two parameter mean variance model and results in a superior screening ability the model that we present requires estimates of only these two parameters and in turn allows for relatively simple determination of stochastic dominance sd among candidate r d portfolios we apply our model to a simple artificial five project set and then to a set of 30 actual candidate projects from an anonymous operating company we demonstrate that we can determine the stochastically non dominated portfolios for this real world set of projects our technique appropriate for all risk averse decision makers permits r d managers to screen large numbers of candidate portfolios to discover those which they would prefer under the criteria of sd

does globalisation discipline monetary policymakers abstract this paper analyses globalisation using a small general equilibrium model it concludes that whether increased openness a reduction in the costs of international trade helps to discipline monetary policy in large open economies depends on the type of trade costs moreover to the extent that globalisation induces stronger competition in the goods market this may also have an adverse effect on monetary policy discipline the latter is due to international expenditure switching which becomes a more forceful channel as competition intensifies thus the answer to the question in the title is not necessarily affirmative

conservation payments under risk a stochastic dominance approach conservation payments can be used to preserve forest and agroforest systems to explain landowners land use decisions and determine appropriate conservation payments it is necessary to focus on revenue risk marginal conditional stochastic dominance rules are used to derive conditions for determining the conservation payments required to guarantee that the environmentally preferred land use dominates an empirical application to shaded coffee protection in the biologically important choco region of west ecuador shows that conservation payments required for preserving shaded coffee areas are much higher than those calculated under risk neutral assumptions further the extant distribution of land has strong impacts on the required payments

have the free trade agreements reduced inflation rates abstract most previous studies have examined extensively the economic effects of free trade agreements ftas such as their effects on economic growth income distribution across industries price competitiveness for international trade trade volume and the price of a commodity but not very much on inflation rates this study empirically estimates how much ftas affect domestic inflation rates from the cross country panel data analysis of 34 oecd countries over the period 1980 2014 the expansion of ftas shows a significant negative effect on the consumer price index inflation which is more apparent than the traditionally used openness measure the inflation reduction effect is more significant in countries with a low level of openness than those with a high level of openness

public estimates of support for offshore wind energy false consensus pluralistic ignorance and partisan effects abstract meeting future energy demands will require large scale implementation of renewable energy projects if one of these energy sources offshore wind becomes a common sight off coastlines consideration of local public opinion and action will be critical previous research from the social sciences has lacked depth in examining the underlying factors that shape public opinion towards offshore wind development the current research brings a new perspective to the literature by showing that how members of the public perceive support among others relates to their own opinions of offshore wind energy we report results from two surveys the first focused on opinion formation relating to offshore wind in general among new england residents while the second focused on a specific offshore wind project in rhode island we find evidence that both supporters and opponents of offshore wind underestimate levels of support among others indicating a pluralistic ignorance effect and false consensus effect respectively we also find distinct patterns of perceived support among self identified republicans and democrats the findings hold important implications for policymakers and developers in understanding the nature of public support and opposition for offshore wind energy particularly with respect to individuals willingness to publicly engage with offshore wind projects

trade openness and inflation the role of real and nominal price rigidities the paper revisits the long standing question of the impact of trade openness on the inflation output trade off by accounting for the effects of product market competition on price flexibility the study develops a new keynesian open economy dynamic stochastic general equilibrium model with non constant price elasticity of demand and calvo price setting in which the frequency of price adjustment is endogenously determined it demonstrates that trade openness has two opposing effects on the sensitivity of inflation to output fluctuations on the one hand it raises strategic complementarity in firms pricing decisions and the degree of real price rigidities which makes inflation less responsive to changes in real marginal cost on the other hand it strengthens firms incentives to adjust their prices thereby reducing the degree of nominal price rigidities and increasing the sensitivity of inflation to changes in marginal cost the study explains the positive relationship between competition and the frequency of price adjustment observed in the data it also provides new insights into the effects of global economic integration on the phillips curve

inference tests for gini based tax progressivity indexes distribution free statistical inference procedures for changes in lorenz and gini based indexes of tax progressivity are developed and applied related but distinct tests for the reynolds smolensky index of residual progression and the kakwani index of liability progression are provided the inference procedures are illustrated by applying them to luxembourg income study microdata for sweden the united kingdom and the united states before and after periods of tax reform in each country a finding of significant change depends on the choice among progressivity indexes no single index exhibits a consistent pattern of significant change in all countries across time

social acceptance of renewable energy innovation an introduction to the concept this paper introduces the special issue on social acceptance of renewable energy innovation it is a collection of best papers presented at an international research conference held in tramelan switzerland in february 2006 while there are ambitious government targets to increase the share of renewable energy in many countries it is increasingly recognized that social acceptance may be a constraining factor in achieving this target this is particularly apparent in the case of wind energy which has become a subject of contested debates in several countries largely due to its visual impact on landscapes this paper introduces three dimensions of social acceptance namely socio political community and market acceptance factors influencing socio political and community acceptance are increasingly recognized as being important for understanding the apparent contradictions between general public support for renewable energy innovation and the difficult realization of specific projects the third dimension market acceptance has received less attention so far and provides opportunities for further research particularly from management scholars

empirical tests for stochastic dominance efficiency we derive empirical tests for the stochastic dominance efficiency of a given portfolio with respect to all possible portfolios constructed from a set of assets the tests can be computed using straightforward linear programming bootstrapping techniques and asymptotic distribution theory can approximate the sampling properties of the test results and allow for statistical inference our results could provide a stimulus to the further proliferation of stochastic dominance for the problem of portfolio selection and evaluation using our tests the fama and french market portfolio is significantly inefficient relative to benchmark portfolios formed on market capitalization and book to market equity ratio

monopolistic competition relative prices and output adjustment in the open economy abstract this paper explains price and output dynamics in an open economy characterized by a monopolistic competitive market structure in which pricing decisions incur costs this leads producers to pre set the price path for several periods the paper derives an optimal pricing rule including the optimal pre setting horizon it does so for a rational expectation equilibrium characterized by staggered unsynchronized price setting for which the degree of staggering is endogenously determined

trade union density and inflation performance evidence from oecd panel data this paper examines the impact of union membership rates on inflation in oecd countries a positive effect of union density is estimated even after controlling for fixed effects and time dummies additional institutional characteristics for example union coordination employment protection laws and central bank independence do not affect inflation directly in a panel setting but do influence the size of the unionization coefficient via interaction terms the results are robust to controlling for potential common causes such as oil price shocks and the political stance of the government and to using gmm iv techniques to handle possible endogeneity biases

a near rational model of the business cycle with wage and price inertia this paper presents a model in which insignificantly suboptimal behavior causes aggregate demand shocks to have significant real effects the individual loss to agents with inertial price wage behavior is second order in terms of the parameter describing the shock while the effect on real economic variables is first order thus significant changes in business activity can be generated by anticipated money supply changes provided that some agents are willing to engage in nonmaximizing behavior which results in small losses

the macroeconomic effects of monetary and fiscal policy in a small open economy does the exchange rate regime matter abstract this paper develops a small open economy model in the spirit of obstfeld and rogoff 1995 the introduction of endogenous traded sector output unlocks current account and real exchange rate effects within this framework where specific consideration is given to the case with fixed but adjustable parities exchange rate devaluation generates similar qualitative effects as a money supply expansion under floating rates output and external effects of government spending shocks are broadly consistent with the adjusted basic non micro founded mundell and fleming mf framework but differ in significant ways from the baseline mf model contrary to the textbook mf model a government expenditure shock depreciates the nominal exchange rate and generates real effects under the fixed rate system

mean gini portfolio theory and the pricing of risky assets this paper presents the mean gini mg approach to analyze risky prospects and construct optimum portfolios the proposed method has the simplicity of a mean variance model and the main features of stochastic dominance efficiency since mean gini is consistent with investor behavior under uncertainty for a wide class of probability distributions gini s mean difference is shown to be more adequate than the variance for evaluating the variability of a prospect the mg approach is then applied to capital markets and the security valuation theorem is derived as a general relationship between average return and risk this is further extended to include a degree of risk aversion that can be estimated from capital market data the analysis is concluded with the concentration ratio to allow for the classification of different securities with respect to their relative riskiness

stochastic dominance and expected utility survey and analysis while stochastic dominance has been employed in various forms as early as 1932 it has only been since 1969 1970 that the notion has been developed and extensively employed in the area of economics finance agriculture statistics marketing and operations research in this survey the first second and third order stochastic dominance rules are discussed with an emphasis on the development in the area since the 1980s

the evidence on globalisation globalisation is blamed for many socioeconomic shortcomings i discuss the consequences of globalisation by surveying the empirical globalisation literature my focus is on the kof indices of globalisation that have been used in more than 100 studies early studies using the kof index reported correlations between globalisation and several outcome variables studies published more recently identify causal effects the evidence shows that globalisation has spurred economic growth promoted gender equality and improved human rights moreover globalisation did not erode welfare state activities did not have any significant effect on labour market interaction and hardly influenced market deregulation it increased however within country income inequality the consequences of globalisation thus turn out to be overall much more favourable than often conjectured in the public discourse

portfolio choice based on third degree stochastic dominance we develop an optimization method for constructing investment portfolios that dominate a given benchmark portfolio in terms of third degree stochastic dominance our approach relies on the properties of the semivariance function a refinement of an existing superconvex dominance condition and quadratic constrained programming we apply our method to historical stock market data using an industry momentum strategy our enhanced portfolio generates important performance improvements compared with alternatives based on mean variance dominance and second degree stochastic dominance relative to the center for research in security prices all share index our portfolio increases average out of sample return by almost seven percentage points per annum without incurring more downside risk using quarterly rebalancing and without short selling this paper was accepted by lauren cohen finance

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

portfolio theory for independent assets this paper presents several new concepts for portfolio problems with independently distributed asset prices a criterion is developed for including or excluding assets in an optimal portfolio for an investor maximizing the expected value of a von neumann morgenstern utility function the central concept of the generalized harmonic mean is introduced it is shown to be the analogue of the riskless rate of return for problems without a riskless asset a new ordering theorem is proven showing that an optimal portfolio always consists of positive amounts of the assets with the largest mean values next the concept of independence from irrelevant alternatives is introduced for portfolio problems this is a property of utility functions and is proven to be true for most of the commonly used utility functions altogether the results provide new insights and tools for portfolio problems with independent assets and extend earlier results by samuelson and fishburn and porter

income velocity of money in agricultural developing economies t he response of income velocity of money to economic growth has implications for monetary planning in a developing economy velocity is the ratio of nominal income to money stock and decreases only if money stock rises at a faster rate than nominal income a well known hypothesis in this context is that of friedman 1959 which states that in countries experiencing a secular rise in real income per capita the stock of money generally rises over long periods at a decidedly higher rate than does money income i e velocity declines ezekiel and adekunle 1969 and melitz and correa 1970 in their international crosscountry comparisons have found evidence largely in favour of the friedman hypothesis this in its turn has strengthened the hope for active growthoriented monetary planning the extent of resources that can be transferred for investment purposes through non inflationary monetary expansion increases as development proceeds cross section studies involving developed and developing economies do not provide satisfactory indications of what happens to velocity over time in any individual developing economy firstly velocities have not behaved uniformly in all the developing economies secondly international cross country comparisons do not adequately explain why velocity changes in any individual economy is it because money is a luxury good i e income elasticity of demand for money is greater than unity to the agents in the economy is it because economic development brings about structural changes in the economy which lead to the observed behaviour of velocity is it because monetary habits change in a systematic way it is important to have time series analyses of developing economies to provide answers to such questions for example in a study of malaysia and singapore short 1973 found that though velocity did move inversely to per capita income this negative impact was overpowered by the change in monetary habits which the increase in bank offices caused the aim of this paper is to analyse the temporal behaviour of income velocity of money in agricultural developing economies in the literature on velocity and demand for money in developing economies attention is focussed mainly on three issues i the incomeelasticity of demand for money and in particular whether money is a luxury good or not ii the growth of monetisation and changes in monetary habits and iii the effect of the cost of holding money one important factor which has suffered total neglect is the role of sectoral differences in money demand behaviour and the structural shifts in the sectoral composition of income that accompany development money demand behaviour may vary across sectors this is true not only in developing economies but also in developed economies for example goldfeld 1976 has found that the business sector and the household sector in the united states have different money demand functions an implicit specification error is committed in the aggregative money demand or velocity equation whenever the sectoral income composition factor is omitted on a priori grounds this factor should have special significance in developing economies where sectoral shares in national income change over time in the absence of flow offunds accounts and adequate data on sectoral money holdings for most of the developing economies direct estimation of sectoral demand functions is not possible thus an aggregative specification which incorporates the sectoral income composition factor is necessary to analyse the behaviour of velocity

public inflation aversion and the political economy of macroeconomic policymaking do the macroeconomic priorities of citizens differ across countries if so what accounts for this variation and what are its consequences for explanations of the choice of monetary institutions macroeconomic policy and international monetary cooperation this article uses survey data from twenty advanced economies to examine individual preferences about macroeconomic priorities the analysis establishes three key findings first the results suggest that economic context defined by inflation and unemployment performance has a substantial impact on the public s economic objectives in a way that is broadly consistent with the specification of utility loss functions in the theoretical political economy literature second the results suggest that there is significant cross country variation in inflation aversion controlling for economic context third some of this variation is accounted for by national level factors affecting the aggregate costs of inflation and unemployment these results have significant implications for optimal monetary policymaking the explanation of variation in economic outcomes and for accounts of the choice of institutional frameworks for policymaking i thank the bank of england the center for basic research in the social sciences and the institution for social and policy studies for research support and jim alt andrew bailey bill bernhard lawrence broz john freeman jeff frieden jim granato shigeo hirano david lake jeff lax simon price rose razaghian ron rogowski david stasavage gabriel sterne mike tomz jim vreeland the editor and two anonymous reviewers for helpful comments all views expressed are those of the author and do not represent those of the bank of england

social responses to wind energy development in ontario the influence of health risk perceptions and associated concerns this study documents and analyzes the role of health risk perceptions and other associated concerns of wind energy development henceforth wed in ontario drawing on the risk society framework we conduct a longitudinal media content analysis to document and analyze perceptions of and responses to wed over a nine year period attention is paid to temporal variations in responses relative to ontario s green energy act 2009 henceforth gea legislation aimed at the rapid expansion of renewable energy the study reveals that the most radical forms of resistance to wed on health grounds are driven by perceived injustices in the treatment of potential at risk citizens and citizens with health concerns the gea is fuelling these perceptions of injustices in subtle and nuanced ways particularly by acting as a major confounder to health risk concerns contrary to several existing studies we problematize the use of financial incentives to foster the development of wind energy we also provide policy recommendations which include the need for increased public engagement in the wed process the importance of using third party health and environmental assessments to inform developments as well as the need for post development strategies to address ongoing community concerns

testing monetary policy intentions in open economies 1 introductionthis article examines the relationship between economic openness and inflation performance among the most prominent research on this topic is the work by romer 1993 he demonstrates a negative relationship between economic openness and the inflation level his finding has also been viewed as supportive albeit indirectly of time consistency theory kydland and prescott 1977 1 romer 1993 argues that policymakers in more open economies have less incentive to adopt an expansionary monetary policy his argument is based on the assumption that monetary surprises in more open economies result in higher inflation for a given increase in output romer s finding that more open economies have lower inflation levels leads him to infer that this is evidence of time consistency in monetary policy practices however romer s work has not been generally accepted temple 2002 provides evidence that the openness inflation correlation does not stem from time consistency theory because the inflation level may not properly reveal the monetary authorities policy intentions temple questions this inference because it starts from a strong but unjustified assumption more open economies possess a relatively steeper phillips curve consequently temple proposes that the examination of the positive relationship between openness and the slope of the phillips curve is a fundamental condition for romer s argument he however finds little support for the positive relationship between economic openness and the slope of the phillips curve further work on the relationship of openness and monetary policy intentions comes from clarida gali and gertler 2001 2002 hereafter cgg in cgg 2001 the authors present a simple open economy model with a taylor type interest rate policy rule taylor 1993 the article concludes that the optimal monetary policy in an open economy has the same solution as that in a closed economy derived in cgg 1999 the authors also suggest that there is a direct link between the degree of economic openness and the aggressiveness of monetary policy they state that o penness does affect the parameters of the model suggesting a quantitative implication h ow aggressively a central bank should adjust the interest rate in response to inflationary pressures depends on the degree of openness cgg 2001 p 248 in subsequent work cgg 2002 revisit the issue based on a dynamic open economy new keynesian model and the role of monetary policy in open economies is refined consistent with the argument in cgg 2001 they find that the optimal monetary policy rule in an open economy is isomorphic to that in a closed economy in the nash equilibrium they also suggest that openness does not affect the optimality of a policy rule in such a scenario on the other hand economic openness does affect optimal monetary policy when the foreign optimal policy is endogenous in the domestic country s objective function this effect however is ambiguous in direction because the relationship between the degree of economic openness and the aggressiveness of monetary policy is determined by the relative size of trade and wealth effects of changes in foreign output this line of theoretical literature is limited and does not offer a definitive conclusion on the relationship between economic openness and monetary policy intentions our article provides an alternative empirical evaluation of the relationship based on prior literature we use inflation variability and persistence as the measures of monetary policy intentions one branch of the literature such as taylor 1999 cgg 2000 and owyang 2001 argues that aggressive monetary policy reduces the volatility of inflation for instance cgg 2000 estimate a forward looking taylor rule for the period between 1960 i and 1996 iv they use paul volcker s appointment as chairman of the federal reserve system as a regime shift to a more aggressive anti inflation policy stance

on the flexibility of monetary policy the case of the optimal inflation tax this paper examines optimal monetary policy under uncertainty in a context in which policy makers are able to make credible policy commitments we study an optimal taxation problem of minimizing the social cost of financing a stochastic and exogenous level of government transfers since in the basic model the welfare costs of inflation derive only from expected inflation the optimal monetary policy is highly responsive to the state of nature in a benchmark case in which all shocks are transitory the optimal policy calls for loading all the variability of government transfers on the shoulders of the inflation tax

inflation openness and exchange rate regimes the quest for short term commitment abstract this paper further tests romer s romer d 1993 openness and inflation theory and evidence quarterly journal of economics 58 869 903 extension of kydland and prescott s kydland f prescott e 1977 rules rather than discretion the inconsistency of optimal plans journal of political economy 85 473 491 predictions for dynamic inconsistency problems in open economies in a panel data set of developed and developing countries from 1973 to 1998 i find that openness does not play a role in restricting inflation in the short run on the other hand a fixed exchange rate regime plays a significant role the results are robust to controlling for other variables that determine inflation performing sensitivity analysis and using a de facto exchange rate regime classification

risk aversion and the choice between risky prospects the preservation of comparative statics results most results in what can be termed the comparative statics of risk aversion are obtained when there is only one source of uncertainty the primary example which originally motivated the definition of risk aversion is that more risk averse people are willing to pay a higher premium for insuring against risk it is known that the results do not generally carry over when there is another source of uncertainty the paper develops conditions under which comparative statics results are robust against the introduction of additional sources of uncertainty

stochastic dominance via quantile regression with applications to investigate arbitrage opportunity and market efficiency abstract tests for stochastic dominance constructed by translating the inference problem of stochastic dominance into parameter restrictions in quantile regressions are proposed they are variants of the one sided kolmogorov smirnoff statistic with a limiting distribution of the standard brownian bridge the procedure to obtain the critical values of our proposed test statistics are provided simulation results show their superior size and power they are applied to the nasdaq 100 and s p 500 indices to investigate dominance relationship before and after major turning points results show no arbitrage opportunity between the bear and bull markets our results infer that markets are inefficient and risk averters are better off investing in the bull rather than the bear market

traded goods competitiveness and aggregate fluctuations in the united kingdom this paper presents an investigation of the relations between wage adjustment competitiveness and aggregate fluctuations in the united kingdom it uses a real business cycle model based on the distinction between internationally traded and nontraded goods the traded goods sector is assumed a price taker and the focus is on the supply side the model can account quite well for fluctuations in competitiveness output wages and the terms of trade the results suggest output flexibility and wage price rigidity a combination that produces interesting patterns of macroeconomic adjustment which parallel the predictions of more traditional keynesian models copyright 1990 by royal economic society

the new open economy macroeconomics a survey since the 1995 publication of obsteld and rogoff s redux model there has been an outpouring of research on open economy dynamic general equilibrium models that incorporate imperfect competition and nominal rigidities this paper offers an interim survey of this recent literature 2001 elsevier science b v all rights reserved

stochastic dominance and the investment horizon with riskless assets this paper analyses the relationship between the efficient sets of investment portfolios and the investment holding period investors are allowed to hold risky assets as well as the riskless asset the main result is that dominance in each period implies dominance in the multiperiod case this finding holds with respect to first second and third degree stochastic dominance the riskless interest rate may vary from one period to another without changing the results of this paper

the inflationary bias in a model of the open economy a note abstract in this paper we highlight the importance of aggregate supply effects on the size of the inflationary bias under discretionary policy making using a simple model of an open economy that imports a foreign resource input we show that under discretion the inflationary bias bears an inverse relationship to the elasticity of output supplied with respect to the real exchange rate this theoretical finding is consistent with romer 1993 romer d 1993 openness and inflation theory and evidence quarterly journal of economics 108 869 903 empirical results that point to the existence of a negative association between openness and inflation

theories of risk testing investor behaviour on the taiwan stock and stock index futures markets investor behavior towards risk lies at the heart of economic decision making in general and modern investment theory and practice in particular this paper uses both the mean variance mv criterion and stochastic dominance sd procedures to analyze the preferences for four of the most widely studied investor types in the taiwan stock and stock index futures market we find that risk averters concave utility function prefer spot to futures whereas risk seekers convex utility function prefer futures to spot our findings also show that investors with s shaped utility functions prefer spot futures to futures spot when markets move upward downward finally our results imply that investors with reverse s shaped utility functions prefer futures spot to spot futures when markets move upward downward these results are robust with respect to sub periods spot returns including dividends and diversification although we do not check whether risk averters risk seekers and investors with s shaped and reverse sshaped utility functions actually exist in the market we do show that their existence is plausible the implications of our findings on market efficiency and the existence of arbitrage opportunities are also discussed in this study

excess capacity monopolistic competition and international transmission of monetary disturbances analyzes the excess capacity monopolistic competition and international transmission of monetary policy disturbances in the united states sheds light on the international impact of monetary policy emphasis on the spillover effects of monetary disturbances similarity of framework used with open economy macroeconomics

globalisation institutional reforms and financial development in east asian economies this study investigates the dynamic effects of globalisation on institutions and financial development in east asian economies using panel data tests our empirical results demonstrate that globalisation has a significant influence on institutional quality and that institutional reforms in turn facilitate and support financial development in particular the development of the banking sector in east asia globalisation is also found to have a favourable direct impact on stock market development without passing through an institutional quality channel

small menu costs and large business cycles a macroeconomic model of monopoly i introduction the conflict between modern neoclassical and traditional keynesian theories of the business cycle centers upon the pricing mechanism in neoclassical models prices are fully flexible they represent the continuous optimization of economic agents and the continuous intersection of supply and demand in keynesian models prices are often assumed to be sticky they do not necessarily equilibrate all markets at all times one of the reasons for the resurgence of the equilibrium approach to macroeconomics has been the absence of a theoretical underpinning for this keynesian price stickiness this note shows that sticky prices can be both privately efficient and socially inefficient the business cycle results from the suboptimal adjustment of prices in response to a demand shock to the extent that policy can stabilize aggregate demand it can mitigate the social loss due to this suboptimal adjustment in some keynesian models prices are simply exogenously fixed 2 in others agents must set their prices in advance of the transaction date the act of altering a posted price is certainly costly these costs include such items as printing new catalogs and informing salesmen of the new price yet these menu costs are small and therefore generally perceived as providing only a weak foundation for these fixed price models however this inference is flawed small menu costs can cause large welfare losses the claim that price adjustment costs are small does not rebut the claim that they are central to understanding economic fluctuations

inflation in open economies abstract this paper relates the time consistent inflation rate to the degree of trade openness of an economy the mechanism linking the welfare effects of monetary surprises and hence the incentives to inflate to openness does not rely on a large country terms of trade effect but rather is due to imperfect competition and nominal price rigidity in the non traded sector the empirical evidence supports the main predictions of the model 1997 elsevier science b v

trade linkages and the globalisation of inflation in asia and the pacific abstract some observers argue that increased real integration has led to greater co movement of prices internationally we examine the evidence for cross border price spillovers among economies participating in the pan asian cross border production networks starting with country level data we find that both producer price and consumer price inflation rates move more closely together between those asian economies that trade more with one another ie that share a higher degree of trade intensity next using a novel data set based on the world input output database wiod we examine the importance of the supply chain for cross border price spillovers at the sectoral level we document the increasing importance of imported intermediate inputs for economies in the asia pacific region and examine the impact on domestic producer prices of changes in costs of imported intermediate inputs our results suggest that real integration through the supply chain matters for domestic price dynamics in the asia pacific region

the markup and inflation evidence in oecd countries in this paper we evaluate the dynamic inconsistency argument put forth by kydland and prescott 1977 and barro and gordon 1983 as an explanation for differences in the average inflation experience across oecd countries the focus is on the empirical evidence relating the overall degree of competition among firms as measured by the markup of price over marginal cost and inflation over the 1973 88 period the prediction is that higher markups raise the monetary authority s incentive to increase output leading to higher equilibrium rates of inflation we find that the markup does well in explaining cross country differences in average inflation jel classification e31 e58 d43 l ecart du prix par rapport au cout marginal et l inflation resultats pour les pays de l ocde ce memoire examine l argument mis de l avant par kydland et prescott 1977 et barro et gordon 1983 pour expliquer les differences dans le taux moyen d inflation entre les pays de l ocde on porte une attention speciale aux resultats empiriques qui relient le degre general de concurrence entre les entreprises mesure par l ecart du prix par rapport au cout marginal et le niveau d inflation entre 1973 et 1988 la prediction est que des ecarts prix cout marginal plus eleves augmentent l incitation des autorites monetaires a accroitre le niveau de production ce qui entraine des taux d inflation d equilibre plus eleves il s avere que l ecart du prix par rapport au cout marginal tend a expliquer bien les differences dans le niveau moyen d inflation entre pays

marginal conditional stochastic dominance this paper introduces the concept of marginal conditional stochastic dominance mcsd which states the conditions under which all risk averse individuals when presented with a given portfolio prefer to increase the share of one risky asset over that of another mcsd rules also answer the question of whether all risk averse individuals include a new asset in their portfolio when assets returns are correlated mcsd criteria are expressed in terms of the probability distributions of the assets and of the underlying portfolio an empirical application of mcsd is provided using stocks traded on the new york stock exchange mcsd rules are used to show that in the long run one cannot assert that the market portfolio is inefficient

openness and inflation new empirical panel data evidence abstract the purpose of this paper is to test the hypothesis first documented by romer 1993 that inflation is lower in more open economies according to this hypothesis central banks have a smaller incentive to engineer surprise inflations in economies that are more open because the phillips curve is steeper in this paper the panel data technique has been employed to examine the aforementioned hypothesis concerning the developed and developing countries over the last two decades also comparing with other empirical studies this paper has estimated the relationship between economic globalization as one dimension of the new kof globalization index and inflation the paper s results cast substantial doubts on the conventional view that suggests a robust and negative relationship between trade openness and inflation the estimation result regarding the traditional measure of trade openness indicates a positive and significant association between trade openness and inflation which opposes the view of the romer 1993 hypothesis in contrast the estimation results regarding a new economic globalization index the kof index suggest that higher economic globalization will decrease inflation as supported by the romer 1993 hypothesis for both developed and developing countries during 1990 9 and 2000 9 thus it seems that the new economic globalization measure the kof index which is a broader comprehensive index is a better proxy for openness

the role of values in public beliefs and attitudes towards commercial wind energy mandates for renewable energy lead to siting disputes because meeting the mandates requires the development of renewable energy production facilities proposals for one common form of renewable energy commercial wind farms are frequently met with forceful local opposition dissatisfied with simplistic explanations for this opposition i e nimby social scientists have urged a more nuanced understanding of public attitudes towards wind energy and other renewables based on a survey of residents of coastal michigan this article explores the role of general values and beliefs in shaping attitudes towards the potential development of commercial wind energy projects in or near respondents communities structural equation modeling reveals that support of commercial wind energy depends largely on a belief that wind farms will provide economic benefits to the community underlying values have substantial and important indirect effects on beliefs regarding the likely economic outcomes of wind farm development altruistic values buoy wind energy attitudes while values of traditionalism diminish wind energy support the pivotal role of values in attitudes towards renewables lends support for more participatory development processes

making inefficient market indices efficient this paper uses the concept of marginal conditional stochastic dominance and a generalization of the 50 portfolio rule to develop a tractable and parsimonious methodology for constructing a second degree stochastic dominance ssd efficient portfolio from a given inefficient index because the ssd approach considers the entire probability distributions of asset returns the resulting portfolios are efficient with respect to all risk averse utility maximizing investors regardless of the form of their utility functions or the distributions of asset returns

a comparison of mad and cvar models with real features abstract in this paper we consider two different mixed integer linear programming models for solving the single period portfolio selection problem when integer stock units transaction costs and a cardinality constraint are taken into account the first model has been formulated by using the maximization of the worst conditional expectation as objective function the second model is based on the maximization of the safety measure corresponding to the mean absolute deviation extensive computational results are provided to compare the financial characteristics of the optimal portfolios selected by the two models on real data from european stock exchange markets some simple heuristics are also introduced that provide efficient and effective solutions when an optimal integer solution cannot be found in a reasonable amount of time

how projected electricity price and personal values influence support for a 50 renewable energy target in australia abstract this study investigated how projected electricity prices and personal values influence public support for a 50 renewable energy target ret in australia in an online experiment 404 participants rated their support for a 50 ret across eight projected increases in their quarterly power bills multi level modelling indicated that 1 support for the 50 ret fell as the projected price of electricity increased 2 although participants with low self enhancement values and high self transcendent values were most supportive of the 50 ret these value based differences disappeared as projected electricity prices increased implications of these findings for energy policy design are discussed