forecast accuracy of individual analysts in nine industries the purpose of this paper is to investigate whether financial analysts with superior earnings forecasting ability can be distinguished on the basis of ex post forecast accuracy i explore the question by estimating and comparing average accuracy across individuals and by considering whether the observed distribution of analyst forecast accuracies differs from the distribution expected if their relative performances each year were purely random overall i do not find systematic differences in forecast accuracy across individuals financial press coverage suggests there are superior financial analysts for example institutional investor s annual all american research team includes analysts rated by money managers as superior on a variety of criteria including earnings forecasting ability to pick stocks and the quality of written reports clearly financial analyst services other than forecast accuracy are valued by their clients i focus on only one activity earnings forecasting for two reasons first forecast data are available quantitative and can be evaluated against observable earnings outcomes services such as insightful well written research reports are harder to evaluate quantitatively second academic use of analyst forecasts as earnings expectations data in capital markets empir

measuring gross flows in the labor force an overview of a special conference the measurement of flows in the american labor market has challenged researchers for years several problems including response variability rotation group bias and matching errors hinder accurate measurement of the flows the bureau of the census and the bureau of labor statistics jointly sponsored a conference to examine these problems present current research on solutions to the problems and submit recommendations for improving the data recommendations include procedural changes in the current population survey as well as new estimation techniques

estimation of current quarter gross national product by pooling preliminary labor market data two methods of using labor market data as indicators of contemporaneous gross national product gnp are developed the establishment survey data are used by inverting a partial adjustment equation for hours a second gnp forecast can be extracted from the household survey by using okun s law using preliminary rather than final data adds about 2 to 4 percentage point to the expected value of the root mean squared errors and changes the weights that the pooling procedure assigns to the two forecasts the use of preliminary rather than final data results in a procedure that assigns more importance to the okun s law forecast

india trade policy review the review of india s trade policy by the wto the third of its kind is in three parts the report by the wto secretariat a statement by the government of india and minutes of the discussion of the report by the trade policy review board the review provides detailed information not only on india s trade and foreign investment policies but also an analytical review of india s export and economic performance the review notes that india has made considerable progress with the liberalisation of its trade and investment regime but it has a long way to go if it were to achieve a growth rate of eight to nine per cent the stated objective of the policy makers this paper drawing upon the material in the report analyses india s growth prospects and endorses the broad conclusions of the report

use of futures markets for exports by less developed countries there is no question that the contribution of primary commodity exports to national income is critical to many less developed countries ldcs the problem of instability in ldc export revenues has provoked the analysis and implementation of a variety of export strategies these strategies have generally concentrated on moderating the variability in prices received for commodity exports schemes such as buffer stocks buffer funds and export quotas are aimed at reducing price variability these nonmarket strategies have met with limited success because of insuf

risk taking global diversification and growth this paper develops a continuous time stochastic model in which international risk sharing can yield substantial welfare gains through its effect on expected consumption growth the mechanism linking global diversification to growth is an attendant world portfolio shift from safe low yield capital to riskier high yield capital the presence of these two types of capital captures the idea that growth depends on the availability of an ever increasing array of specialized hence inherently risky production inputs calibration exercises using consumption and stock market data imply that most countries reap large steady state welfare gains from global financial integration copyright 1994 by american economic association

democratic institutions versus autocratic regimes the case of environmental policy the literature suggests that democracy positively affects environmental policy stringency using the method of propensity score matching we find that this result appears to be largely driven by the parliamentary democracies as opposed to the presidential congressional proportional or majority systems moreover it appears that presidential congressional systems often set environmental policies not significantly different from autocracies these are novel contributions to the literature

environmentalism democracy and pollution control this paper makes two empirical contributions to the literature based on predictions generated by a lobby group model first we investigate how environmental lobby groups affect the determination of environmental policy in rich and developing countries second we explore the interaction between democratic participation and political electoral competition the empirical findings suggest that environmental lobby groups tend to positively affect the stringency of environmental policy moreover political competition tends to raise policy stringency in particular where citizens participation in the democratic process is widespread

does trade liberalization lead to environmental burden shifting in the global economy abstract does trade liberalization lead to the outsourcing of pollution from industrialized countries to developing countries according to the pollution haven hypothesis international trade is a key channel through which richer countries can geographically dissociate consumption from production of goods we examine whether and how trade liberalization via preferential trade agreements ptas facilitates the shifting of consumption based environmental burdens from developed countries via imports to poorer countries via exports based on panel data analysis of 183 countries from 1987 to 2013 we find partial evidence for trade induced environmental burden shifting while we observe an increase in footprint exports from low income countries when these countries liberalize trade this is not matched by an increase in footprint imports of high income countries our results also show that environmental clauses in ptas and participation in international environmental agreements do not influence the relationship between trade liberalization and ecological footprint movements however domestic institutions have a significant effect on the trade induced distribution of environmental burdens these findings suggest that ptas as a policy tool for trade liberalization are per se unlikely to induce exploitation of low income countries natural capital by wealthier nations however they suggest that political incentives inherent to democratic institutions encourage environmental burden shifting

combining economic forecasts a method for combining forecasts may or may not account for dependence and differing precision among forecasts in this article we test a variety of such methods in the context of combining forecasts of gnp from four major econometric models the methods include one in which forecasting errors are jointly normally distributed and several variants of this model as well as some simpler procedures and a bayesian approach with a prior distribution based on exchangeability of forecasters the results indicate that a simple average the normal model with an independence assumption and the bayesian model perform better than the other approaches that are studied here

false prophet or genuine savior assessing the effects of economic openness on sustainable development 1980 99 while many herald globalization the increasing interconnectedness of national economies to be associated with rising standards of living across the globe others fear its effects on sustainability antiglobalization forces and environ mentalists view these developments as a threat to the welfare of future generations because of profligate and excessive current consumption this study is the first to estimate the effects of dependence on trade foreign direct investment fdi and an index of economic freedom on the world bank s measure of sustainability the gen uine savings rate which measures the rate at which investment in the total stock of manufactured human and natural capital exceeds its depreciation contrary to pessi mists fears our indicators of economic openness show positive effects on sustain ability results that are robust to sample size testing procedure and several alternative specifications the results support those who suggest that distorted economies tend to be both inefficient and damaging to future generations if increasing trade fdi and economic freedom are hallmarks of globalization then worries about its effects on future well being are misplaced

futures for farmers hedging participation and the mexican corn scheme administered commodity price schemes in developing countries have proved ineffective in raising farmers incomes and price stabilisation through futures markets is increasingly advocated as the alternative policy objective a potential difficulty is that farmers tend not to hedge extensively even in developed countries where access to futures markets is long established explanations for this reticence are examined here with context provided by the mexican hedging programme which incorporates financial incentives to spur adoption applying representative data for corn to a well known analysis of the hedging decision suggests that limited participation may reflect rational calculation rather than farmer inertia a policy implication is that permanent access subsidies are difficult to justify from the national perspective

optimal aggregation of money supply forecasts accuracy profitability and market efficiency we present a general procedure for aggregating expert forecasts which exploits regularities in the structure of information within the forecaster population specific information structures lead to aggregation methods which adjust for additive bias differences in individual accuracy and correlation among forecasts as an application we construct composite predictions of the weekly change in the money supply from forecasts made by twenty major securities dealers for which high positive correlation is found to be a significant characteristic due to instability in the information structure our methods cannot improve on the accuracy of a simple average in this case however they do capture information about the correlation among money supply forecasts which is not fully impounded in short term interest rates forecasts from our models accurately predict the direction of price changes for treasury bills and treasury bill futures after a money supply announcement the adjustment of prices to information in financial markets has been studied at length mostly from the perspective of the efficient markets hypothesis market efficiency tests typically look at the behavior of prices the end product

does trade openness promote multilateral environmental cooperation this article puts forward a number of arguments why trade openness might promote multilateral environmental cooperation most of these arguments are grounded in the substantive self interest of the trading country it tests the proposition using a range of proxy variables for general trade openness as well as specific export interests the article examines whether countries open to trade are more likely to have signed three recent multilateral environmental agreements meas and are more likely to have ratified early on another three agreements with quasi universal membership after controlling for income political freedom and population size the empirical estimations find some weak evidence in favour of a possible synergy between trade openness and multilateral environmental cooperation world trade organisation membership as well as general export openness go hand in hand with greater willingness to participate in multilateral environmental cooperation in some cases however whether specific trade interests promote or hinder multilateral environmental cooperation depends on whether the relevant agreement is likely to threaten or accommodate the interests of exporting countries

unanimity and compromise among probability forecasters when two forecasters agree regarding the probability of an uncertain event should a decision maker adopt that probability as his or her own a decision maker who does so is said to act in accord with the unanimity principle we examine a variety of bayesian consensus models with respect to their conformance or lack thereof to the unanimity principle and a more general compromise principle in an analysis of a large set of probability forecast data from meteorology we show how well the various models when fit to the data reflect the empirical pattern of conformance to these principles

how do elections affect international cooperation evidence from environmental treaty participation is there a strategically beneficial time for political leaders to make international environmental commitments based on the political cycles theory we argue that leaders have incentives to delay costly ratification of international environmental agreements to the post electoral period however the cost of participating in these agreements is often lower for developing countries and they may enjoy indirect advantages which may make them more prone to ratifying in the pre electoral period these hypotheses are assessed empirically by studying the ratification process of 41 global environmental agreements censused in the environmental treaties and resources indicators database from 1976 to 1999 we use a duration model in which time is measured on a daily basis enabling us to precisely identify pre and post electoral periods a significant challenge in political cycles studies our investigation reveals the existence of political ratification cycles that are of substantial magnitude and non linear over the pre and post electoral years

capital account liberalization what do cross country studies tell us capital account liberalization it is fair to say remains one of the most controversial and least understood policies of our day one reason is that different theoretical perspectives have very different implications for the desirability of liberalizing capital flows another is that empirical analysis has failed to yield conclusive results the answer another influential strand of thought contends is that this efficient markets paradigm is fundamentally misleading when applied to capital flows limits on capital movements are a distortion it is an implication of the theory of the second best that removing one distortion need not be welfare enhancing when other distortions are present

kyoto protocol cooperation does government corruption facilitate environmental lobbying does environmental lobbying affect the probability of environmental treaty ratification does the level of government corruption play a role for the success of such lobbying in this paper we propose that a more corruptible government may be more responsive to the demands of the environmental lobby we use several stratified hazard models and panel data from 170 countries on the timing of kyoto protocol ratification to test this hypothesis we find that increased environmental lobby group activity raises the probability of ratification and the effect rises with the degree of corruption

averages of forecasts some empirical results an alternative to using a single forecasting method is to average the forecasts obtained from several methods in this paper we investigate empirically the impact of the number and choice of forecasting methods on the accuracy of simple averages it is concluded that the forecasting accuracy improves and that the variability of accuracy among different combinations decreases as the number of methods in the average increases thus combining forecasts seems to be a reasonable practical alternative when as is often the case a true model of the data generating process or a single best forecasting method cannot be or is not for whatever reasons identified

international overborrowing a decomposition of credit and currency risks summary the severity of the financial crises enveloping the tiger economies of southeast asia in 1997 came as a surprise to many observers this paper uses a simple fisherian model of the overborrowing syndrome to compare the asian crises of 1997 with earlier overborrowing episodes in mexico and chile while important similarities exist the crises in southeast asia have been exacerbated by the unhedged foreign exchange positions of asian banks these open currency positions not only imposed significant additional losses on the banks following devaluation they also magnified the scale of overborrowing during the cycle s initial boom phase failure to limit the exposure of banks to foreign exchange risk therefore increased the magnitude of the boom bust overborrowing cycle both ex ante and ex post the paper highlights the importance of effective regulation and supervision of capital markets with a focus on limiting the speculative currency positions of banks especially those that form the core of the domestic payments system and therefore enjoy a possibly implicit public guarantee improving the institutional infrastructure of financial supervision is the only effective way of mitigating the macroeconomic costs of overborrowing

effects of rotation group bias on estimation of unemployment previous analysis of rotation group bias in the current population survey has concluded that if the biases are additive the ratio and composite estimators of month to month change in unemployment are unbiased this article shows that if the biases contain a multiplicative aspect both estimators of change are then biased the article also presents some empirical results that cast doubt on the validity of a purely additive model

average of forecasts an improvement stein rules are used in forming combination forecasts such forecasts have smaller prediction risk under certain conditions than the preferred method of average of forecasts the new composite forecasts will be theoretically biased but are likely to have smaller mean squared error of forecasts as shown in the empirical exercises examined when the forecasts appear to be unbiased and have a common mean lindley type combination is most useful

is it better to average probabilities or quantiles we consider two ways to aggregate expert opinions using simple averages averaging probabilities and averaging quantiles we examine analytical properties of these forecasts and compare their ability to harness the wisdom of the crowd in terms of location the two average forecasts have the same mean the average quantile forecast is always sharper it has lower variance than the average probability forecast even when the average probability forecast is overconfident the shape of the average quantile forecast still offers the possibility of a better forecast using probability forecasts for gross domestic product growth and inflation from the survey of professional forecasters we present evidence that both when the average probability forecast is overconfident and when it is underconfident it is outperformed by the average quantile forecast our results show that averaging quantiles is a viable alternative and indicate some conditions under which it is likely to be more useful than averaging probabil

the evolution of rotation group bias will the real unemployment rate please stand up we document that rotation group bias the tendency for the unemployment rate to vary systematically by month in sample in the current population survey cps has worsened over time estimated unemployment rates for earlier rotation groups have grown sharply relative to later rotation groups both should be nationally representative samples this bias increased discretely after the 1994 cps redesign and rising nonresponse rates are likely a significant contributor survey nonresponse increased after the redesign mirroring the evolution of rotation group bias consistent with this explanation rotation group bias for households that responded in all eight interviews remained stable over time

international commodity agreements an obituary notice abstract it is widely believed that international commodity agreements have lapsed because they have failed the reality is more complex the tin agreement did collapse but for sugar and cocoa adverse market conditions and lack of general support made stabilization impractical control of the coffee market ceased largely because of disagreements both between and within the producing countries on the division of the benefits resulting from higher prices overall commodity control fits uneasily in an increasingly globalized and competitive world and this perception has resulted in a diminished willingness to resolve the practical difficulties of price stabilization

distributions of forecasting errors of forecast combinations implications for inventory management inventory control systems rely on accurate and robust forecasts of future demand to support decisions such as setting of safety stocks the combination of multiple forecasts is shown to be effective not only in reducing forecast errors but also in being less sensitive to limitations of a single model research on forecast combination has primarily focused on improving accuracy largely ignoring the overall shape and distribution of forecast errors nonetheless these are essential for managing the level of aversion to risk and uncertainty for companies this study examines the forecast error distributions of base and combination forecasts and their implications for inventory performance it explores whether forecast combinations transform the forecast error distribution towards desired properties for safety stock calculations typically based on the assumption of normally distributed errors and unbiased forecasts in addition it considers the similarity between in and out of sample characteristics of such errors and the impact of different lead times the effects of established combination methods are explored empirically using a representative set of forecasting methods and a dataset of 229 weekly demand series from a leading household and personal care uk manufacturer findings suggest that forecast combinations make the in and out of sample behaviour more consistent requiring less safety stock on average than base forecasts furthermore we find that using in sample empirical error distributions of combined forecasts approximates well the out of sample ones in contrast to base forecasts

capital market liberalization economic growth and instability summary this paper reviews briefly the arguments for capital market liberalization and identifies their theoretical and empirical weaknesses this provides the foundations for the argument for intervention in short term capital flows the paper concludes with a brief discussion of the various ways in which such interventions may be implemented 2000 elsevier science ltd all rights reserved

estimating strategic models of international treaty formation this article develops an empirical framework for analysing the timing of international treaties a treaty is modelled as a dynamic game among governments that decide on participation in every period the net benefit of treaty membership increases over time spillovers among members and non members accelerate or delay treaty formation by transforming participation into a strategic complement or substitute respectively the predictions of the model inform the estimation of the structural parameters based on a cross section of treaty ratification dates with this approach i estimate the sign and magnitude of strategic interaction in the ratification of the montreal protocol in the formation of europe s preferential trade agreements and in the growth of germany s network of bilateral investment treaties through a series of counterfactual experiments i explore different mechanisms that give rise to strategic interaction in the formation of these treaties

percentage and relative error measures in forecast evaluation properties of two large families of scale free forecast accuracy measures that include popular measures such as mean absolute percentage error relative error and squared percentage error are examined in this paper we describe the optimal reports when forecasts are evaluated using these measures we also provide analytic expressions for the optimal bayes act associated with these measures under a general power transformation for several well known probability distributions we then show that using measures from these two families may inadvertently provide incentives for either pessimism or optimism among forecasters i e rewarding underforecasts or overforecasts relative to some reference measure of central tendency as an illustration of these concepts we examine the use of these measures for model selection in a forecast aggregation example using stock price forecasts derived from the thomson reuters institutional brokers estimate system this example illustrates how aggregation methods that alw

rotation group bias in measures of multiple job holding reported multiple job holding rates in the u s are found to be substantially higher among workers in their first month in the cps sample the first rotation group with rates declining in subsequent rotation groups true rates should not differ across rotation groups using 22 years of cps data multiple job holding rates based solely on the first rotation group were 27 5 percent higher than official rates based on all rotation groups rotation group bias worsened over time and could account for as much as one quarter of the measured decline in multiple job holding

the value of combining forecasts in inventory management a case study in banking managing inventories in the face of uncertain stochastic demand requires an investment in safety stocks these are related to the accuracy in forecasting future demands and the noise in the demand generation process reducing the demand forecasting error can free up capital and space and reduce the operating costs of managing the inventories a leading bank in hong kong consumes more than three hundred kinds of printed forms for its daily operations a major problem of its inventory control system for the forms management is to forecast the monthly demand of these forms in this study the idea of combining forecasts is introduced and its practical application is addressed the individual forecasts come from well established time series models and the weights for combination are estimated with quadratic programming the combined forecast is found to perform better than any of the individual forecasts

whither the terms of trade an elaboration of the prebisch singer hypothesis movements in the prices of primary products and manufactured goods are analysed using a model that introduces differences in wage and price determination between primary production and manufacturing wages and prices in primary production are treated as competitively determined while prices and wages in manufacturing are determined by mark up pricing and union employer bargaining respectively the objective is to capture the influence of structural differences between manufacturing and primary production on the terms of trade between industrialised and developing worlds as discussed in the seminal contributions to the development literature by raul prebisch and hans singer the model is estimated using price and wage data from the post world war ii period support is found for the prebisch singer hypothesis however our estimates suggest that during periods of particularly rapid manufac turing growth there have been intervals of net improvement in the terms of trade of primary producers

capital control liberalization and stock market development the authors address two questions what happens to stock market size liquidity volatility and integration with world capital markets after capital controls are liberalized and what is the relationship between those indicators of stock market development and regulations about information disclosure accounting standards and investor protection an analysis of data on stock markets in 16 developing countries suggests the following a stock markets become larger more liquid more integrated internationally and more volatile after controls on capital and dividend flows are liberalized b easy access to information about firms is positively associated with the size and liquidity of stock markets and c countries that officially establish internationally accepted accounting standards and laws to protect investors do not have substantially better functioning stock markets than countries that do not adopt those official standards

real interest rates home goods and optimal external borrowing the paper investigates the optimal time path of consumption and external borrowing in the dependent economy model the small country faces given world prices and a given world real interest rate the presence of a home goods sector implies that the relevant real interest rate appropriate to consumption decisions depends on the rate of change of the real price of home goods the paper shows how transitory disturbances in output or in the world real interest rate affect the time profile of consumption and the trade balance in particular it is shown that the presence of a home goods sector dampens the consumption effects of changes in the world interest rate

tourism forecasting to combine or not to combine abstract existing non tourism related literature shows that forecast combination can improve forecasting accuracy this study tests this proposition in the tourism context by examining the efficiency of combining forecasts based on three different combination methods the data used for this study relate to tourist arrivals in hong kong from the top ten tourism generating countries regions the forecasts are derived from four different forecasting models autoregressive integrated moving average arima model autoregressive distributed lag model adlm error correction model ecm and vector autoregressive var model all forecasts are ex post and the empirical results show that the relative performance of combination versus single model forecasts varies according to the origin destination tourist flow under consideration which parallels previous findings regarding the relative performance of individual forecasting methods the results also vary with the combination techniques used furthermore although the combined forecasts do not always outperform the best single model forecasts almost all the combined forecasts are not outperformed by the worst single model forecasts this suggests that forecast combination can considerably reduce the risk of forecasting failure this conclusion also implies that combined forecasts are likely to be preferred to single model forecasts in many practical situations

market based measures of monetary policy expectations a number of recent articles have used different financial market instruments to measure near term expectations of the federal funds rate and the high frequency changes in these instruments around federal open market committee announcements to measure monetary policy shocks this article evaluates the empirical success of a variety of financial market instruments in predicting the future path of monetary policy all of the instruments we consider provide forecasts that are clearly superior to those of standard time series models at all of the horizons considered among financial market instruments we find that federal funds futures dominate all the other securities in forecasting monetary policy at horizons out to six months for longer horizons the predictive power of many of the instruments we consider is very similar in addition we present evidence that monetary policy shocks computed using the current month federal funds futures contract are influenced by changes in the timing of policy actions tha

exploring the nature of inter country interactions in the process of ratifying international environmental agreements the case of the kyoto protocol international environmental agreements require negotiation and cooperation among countries this paper attempts to analyze the presence and nature of inter country interactions in the process of ratifying such agreements we develop a theoretical argument based on the notions of strategic substitutability and strategic complementarity and study the interactions among three different peer types geographic neighbors trading partners and green investment projects partners in our case clean development mechanism projects partners we test for the presence of interactions by taking into account a temporal dimension which constitutes a methodological contribution to this end we introduce spatially lagged endogenous variables into a parametric survival model and apply the proposed framework to the kyoto protocol ratification process our data sample covers 164 countries for the period 1998 to 2009 we find evidence that while countries ratification decisions are basically strategic substitutes they become strategic complements once we focus on the ratification decisions of specific peers

the effect of futures markets and corners on storage and spot price variability when a futures market is introduced the volume of storage should become more sensitive to changes in the return to storage the increase in storage sensitivity means that storage will absorb a larger proportion of demand and supply shocks than it did previously reducing spot price volatility data from the chicago board of trade support the hypotheses of increased storage sensitivity and reduced spot price volatility the effect of futures on spot price volatility is sensitive to the competitive structure of the futures market futures market manipulation causes spot price variance to increase despite manipulation the development of the wheat futures market caused the coefficient of variation of spot price to decline significantly

environmental pressure group strength and air pollution an empirical analysis there is an established theoretical and empirical case study literature arguing that environmental pressure groups have a real impact on pollution levels our original contribution to this literature is to provide the first systematic quantitative test of the strength of environmental non governmental organizations engos on air pollution levels we find that engo strength exerts a statistically significant impact on sulfur dioxide smoke and heavy particulates concentration levels in a cross country time series regression analysis this result holds true both for ordinary least squares and random effects estimation it is robust to controlling for the potential endogeneity of engo strength with the help of instrumental variables the effect is also substantively important strengthening engos represents an important strategy by which aid donors foundations international organizations and other stakeholders can try to achieve lower pollution levels around the world

comparative advantage and the gains from financial trade a reappraisal emerging market crises have suggested that a national benefit cost assessment of external financial liberalisation could well pro ve unfavourable this paper re examines the principle of comparative advantage in its application and international migration we distinguish between those arising in f inancial trade from the net transfer of capital and those deri ving from the contemporaneous exchange of f inancial claims or services of equivalent is on the contractual risk return characteristics of the financial claims exchanged this perspective is applied firstly to portfolio diversification gains arising from further international stock market integration secondly price risk management for developing countries in international primary commodity trade is discussed both applications imply the need for significant institutional development but could reali se approximately contemporaneous gains reminiscent both of those involved in merchandise trade and in the skills and product or service flows that baloo has emphasis ed in relation to fdi and international migration

diaspora and development jagdish bhagwati s proposal for a brains tax to be levied on the incomes of the diaspora from developing countries residing in the developed countries and the proceeds to be remitted to the countries of origin of the diaspora is well known in recent years the voluntary contributions or remittances from the diaspora to their countries of origin have often been higher than the aid monies given to these countries it is now increasingly recognised that the diaspora may have an active role to play in the development process of their countries of origin they are not only a source of funds they are also a rich source of skills and know how this paper analyses the potential of the diaspora as agents of change in their countries of origin and argues that the social rate of return to a unit of diaspora investments may be higher than that for a unit of foreign direct investment from non diaspora sources