the tail index of exchange rate returns in the literature on the empirical distribution of foreign exchange rates there is now consensus that exchange rate yields are fat tailed three problems however persist 1 which class of distribution functions is most appropriate 2 are the parameters of the distribution invariant over subperiods 3 what are the effects of aggregation over time on the distribution in this paper we employ extreme value theory to shed new light on these questions we apply the theoretical results to ems data

animal spirits in the foreign exchange market it is traditionally assumed in finance models that the fundamental value of an asset is known with certainty in this paper we depart from that assumption we propose a simple model of the exchange rate in which agents have biased and unbiased beliefs about the fundamental rate we show that such a model produces waves of optimism and pessimism unrelated to the underlying fundamental value in addition the model shows that in a world characterized by the existence of heterogeneous beliefs about the fundamental exchange rate movements can be remarkably complex even if only fundamentalist traders operate in the market

flexible specialisation the new competition and industrial districts flexible specialisation the new competition and industrial districts are concepts reviewed in this article to determine whether they can provide an alternative for the description of the industrial sector as a system of mass production the concepts mentioned are discussed and criticized in this article all three concepts stress the importance of a certain division of labour of interfirm relations of cooperation versus competition of technological development and innovation diffusion of flexibility the role of small enterprises and a local value system however a number of differences between the concepts are also highlighted as well as the problems to use them in empirical research it is concluded that the three terms are complementary and could be used in combination the flexible competitive districts would provide an alternative type of industrial organization somewhere between the large scale integrated enterprise and the atomized self contained individual firm the challenge lies in turning the positive theory into a normative one how can industrial development in eastern europe and third world countries be turned into the development of flexible competitive district which contribute significantly to the development of these countries and allow for an important role for micro small and medium enterprises it is argued that this can be done in the framework of urban and regional development policies but this requires a different role for the government and the provision of an adequate infrastructure

the distribution of exchange rate returns and the pricing of currency options an empirical model of the distribution of exchange rate returns based on a combination of the generalized student t distribution and conditional variance specifications is formulated and estimated for four daily bilateral exchange rates over the period 1984 to 1991 the empirical results show that the stylized characteristics of exchange rate returns such as volatility clustering leptokurtosis and skewness are consistently captured by this model in contrast with other model specifications based on more restrictive distributional assumptions implications of the analysis are also investigated for the pricing of currency options including comparisons with black scholes prices

on rational bubbles and fat tails this paper addresses the statistical properties of time series driven by rational bubbles a la blanchard and watson 1982 using insights on the behavior of multiplicative stochastic processes we demonstrate that the tails of the unconditional distribution emerging from such bubble processes follow power laws exhibit hyperbolic decline more precisely we find that rational bubbles predict a fat power tail for both the bubble component and price differences with an exponent smaller than 1 the distribution of returns is dominated by the same power law over an extended range of large returns although power law tails are a pervasive feature of empirical data these numerical predictions are in disagreement with the usual empirical estimates it therefore appears that exogenous rational bubbles are hardly reconcilable with some of the stylized facts of financial data at a very elementary level

the subcontracting behavior of single vs multiplant enterprises in us manufacturing implications for economic development abstract in this paper we explore the factors shaping the production subcontracting make buy decisions of managers in the plants of both small and large firms in 21 industries that constitute the us metalworking and machinery manufacturing sector descriptive and multivariate statistical analyses of original survey data collected in 1986 1987 lead us to infer that a regional economic development strategy that promotes those manufacturing firms with a single relatively large plant making a diverse range of products and having close ties to customers but limited internal machining capacity has the greatest potential for generating local backward linkages in this respect we find empirical if nuanced support for certain normative aspects of the industrial district or networking approach to economic development policy

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

the statistical distribution of exchange rates empirical evidence and economic implications the abundant evidence that changes in exchange rates have distributions with fatter tails than the normal distribution has led researchers to consider non normal distributions including the student the stable paretian and mixtures of distributions this paper compares the empirical fits of three non normal candidates and the normal distribution for daily changes in the logarithms of exchange rates using maximum likelihood estimation of the parameters and chi square goodness of fit tests the student and mixture of two normals provide the best fits but there is evidence that the distribution parameters may vary over time

declining share of small firms in u s output causes and consequences jang ting guo i introduction according to the small business administration s sba calculations as shown in table 1 the contribution of small firms to u s national income was 58 in 1958 which then declined steadily to 51 in 1982 and stabilized around this value until 1992 the latest year for which the figures are available 1 this decline is quite puzzling in light of recent changes in technological factors market competition and government policies that were supposed to benefit small businesses 2 in this article we construct a dynamic general equilibrium model with two production sectors representing large and small firms to examine possible causes and welfare implications of this declining trend of small firms output contribution in the u s economy moreover this study brings into focus the role of government policies such as the justice department s anti trust efforts and the tiering programs whereby many regulations impose lighter requirements on smaller firms in order to maintain their viability 3 recently there have been several developments that can be considered beneficial towards the emergence of small firms shephard 1982 has estimated that since 1958 government deregulatory efforts have raised the level of competition in the u s economy by eliminating entry barriers and lowering transaction costs these factors in turn have contributed to the viability of small firms in the marketplace furthermore the emergence of new computer based technologies in the last two decades has improved the quality and flexibility of small scale production relative to standardized mass production techniques since they reduce the fixed capital or fixed cost requirements see shephard 1982 piore and sable 1984 carlsson 1989b and carlsson audretsch and acs 1994 4 another factor that improves the viability of small firms is their higher innovation rate as documented by acs and audretsch 1990 the shift of consumers taste from standardized mass produced goods towards stylized and personalized prod ucts also promotes small firm growth given their flexible production structure small firms have become important suppliers for these new goods and services see carlsson 1989a in light of these favorable developments one would expect to observe the number of small firms as well as their share in national income to rise in the u s economy however this has not been borne out by the data regarding small firms output share this article examines this issue in a dynamic general equilibrium framework extending romer s 1987 model of specialization we develop an infinite horizon representative agent model with two production sectors that are made up of large and small firms respectively the two sectors differ from each other with respect to the level of fixed set up costs and returns to scale parameters of their production functions each sector has an intermediate good segment in which monopolistically competitive firms operate using fully mobile capital and labor inputs the number of these intermediate firms is determined endogenously from the condition of free entry and exit a final good is produced in each sector from the set of available intermediate goods in a perfec tly competitive environment these two final goods are then aggregated into a single output gdp that can be consumed or invested by the representative household in a symmetric perfect foresight equilibrium these features result in an unequal number of large and small firms which can then be used to analyze the effects of technological changes and government policies the sectoral structure of our model in which gdp is produced by combining outputs of large and small firms is different from a typical two sector model with distinct consumption and investment goods in fact our two sector economy with identical factor intensities behaves exactly like a standard one sector model in which the representative household allocates resources across the two sectors to equate marginal products to factor prices

impact of plant size and focus on productivity an empirical study recent popular business literature has suggested that there is a significant trend in the united states for firms to decrease the size and increase the focus of manufacturing plants they operate and that this leads to higher productivity this paper tests empirically the validity of these claims we analyze data on virtually the entire population of manufacturing plants in the united states and find that contrary to the popular business literature the average size of plants increased during the period 1972 1984 however consistent with the popular notion the rate of growth in plant size slowed considerably and even turned negative for a category of large plants plant focus did increase during this period we then investigate the relationship between productivity and plant characteristics including plant size and plant focus overall our results do not support the popular argument that reduction in plant size results in productivity gains however we do find support for this argument in some two digit sic industries also scale economies in the entire population decreased over the period 1972 1982 we also find only limited support for the popular argument that plant focus increases productivity

flexibility and the theory of the firm abstract the object of this paper is 1 to bring together and integrate the various concepts of flexibility found in the economic literature 2 to flesh out the meaning of various aspects of flexibility and their implications thereby bridging the gap between the existing highly abstract theories and the empirical facts and 3 in the process to give a rich and comprehensive enough description of an industry to stimulate further theoretical as well as empirical work the study tries to combine inductive and deductive reasoning using empirical observations based on indepth interviews with manufacturers in the metalworking industry in the united states and sweden

an analysis of extreme movements of exchange rates of the main currencies traded in the foreign exchange market this article analyses the extreme movements of exchange rates of the seven main currencies traded in the foreign exchange market against the us dollar euro british pound canadian dollar japanese yen swiss franc australian dollar and new zealand dollar by using tail index indicators payaslioglu 2009 considers the case of the turkish exchange rate using the traditional hill 1975 estimator as a tool in this article we employ also an alternative estimator proposed in iglesias and linton 2009 that is shown to have in some cases improved finite sample properties and it provides substantially different results versus the hill estimator we find that for the euro japanese yen swiss franc canadian australian and new zealand dollars the hill estimator provides a better measure to analyse the extreme behaviour while for the british pound the iglesias and linton alternative estimator is superior by using hausman type tests of misspecification measures of value at risk are also provided for th

causes of increased competition in the u s economy 1939 1980 examines the sources of increased competition in the united states u s between 1939 to 1980 in this paper authors consider the review of related literature trends and patterns of competitive structure in the u s economy influence of antirust actions on competition

firm size and employment determination in dutch manufacturing industries this paper examines whether the determination of employment differs between large and small firms an employment equation is estimated on panel data of 67 35 three digit industries in dutch manufacturing 1974 1986 the conclusions are as follows firstly employment adjustment appears to be faster in small firms than in large ones secondly the elasticity of factor substitution and the real wage elasticity at constant output are nearly the same for large and small firms thirdly the estimated output elasticities suggest constant returns to scale in large firms and increasing returns in small ones finally the number of working hours has less impact on employment in small firms than in large ones

the role of small firms in the industrial development and transformation of czechoslovakia this article presents an analysis of the role of small firms in the formation and reform of the czechoslovak manufacturing sector it attempts to give an understanding of the industrial structure formed under the past regime within the framework of the mass production paradigm as manufacturing productivity gradually declined over the past 25 years and small firms have been virtually eliminated systemic preference has been given to the development of large monopolies consequently a monolithic coalition structure of enterprise managers state bureaucrats and political nomenklatura has arisen and continues to present itself as a serious hindrance to economic transformation while small firms have the potential to play a critical role in the democratic marketization of czechoslovakia current government preoccupation with the rapid privatization of the state sector risks damaging the development of a balanced distribution of firm size and in turn the revitalization of the society

testing for multiple regimes in the tail behavior of emerging currency returns it is by now generally accepted that foreign exchange returns exhibit heavy tails as measured by the so called tail index however it is unclear whether the tail behavior remains stationary in the presence of recurrent switches in the exchange rate regime we therefore test the null hypothesis of tail index constancy by applying a single breaks test in rounds which enables the detection of multiple breakpoints we are able to identify multiple jumps in the tail index of currency returns moreover some breaks coincide with documented shifts in monetary and exchange rate policies

anonymity and optimality of competitive equilibria when markets are incomplete abstract we study the optimality or efficiency of competitive equilibria in a standard two period economy where markets are incomplete statistical information about consumers preferences and endowments is known to a social planner but the planner cannot observe consumers types directly a competitive equilibrium is anonymous constrained optimal if the social planner cannot pareto improve upon the equilibrium allocation by intervening in asset markets with any asset trade rule satisfying anonymity in some cases a competitive equilibrium is robustly anonymous constrained optimal whereas it is known that competitive equilibria are generically constrained suboptimal for the case of completely observable types journal of economic literature classification numbers d52 d82 h21

tail estimates of east european exchange rates in the literature a consensus exists that distributions of exchange rate returns are fat tailed we use a nonparametric tail index estimator based on extreme value theory to shed light on some of the characteristics of the empirical distribution of black market exchange rate returns for seven east european currencies between 1955 and 1990 focusing on the information in the tails of the distribution we modify an existing tail index estimator to take into account information in both tails the results support the existence of finite second moments in exchange rate returns implicitly the sum stable distribution is rejected

extreme us stock market fluctuations in the wake of 9 11 we apply extreme value analysis to us sectoral stock indices in order to assess whether tail risk measures like value at risk and extremal linkages were significantly altered by 9 11 we test whether semi parametric quantile estimates of downside risk and upward potential have increased after 9 11 the same methodology allows one to estimate probabilities of joint booms and busts for pairs of sectoral indices or for a sectoral index and a market portfolio the latter probabilities measure the sectoral response to macro shocks during periods of financial stress so called tail s taking 9 11 as the sample midpoint we find that tail s often increase in a statistically and economically significant way this might be due to perceived risk of new terrorist attacks copyright 2008 john wiley sons ltd

differences between foreign exchange rate regimes the view from the tails abstract in the literature on the empirical unconditional distribution of foreign exchange rate returns there is indication that the type of distribution function is related to the form of exchange rate regime the analysis has been hampered by the nonnestedness of alternative distribution models the paper investigates the issue by means of extremal analysis which allows for a unified treatment in particular we try to sort out whether apparent distributional differences are due to differences in techniques or in regimes jel f31 f33

the development and use of machine tools in historical perspective abstract improvements and diffusion of machine tools have had a major impact on productivity in manufacturing industry since the industrial revolution the impact has been both direct and indirect the direct impact consists of rising labor productivity through the use of faster more accurate more mechanized machines and of the higher capital productivity through higher operating rates greater reliability and higher utilization rates the indirect impact arises as the use of new or improved machine tools has necessitated or facilitated organizational changes affecting both labor capital raw materials and energy the magnitude of these impacts has varied over the years with the areas of application as new production methods have made possible entirely new products or lowered the cost of existing products sufficiently to create new markets the first part of the paper contains a review of the historical development of machine tool technology since the industrial revolution paying particular attention to the role of interaction between producers and users of machine tools the second part focuses on the way in which recent development differs from that in earlier periods in particular it is found that the major changes in machine tool technology from the so called american system of manufactures in the early 19th century to the development of detroit automation in the 1950s have tended to improve mass production methods by contrast the development of numerical control beginning in 1948 has opened up the possibility of extending industrial production methods and automation to areas previously characterized more by handicraft methods even though this technology is not yet fully utilized it is clear that the economics of industrial production has been revolutionized by the cost reduction of small scale production relative to large scale and the degree of flexibility offered by the technology the third section of the paper deals with the present development trends particularly discussing the increasing importance of flexibility and the shifting emphasis from development of individual pieces of machinery to integration and control of entire manufacturing processes i a through the use of industrial robots the reasons for the need for greater flexibility in manufacturing are also identified

the economics of change in rural america communities perceptions of economic development prospects and alternatives are conditioned by previous experiences and anecdotal success stories thus small towns in traditionally agricultural regions equate economic development with prosperity in agriculture and the agricultural development program of the day sustainable agriculture value added enhancement alternative crops prosperity in nonmetro manufacturing centers is linked with industrial retention and recruitment and small business development and rural areas with natural historic or climatic amenities associate development with expanded tourism activity and the attraction of retirees

the evolution of manufacturing technology and its impact on industrial structure an international study this paper shows that plant and firm size in manufacturing and especially in engineering industry in several western industrial countries has declined since the early 1970s two hypotheses explaining the decline are advanced one is de glomeration or specialization the divestiture of non core businesses in order to free up scarce resources particularly management time to defend and nurture core business activities the second hypothesis is that the emergence of new computer based technology has improved the quality and productivity of small and medium scale production relative to standardized mass production techniques which dominated previously

overnight borrowing interest rates and extreme value theory we examine the dynamics of extreme values of overnight borrowing rates in an inter bank money market before a financial crisis during which overnight borrowing rates rocketed up to simple annual 4000 percent it is shown that the generalized pareto distribution fits well to the extreme values of the interest rate distribution we also provide predictions of extreme overnight borrowing rates before the crisis the examination of tails extreme values provides answers to such issues as what are the extreme movements expected in financial markets have we already seen the largest moves is there a possibility for even larger movements and are there theoretical processes that can model the type of fat tails in the observed data the answers to such questions are essential for proper management of financial exposures and laying ground for regulations

small businesses as a research subject some reflections on knowledge of small businesses and its effects on economic theory most economists agree in their view of small and medium sized enterprises or small businesses smes as a marginal scientific subject they may go so far as to ignore them either because they think these economic units do not lend themselves to conventional economic studies studies which for instance take into account the sacred cow theory of economies of scale or because they see them as being not really different from big businesses

promoting entrepreneurship in eastern europe the past decade has seen a revival of entrepreneurship in the modern industrial economies characterized by a wave of enterprise restructuring and of new developments in business and technology in this paper we argue that market transitions of the post socialist economies of eastern europe cannot be successful without similar entrepreneurial restructuring to address the massive structural distortions that still plague the post reform economies the governments of the region must promote entrepreneurship through policies that 1 make use of all possible sources of entrepreneurship including in particular the former state and social sectors and 2 establish a macroeconomic environment and property rights framework conducive to entrepreneurship a successful promotion strategy will need to operate on several fronts by 1 redirecting entrepreneurial activities into legal productive activities 2 increasing the supply and effectiveness of entrepreneurs 3 developing markets for complementary inputs and 4 increasing the demand for entrepreneurship an unsuccessful approach we argue will be one that regards the pre reform small private sector as the only source of entrepreneurship and as the only arena for its productive use

higher growth through the blue ocean strategy implications for economic policy a b s t r a c t higher growth is a key goal of companies governments and societies economic policies often attempt to attain this goal by targeting companies of certain sizes that operate in specific industries and focus on a specific business activity this approach to policy making has considerable shortcomings and seems to be less than fully effective in increasing economic growth we suggest a new approach to policy making that stems directly from the entrepreneurial perspective this approach examines a successful business strategy framework the blue ocean strategy to discover conditions for high growth we test the propositions on empirical data for two cases of successful high growth business namely slovenian gazelles and amazon com the results reveal a gap between the macro level of economic policy making to achieve higher growth and the micro level of business growth the findings call for a change in the focus of economic policies on specific size companies industries and business activities to intraindus try cooperation collaboration between companies of different sizes value innovation and creation of uncontested markets

the taxation of trades in assets when the asset market is incomplete there typically exist taxes on trades in assets that are pareto improving this fiscal policy is anonymous it is fully and correctly anticipated by traders and it results in ex post pareto optimal allocations as such it improves over previously proposed constrained interventions

optimal futures innovation in a dynamic economy the discrete time case abstract we study the optimal futures innovation in a dynamic economy and investigate how the results obtained in a static economy should be modified due to the possibility of dynamic trading we analyze three different notions of ex ante optimality depending on the authority s ability to redistribute wealth among the investors and characterize the optimal futures innovation in each sense journal of economic literature classification numbers d52 d60 g10

corporate takeovers the efficiency arguments in recent years the tender offer takeover has been praised and damned with a ferocity suggesting that the survival of capitalism is at stake the truth as in most disputes with substantial metaphysical content is more prosaic some takeovers enhance economic efficiency some degrade it and the balance of effects though not fully known is most likely a close one in this essay i try to lay bare the debate s foundations and bring it back to earth with an injection of evidence

measuring tail thickness to estimate the stable index α a critique a generalized pareto or simple pareto tail index estimate above 2 has frequently been cited as evidence against infinite variance stable distributions it is demonstrated that this inference is invalid tail index estimates greater than 2 are to be expected for stable distributions with as low as 1 65 the nonregular distribution of the likelihood ratio statistic for a null of normality and an alternative of symmetric stability is tabulated by monte carlo methods and appropriately adjusted for sampling error in repeated tests real stock returns yield a stable of 1 845 and reject iid normality at the 996 level

firm size efficiency and employment a review article s j s book contains much careful and interesting discussion of small firm employment data and related issues and will be read by all workers in the field however it also contains too much detailed quantification and international comparison of doubtful relevance at least for most economists and misses much background material of direct importance for evaluating the role of small firms as a result the authors seriously under estimate the contribution of small business to both employment and efficiency of modern economies as well as the importance of policy to correct the traditional and still pervasive bias towards large organizations

collapsing exchange rate regimes some linear examples abstract we construct a pair of linear examples to study the collapse time of a fixed exchange rate regime the first example is a perfect foresight continuous time model which allows calculation of the exact collapse time and the tracking of reserves the second example is a discrete time stochastic model which yields an endogenous probability distribution over the collapse time and produces a forward discount of the exchange rate

structural change tests in tail behaviour and the asian crisis this paper explores tests of the hypothesis that the tail thickness of a distribution is constant over time using hill s conditional maximum likelihood estimator for the tail index of a distribution tests of tail shape constancy are constructed that allow for an unknown breakpoint the recursive test is shown to be inconsistent in one direction and only a one sided test is recommended specifically the test can be used when the alternative hypothesis is that the tail index decreases over time a rolling and sequential version of the test is consistent in both directions the methods are illustrated on recent stock price data for thailand malaysia and indonesia the period covers the recent asian financial crisis and enables us to assess whether breakpoints in domestic asset return distributions are related to known changes in institutional arrangements in the foreign currency markets of these countries

tail risk dynamics in stock returns links to the macroeconomy and global markets connectedness we propose a new time varying peaks over threshold model to study tail risk dynamics in equity markets the laws of motion for the parameters are defined through the score based approach we apply the model to daily returns from u s size sorted decile stock portfolios and show that large firms tail risk increases during recessions more than small firms tail risk our results are consistent with the granular hypothesis of aggregate fluctuations and we quantify the impact of large firms tail risk shocks on the economy a measure of tail connectedness is proposed evidence from international equity markets shows that tail connectedness increases during periods of turmoil this paper was accepted by lauren cohen finance

a tail index tour across foreign exchange rate regimes in turkey this article uses daily foreign exchange data in the usd trl foreign exchange market to test for structural breaks due to exchange rate regime switches the analysis focus on extreme movements of exchange rate returns across different regimes using tail index indicators sequential and rolling tests developed by quintos et al 2001 are used to identify the dates of breaks in the turkish exchange rate for the period 28 january 1980 to 11 october 2004 and for the sub periods which cover the fixed exchange rate regime from 28 january 1980 to 22 february 2001 and the flexible exchange rate regime from 23 february 2001 to 11 october 2004 compelling evidence for breaks in the tail index is found not only across but also within different exchange rate regimes especially within the fixed regime moreover breakpoint dates are clustered right before the crisis in 2001 this makes the tail index indicator a fairly good candidate for a variable to be used in early warning systems for currency crises

statistical distributions and the identification of currency crises abstract we use extreme value theory to identify periods of currency crisis for a broad cross section of asian european and latin american countries we argue that our methodology improves upon the more conventional methodology for defining currency crises because fewer parametric assumptions need to be satisfied we compare the incidence of currency crises using the conventional method with the incidence obtained using our method we conclude that identifying currency crises using extreme value theory is a good alternative to the conventional method

extreme value theory in finance a survey extreme value theory is concerned with the study of the asymptotic distribution of extreme events that is to say events which are rare in frequency and huge in magnitude with respect to the majority of observations statistical methods derived from it have been employed increasingly in finance especially for risk measurement this paper surveys some of those main applications namely for testing different distributional assumptions for the data for value at risk and expected shortfall calculations for asset allocation under safety first type constraints and for the study of contagion and dependence across markets under conditions of stress

long term asset tail risks in developed and emerging markets a power law typically governs the tail decay of financial returns but the constancy of the so called tail index which dictates the tail decay remains relatively unexplored we study the finite sample properties of some recently proposed endogenous tests for structural change in the tail index given that the finite sample critical values strongly depend on the tail parameters of the return distribution we propose a bootstrap based version of the structural change test our empirical application spans developed and emerging financial asset returns somewhat surprisingly emerging stock market tails are not more inclined to structural change than their developed counterparts emerging currency tails on the contrary do exhibit structural shifts in contrast to developed currencies our results suggest that extreme value theory evt applications in hedging tail risks can assume stationary tail behavior over long time spans provided one considers portfolios that solely consist of stocks or bonds

robust tests of forward exchange market efficiency with empirical evidence from the 1920s summary this paper provides a robust statistical approach to testing the unbiasedness hypothesis in forward exchange market efficiency studies the methods we use allow us to work explicitly with levels rather than differenced data they are statistically robust to data distributions with heavy tails and they can be applied to data sets where the frequency of observation and the futures maturity do not coincide in addition our methods allow for stochastic trend non stationarity and general forms of serial dependence the methods are applied to daily data of spot exchange rates and forward exchange rates during the 1920s which marked the first episode of a broadly general floating exchange rate system the tail behaviour of the data is analysed using an adaptive data based method for estimating the tail slope of the density the results confirm the need for the use of robust regression methods we find cointegration between the forward rate and spot rate for the four currencies we consider the belgian and french francs the italian lira and the us dollar all measured against the british pound we find support for a stationary risk premium in the case of the belgian franc the italian lira and the us dollar and we find support for the simple market efficiency hypothesis where the forward rate is an unbiased predictor of the future spot rate and there is a zero mean risk premium in the case of the us dollar

flexible technology and industrial structure in the u s this paper analyzes the development over the postwar period of output employment and the number of plants in manufacturing in the united states it is shown that the distribution of flexible technology in the form of machine tools ncmts shifted markedly toward small plants during the 1980s it is found that the probability of adoption and the penetration rate of ncmts are higher in large than in small plants even though the number of ncmts per worker is much higher in small plants this apparent paradox is explained it is also suggested that the shift of output towards smaller plants is correlated with the increased use of flexible technology and that this reflects changes in the division of labor among plants of various sizes as well as changes in the composition and organization of production in large plants

an ampirical assessment of the contribution of small business employment to u s state economic performance small business proponents regularly couple their arguments for favorable government policies and reduced tax and regulatory burdens to the presumed benefits of increased proportions of small versus large sector employment though regularly espoused at both the state and national level these presumptions regarding the benefits of small business employment remain an empirical issue are the presumed benefits a reality a panel analysis of 48 u s states for a ten year period was used to evaluate the contribution of small businesses to growth in productivity growth in gross state product gsp unemployment and wage inflation at the state level the system of simultaneous equations revealed that states with higher proportions of very small business employment do indeed experience higher levels of productivity growth and gross state product growth while having less wage inflation and lower unemployment rates

the role of small firms in east germany this paper examines the role which small firms in east germany have played under the system of combines and the important contribution they can make in the current reform process the evolution of a striking trend towards the centralization of economic power in the gdr during the last three decades is documented not only has the share of economic activity accounted for by the combines greatly increased but the number of establishments and particularly small establishments has drastically decreased it is concluded that the establishment of a vital entrepreneurial sector is essential if east germany is to succeed in its process of economic reform and the transition to the market economy

robust non parametric measures of exchange rate variability changes in exchange rates are well known to possess non gaussian distributions yet in testing for differences in exchange rate volatility few researches have examined measures that do not assume gaussian data this paper develops a robust non parametric measure for comparing exchange rate variability across time the measures are applied to monthly exchange rate data to test for differences in exchange rate variability across different monetary policy regimes the comparison show inconsistencies between conclusions based on the classical f test and the robust non parametric equivalent using the robust test for changes in exchange rate variability we do not conclude that variability has increased over time increases in variability do occur but usually only in specific percentiles of the data