the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

ten little treasures of game theory and ten intuitive contradictions this paper reports laboratory data for games that are played only once these games span the standard categories static and dynamic games with complete and incomplete information for each game the treasure is a treatment in which behavior conforms nicely to predictions of the nash equilibrium or relevant refinement in each case however a change in the payoff structure produces a large inconsistency between theoretical predictions and observed behavior these contradictions are generally consistent with simple intuition based on the interaction of payoff asymmetries and noisy introspection about others decisions

regional electricity generation and employment in uk regions abstractregional electricity generation and employment in uk regions regional studies a number of electricity generation technologies reduce carbon emissions but with different economic and employment effects partly consequent on how far generation capacity supports regional supply chains in devolved regions these issues are important because of the role given to renewable electricity generation in economic development strategies this paper analyses the regional employment supported by different electricity generation technologies illustrating trade offs between generation scale and employment intensity and shows that the regional employment supported under all pathways is modest compared with the regional economic scale the policy implications are investigated

asymmetric monetary policy empirical evidence for italy a growing body of empirical work has examined the potential asymmetry in the effects of monetary policy on united states real activity this study looks for such an empirical evidence for italy in the period 1982 1998 monetary shocks are obtained as residuals from a central bank reaction function where the three months interbank rate is taken as the indicator of the monetary policy stance the effects of these positive and negative shocks on output are statistically different from zero and the null of symmetry between the two is rejected in favour of negative shocks having a greater impact on real output growth thus confirming an asymmetric effect of monetary policy even for italy

asymmetric effects of federal funds target rate changes on s p100 stock returns volatilities and correlations we study the effects of fomc announcements of federal funds target rate decisions on individual stock returns volatilities and correlations at the intraday level for all three characteristics we find that the stock market responds differently to positive and negative target rate surprises first the average response to positive surprises that is bad news for stocks is larger second in case of bad news the mere occurrence of a surprise matters most whereas for good news its magnitude is more important these new insights are possible due to the use of high frequency intraday data

impact of r d expenditures rainfall and temperature variations in agricultural productivity empirical evidence from bangladesh abstractthis study aims to investigate dynamic relationships between research and development r d expenditure climate change measured by annual rainfall and temperature variations human capit

explicit versus implicit contracts for dividing the benefits of cooperation abstract experimental evidence has accumulated highlighting the limitations of formal and explicit contracts in certain situations and has identified environments in which informal and implicit contracts are more efficient this paper documents the superior performance of explicit over implicit contracts in a new partnership environment in which both contracting parties must incur effort to generate a joint surplus and one strong agent controls the surplus division in the treatment in which the strong agent makes a non binding cheap talk bonus offer to the weak agent this unenforceable promise doubles the rate of joint high effort compared to a baseline with no promise the strong agents most frequently offered to split the gains of the high effort equally but actually delivered this amount only about one quarter of the time an explicit and enforceable contract offer performs substantially better increasing the frequency of the most efficient outcome by over 200 relative to the baseline

stock prices money supply and interest rates the question of causality the purpose of this study is to examine the statistical relationship between the supply of money and stock price levels and between the level of interest rates and stock prices the current literature in financial economics offers differing opininon on each of these relationship this research addresses a significant aspect of this debate by examining the direction of causality between the money supply stock prices and interest rates using granger sims test for determining unidirectional causality we find that the relationship between the money supply and stock prices is characterized by a feedback system with money supply causing some of the observed variations in the stock price levels and vice versa with respect to the relationship between stock prices and interest rates the results are not as conclusive in this instance the causality seems to be mostly running from interest rates to stock prices and not the other way around

decisions error and heterogeneity probabilistic choices or choice errors may play an important supporting role in shaping observed risky choices and a variety of restrictions on such choice probabilities play the role of identifying restrictions in empirical decision research we test six restrictions in the context of common ratio effect data for a general class of theories of risky choice two restrictions one for aggregate and one for individual data are supported but none of the heterogeneity restrictions that make the aggregate data model powerful survive scrutiny nor do estimable parametric versions of the individual data model there is room for new stochastic identifying restrictions in empirical decision research

experimental evidence of a sunk cost paradox a study of pricing behavior in bertrand edgeworth duopoly a well known implication of microeconomic theory is that sunk costs should have no effect on decision making we test this hypothesis with a human subjects experiment students recruited from graduate business courses with an average of over six years of work experience played the role of firms in a repeated price setting duopoly game in which both firms had identical capacity constraints and costs including a sunk cost that varied across experimental sessions over six different values we find contrary to the prediction of microeconomic theory that subjects pricing decisions show sizable differences across treatments the effect of the sunk cost is non monotonic as it increases from low to medium levels average prices decrease but as it increases from medium to high levels average prices increase these effects are not apparent initially but develop quickly and persist throughout the game cachon and camerer s 1996 loss avoidance is consistent with both effects while cost based pricing predicts only the latter effect and is inconsistent with the former

the effect of subtracting a constant from all payoffs in a hawk dove game experimental evidence of loss aversion in strategic behavior author affiliation nick feltovich n feltovich abdn ac uk acknowledgment this research was partly funded by the university of aberdeen business school i thank miguel costa gomes erika seki joe swierzbinski and qin xiao for helpful suggestions and comments 1 backgroundgame theoretic solution concepts imply that a change in payoff levels modifying a game by adding a constant to all payoffs should not affect behavior as long as payoffs reflect players preferences i e they are equivalent to expected utilities however when the entries in a payoff matrix are actually monetary gains or losses as in economics experiments with human subjects the robustness of behavior to such changes becomes an empirical question research has found that payoff levels can indeed have an effect on behavior particularly when the signs of payoffs change as a result gains turn to losses or vice versa kahneman and tversky 1979 document survey evidence suggesting that losses weigh more heavily than equally sized gains and name this phenomenon loss aversion many examples of loss aversion in laboratory experiments and in the field have since been found camerer 2004 however nearly all have involved individual decision making tasks by contrast evidence of loss aversion in strategic decision making has been hard to find see section 2 for a review the objective of this article is to add to the discussion of whether and how strategic behavior is affected by differential treatment of gains and losses by reporting the strongest evidence i have seen thus far of such an effect in a strategic situation specifically results of a human subjects experiment involving two hawk dove games see figure 1 played under either a fixed pairs or a random matching protocol figure 1the hawk dove games used in the experimenti am agnostic about the source of the effect i find whether it comes from loss aversion or some other phenomenon such as loss avoidance described in section 2 so to save space i will often abuse terminology somewhat by using loss aversion as a shorthand term for any pattern of behavior in which losses weigh more heavily than gains irrespective of the underlying cause 12 previous literaturehere i present a brief review of previous research into the effects of changing payoff levels for a more thorough review see feltovich iwasaki and oda 2008 ido erev and colleagues have conducted several studies examining payoff level effects in repeated individual decision problems typically finding that subjects are quicker to learn an optimal choice under limited payoff information when both gains and losses are possible than when only gains or only losses are possible 2 erev bereby meyer and roth 1999 examined behavior in two versions of a repeated 2 2 constant sum stage game with a unique nash equilibrium in mixed strategies payoffs in the games differed only by subtraction of a constant but one game had losses possible while the other did not erev bereby meyer and roth found that subject choices were more consistent with fictitious play learning that is more likely to optimize against the historical distribution of opponent choices when losses were possible than when they were not on the other hand rapoport and boebel 1992 failed to find a payoff level effect in two versions of a repeated 5 5 constant sum game with a unique mixed strategy equilibrium unlike erev bereby meyer and roth though rapoport and boebel do not affect the signs of any payoffs with their manipulation of payoff levels suggesting that not all payoff level changes matter for behavior only those that change the signs of payoffs another way of examining payoff level effects is in market experiments in which subjects play the role of firms facing sunk costs that vary across treatments

the impact of clean energy investments on the greek economy an input output analysis 2010 2020 the aim of this paper is twofold first to calculate the green energy investments by industrial sector that greece would need in order to satisfy a number of energy and environmental targets adopted in the context of the european commission s energy and climate change package and second to calculate the macro economic impacts of these green investments on production and employment in the greek economy to this end the input output analysis has been exploited for estimating the direct indirect and induced macroeconomic effects associated with the implementation of selected energy conservation measures the promotion of renewable energy technologies etc our findings show that the required investments would reach the amount of 47 9 billion over the period 2010 2020 these investments will result in an average annual increase of the national product by 9 4 billion creating simultaneously 108 000 full time equivalent jobs for the entire period under consideration the employment generated per 1 million investment is relatively higher in energy saving projects in buildings and transport in comparison with the development of res in power generation sector

forecasting job creation from renewable energy deployment through a value chain approach abstract this paper introduces a new approach to the study of the socioeconomic impact of renewable technologies through the analysis of the reinforcing effects of the expansion of this industry and the specific characteristics of the employment along the value chain the method proposed is based on the collection critical analysis and presentation of the results obtained using primary information sources the model design includes contributions extracted from a prior analysis of the existing assessment methods to lessen the uncertainty of the job ratios often used in these types of analysis one factor to be taken into account is the high degree of development in the sector and above all the maturity of the technology considered from the point of view of the industry fabric the economy of scale and technological development actually influences the human resources needs sometimes increasing the demand for professionals within the scope of r d and sometimes reducing jobs in the manufacturing industry which is gradually applying processes with a greater degree of automation the influence of these experience curves is different for every single stage of the value chain trade balance of technologies is also crucial for local employment generation an analytical model was developed based on the above assumptions and applied to the spanish pv industry this industry has been playing a leading role in the expansion of renewable energy and offers a high potential towards the short term development of the smart grids in this country this model represents very well the history of the spanish pv industry reflected through the evolution of the jobs and is shown to be the foundation of a methodology for prospective studies in the social and economic impacts of renewables

the transmission of us systemic financial stress evidence for emerging market economies abstract we provide empirical evidence that us systemic financial stress shocks us sfsss are an important driver of economic dynamics and fluctuations in emes applying a structural vector autoregression we analyze the international transmission of us sfsss to eight emes using monthly data from 1999 to 2012 us sfsss are identified as unexpected changes in the financial conditions index of the federal reserve bank of chicago findings indicate that a typical emerging market real economy experiences similar negative effects to those seen in the us real economy in response to us sfsss for international transmission our results emphasize that financial interconnectedness with the us is important relative to trade relations the analyzed cases of latin american economies suggest that indirect linkages are also important for transmitting the negative effects of us sfsss in general us sfsss act as a crucial driver of volatility in the emerging world also at business cycle frequencies

the reaction of stock prices to unanticipated changes in money a note much of the past work on the money stock market relationship centered on the question of whether money is a leading indicator of stock prices studies by sprinkel 22 homa and jaffee 10 and hamburger and kochin 8 supported the view that past increases in money lead to increases in equity prices the implication of this work was that investors could earn above normal proflts by using a trading strategy based on the observed behavior of the money stock this contradicts the efficient markets hypothesis which asserts that current asset prices reflect all available information so that no such trading strategy can exist subsequent research by cooper 3 pesando 17 rozeff 21 and rogalski and vinso 19 has shown that past money changes do not contain predictive information on stock prices upholding the efficient markets view this paper investigates whether the response of common stock prices to weekly money announcements is consistent with the efflcient markets hypothesis unlike the above research therefore the focus is on the very short run response of stock prices to both anticipated and unanticipated announced changes in money recent work by berkman 1 grossman 7 urich and wachtel 25 and roley 20 indicates that short term interest rates respond only to the unexpected component of the announcement with short term rates rising when the announced change in money exceeds the expected change berkman also examined the reaction of stock prices finding that an unanticipated increase in the money supply depressed share prices lynge 13 found that positive money announcements lowered stock prices but since he did not distinguish expected from unexpected money growth his results do not bear directly on the efficient markets issue in investigating the response of stock prices to weekly money announcements survey data on market participants forecasts of the announced weekly change

the asymmetric effects of monetary policy a nonlinear vector autoregression approach this paper tests for nonlinearity in a standard vector autoregression including output prices and money supply using an estimation strategy that is consistent with a wide range of structural macroeconomic models shocks to the money supply are found to have stronger output effects and weaker price effects when output growth is initially low positive and negative monetary shocks are found to have nearly symmetric effects in addition there is some evidence that shocks of different magnitudes have asymmetric effects these results are consistent with the view that the aggregate supply curve is convex

liquidity management of u s global banks internal capital markets in the great recession abstract the recent crisis highlighted the importance of globally active banks in linking markets one channel for this linkage is through how these banks manage liquidity across their entire banking organization we document that funds regularly flow between parent banks and their affiliates in diverse foreign markets we show that parent banks when hit by a funding shock reallocate liquidity in the organization according to a locational pecking order affiliate locations that are important for the parent bank revenue streams are relatively protected from liquidity reallocations in the organization while traditional funding locations are more extensively used to buffer shocks to the parent bank balance sheets

investor sentiment and the stock market s reaction to monetary policy this paper shows that monetary policy decisions have a significant effect on investor sentiment the effect of monetary news on sentiment depends on market conditions bull versus bear market we also find that monetary policy actions in bear market periods have a larger effect on stocks that are more sensitive to changes in investor sentiment and credit market conditions overall the results show that investor sentiment plays a significant role in the effect of monetary policy on the stock market

payoff levels loss avoidance and equilibrium selection in games with multiple equilibria an experimental study i introduction game theoretic solution concepts carry the implication that a change in payoff levels a modification to a game by adding the same positive or negative constant to all payoffs should have no effect on behavior such changes do not affect expected payoff differences between strategies under any given beliefs about opponents actions so that best response correspondences and therefore nash equilibria pure or mixed are unaffected when the game has multiple nash equilibria game theory does not rule out the possibility that payoff level changes will lead to a change in which equilibrium is played but it does not predict when such sensitivity will be present or how it will be manifested when the game has a unique equilibrium game theory specifically predicts that changing payoff levels can have no effect so game theory is at least silent as to whether changes in payoff levels can affect players choices and at most explicitly rules out such an effect this implication relies however on the game s payoffs reflecting the true preferences of the players that is the equivalence between payoffs and expected utilities when payoffs are monetary gains or losses as in economics experiments with human subjects this equivalence cannot be taken for granted and the robustness of behavior to changes in payoff levels becomes an empirical question indeed there is evidence dating back at least to kahneman and tversky 1979 suggesting that payoff level changes can affect behavior 1 while their prospect theory was not developed specifically with payoff level effects in mind it can in some cases yield specific predictions for how they ought to affect behavior more recently cachon and camerer 1996 found that decisions in a coordination game experiment could be sensitive to changes in payoff levels when these changes affected the signs of payoffs positive payoffs became negative or vice versa they noted that their results could be explained by loss avoidance which they defined to be a tendency to avoid choices that with certainty yield negative payoffs in favor of alternatives that could yield positive payoffs 2 on the basis of this finding they conjectured that loss avoidance could be used as a criterion for equilibrium selection cachon and camerer s notion of loss avoidance is one of several ways that individuals could treat losses and gains differently in this paper we distinguish between their notion which we call certain loss avoidance and another type which we call possible loss avoidance and define as a tendency to avoid strategies that give a possible negative payoff in favor of one that gives a certain positive payoff we will sometimes use the term loss avoidance to encompass both certain and possible loss avoidance 3 the goal of this paper is to test for loss avoidance in strategic behavior in cases where payoffs are expected money payments to do so we design and conduct an experiment using a stage game well suited for such a test stag hunt a symmetric two player game with one risky action and one safe action and with multiple nash equilibria figure 1 shows three versions of stag hunt with the risky and safe actions labeled r and s these games differ only in payoff level so they are equivalent from a game theoretic standpoint as long as the payoffs represent the players preferences for example they have the same three nash equilibria the pure strategy equilibria r r and s s and a mixed strategy equilibrium in which both players choose r with probability 2 3 when these payoffs represent monetary gains and losses then despite this seeming equivalence our notions of loss avoidance make qualitative predictions regarding how individuals choices might change across the games in the high payoff game shh all payoffs are gains so neither type of loss avoidance will have an effect on behavior

rational expectations and the impact of money upon stock prices received monetary theory supports the existence of a strong relationship between monetary activity and stock prices following the work of friedman and schwartz 8 relating money supply to aggregate economic activity some researchers have examined the more specific connection between changes in the rate of growth of money supply and associated movements in stock prices see 6 10 11 14 17 18 19 20 22 and 28 these studies use a variety of monetary aggregate measures to functionally relate the level of stock market indices to contemporaneous and lagged monetary growth rates in general the findings indicate a direct relationship between money supply and stock returns

green jobs economic impacts of renewable energy in germany abstract the labor market implications of large investment into renewable energy re are analyzed in this text although a growing re industry can be observed in germany the overall effect of large increases of re based electricity and heat generating technologies on the german economy require a careful model based analysis the applied model panta rhei has been used among others to evaluate the german energy concept in 2010 it takes positive and negative impacts of re into account the paper shows the overall effects under different assumptions for fossil fuel prices domestic installations and international trade the results are sensitive to assumptions on the development of re world markets and german exports to these markets almost all of these scenarios exhibit positive net employment effects under medium assumptions net employment of re expansion will reach around 150 thousand in 2030 only with assumptions for german re exports below today s level net impacts are slightly negative gross employment will increase from 340 thousand in 2009 to between 500 and 600 thousand in 2030

macroeconomic cycles and the stock market s reaction to monetary policy abstract this paper examines cyclical variation in the effect of fed policy on the stock market we find a much stronger response of stock returns to unexpected changes in the federal funds target rate in recession and in tight credit market conditions using firm level data we also show that firms that face financial constraints are more affected by monetary shocks in tight credit conditions than the relatively unconstrained firms overall the results are consistent with the credit channel of monetary policy transmission

loss avoidance as selection principle evidence from simple stag hunt games abstract we investigate experimentally the conjecture that loss avoidance solves the tension in stag hunt games for which payoff dominance and risk dominance make conflicting predictions contrary to received textbook wisdom money losing outcomes do shift behavior albeit not strongly toward the payoff dominant equilibrium

are the effects of monetary policy asymmetric huntley schaller by building on the hamilton 1989 markov switching model we examine questions like does monetary policy have the same effect in expansions and recessions given that the economy is currently in a recession does a fall in interest rates increase the probability of an expansion does monetary policy have an incremental effect on the growth rate within a given state or does it only affect the economy if it is sufficiently strong to induce a state change e g from recession to expansion as suggested by models with sticky prices or finance constraints interest rate changes have larger effects during recessions jel e52 e32 much of the recent work in macroeconomics has proceeded under the assumption that variables follow linear stochastic processes with constant coefficients as a result some of the richness of the burns mitchell analysis such as its focus on asymmetries between recessions and expansions may well have been lost blanchard and fischer 1989 7 i introduction for decades macroeconomists have debated whether monetary policy has the same effect on real output in expansions and recessions as far back as the 1930s keynes and pigou debated whether monetary policy would have less effect on output during a severe economic downturn in the 1960s there were active debates on a very different proposition namely whether the rightward portion of the aggregate supply curve was vertical so that monetary policy would have less effect on real output during expansions in this article we provide a new type of evidence on whether monetary policy has different effects depending on whether the economy is in an expansion or recession empirical evidence on this issue is particularly relevant in light of new theoretical work in macroeconomics that predicts asymmetric effects of demand shocks conditional on the state of the economy two examples of this work are s s type models of price adjustment and models in which there are agency costs of financial intermediation 1 the intuition for the latter class of models is simple 2 when there is information asymmetry in financial markets agents may behave as if they were constrained for a variety of reasons these finance constraints are more likely to bind during recessions when the net worth of agents is low an increase in interest rates will then have two effects on investment the standard effect of increasing the cost of capital and therefore reducing investment demand and an additional effect of reducing liquidity e g by increasing debt service obligations and thus reducing investment demand for constrained agents as a result monetary policy actions that change interest rates will have greater effects during a recession 3 the s s type price adjustment models of ball and mankiw 1994 caballero and engel 1992 and tsiddon 1993 lead to a convex aggregate supply curve and therefore also imply that monetary policy will have stronger effects during recessions one of the more frequently cited empirical papers on the potentially asymmetric effects of monetary policy is cover 1992 which finds evidence that positive monetary shocks have different effects from negative monetary shocks we are looking at a different type of asymmetry namely between booms and recessions we study asymmetries using an extension of the markov switching model developed by hamilton 1989 estimated over the period 1955 93 in hamilton s econometric specification the growth rate of output depends on a state variable that corresponds to an expansion or recession this approach has several advantages first unlike linear projections it allows for nonlinearities and asymmetries second in estimating the recession coefficients it gives greater relative weight to observations that most clearly correspond to recessions and similarly for the expansion coefficients

risk aversion and incentive effects comment charles a holt and susan k laury 2002 develop an experimental design to determine the risk attitude of an individual they use their observations to argue that increased incentives appear to change risk attitudes leading to greater risk aversion popular utility functions that do not allow for such effects are therefore misspecified building on this finding they estimate a flexible utility function that characterizes their aggregate data well but that does not assume constant absolute or relative risk aversion the basic holt and laury 2002 hl design should become an important tool for the interpretation and design of experiments in which risk attitudes could play a role however their most important result showing the effect of scaling up the stakes of the lottery choice task is confounded by a possible order effect an order effect occurs when prior experience with one task affects behavior in a subsequent task the primary methodological contribution of experiments in economics is to enhance control ideally such control makes the explanatory variables of interest in this case scale orthogonal to other explanatory variables such as order allowing clearer inferences about behavior than one could get from field econometric data we argue that not controlling for order effects results in a misspecification of utility functions that is as important as that of scale the subjects in the hl design were given sequences of three or four tasks as shown in table 1 task 1 involved choices over lotteries with a baseline level of prizes which we will refer to as the 1 scale task 2 involved hypothetical choices over prizes with a scaled up level of prizes either 20 50 or 90 task 3 repeated task 2 but with choices that involved real payoffs task 4 was a return to the baseline task with real 1 prizes in some sessions subjects were not given task 2 or task 3 what could one infer from the comparison of measured risk attitudes in the 1 and 20 tasks in hl unfortunately any observed difference could be due either to the scale of the prizes involved or the task order or some combination of both thus the effect of scale is intrinsically confounded with the possible effect of task order this is a logical flaw in their design which

renewable energy and employment in germany abstract the positive impacts of an increasing share of renewable energy on the mitigation of climate change as well as on the decrease of the dependency of energy imports are indisputable however one persistent problem for the german economy has been its high level of unemployment in the recent past therefore any policy strategy will be measured also by its net impact on the labor market the paper describes the results of a study that models this impact and is novel within three respects firstly an input output vector for the renewable energy sector was developed based on the results of more than 1000 interviews with an extensive questionnaire secondly gross and net effect of two different policy scenarios for germany until 2030 were calculated and thirdly the approach varies from earlier studies by its explicit modeling of export and foreign trade effects

a simple framework for analysing bull and bear markets bull and bear markets are a common way of describing cycles in equity prices to fully describe such cycles one would need to know the data generating process dgp for equity prices we begin with a definition of bull and bear markets and use an algorithm based on it to sort a given time series of equity prices into periods that can be designated as bull and bear markets the rule to do this is then studied analytically and it is shown that bull and bear market characteristics depend upon the dgp for capital gains by simulation methods we examine a number of dgps that are known to fit the data quite well random walks garch models and models with duration dependence we find that a pure random walk provides as good an explanation of bull and bear markets as the more complex statistical models in the final section of the paper we look at some asset pricing models that appear in the literature from the viewpoint of their success in producing bull and bear markets which resemble those in the data copyright 2002 john wiley sons ltd

loan supply shocks during the financial crisis evidence for the euro area this paper employs a panel vector autoregressive model for the member countries of the euro area to explore the role of banks during the slump of the real economy that followed the financial crisis in particular we seek to quantify the macroeconomic effects of adverse loan supply shocks which are identified using sign restrictions we find that loan supply shocks significantly contributed to the evolution of the loan volume and real gdp growth in all member countries during the financial crisis however concerning both the timing and the magnitude of the shocks our results also indicate that the euro area was characterized by a considerable degree of cross country heterogeneity

economic growth export and external debt causality the case of african countries empirical investigation of the export driven economic growth hypothesis has provided mixed results in a bivariate causality framework the problem with such bivariate causality analysis is that there can be an omitted variable which could adversely affect the results this paper looks at the trivariate causality analysis of african countries by introducing external deby servicing as a third variable in the export economic growth analysis the results indicate that there is a feedback or bidirectional causality between external debt servicing economic growth and exports evidence of the 1983 90 subperiod is consistent with the argument that the structural adjustment programmes which were designed to remove economic distortions promote exports and encourage external debt management increased growth in the countries involved

coordination and focality under gain loss framing experimental evidence are people better at coordinating on a focal point when the game is framed as coordinating on a division of losses rather than gains in an experimental coordination game we vary the payoff framing gain vs loss and stake size low vs high to examine this question we find that loss framing reduces coordination on the focal point with the strongest effect observed in high stakes games

does monetary policy have asymmetric effects on stock returns this paper investigates whether monetary policy has asymmetric effects on stock returns using markov switching models different measures of a monetary policy stance are adopted empirical evidence from monthly returns on the standard poor s 500 price index suggests that monetary policy has larger effects on stock returns in bear markets furthermore it is shown that a contractionary monetary policy leads to a higher probability of switching to the bear market regime

bayesian methods for dynamic multivariate models if dynamic multivariate models are to be used to guide decisionmaking it is important that probability assessments of forecasts or policy projections be provided when identified bayesian vector autoregression var models are presented with error bands in the existing literature both conceptual and numerical problems have not been dealt with in an internally consistent way in this paper the authors develop methods to introduce prior information in both reduced form and structural var models without introducing substantial new computational burdens their approach makes it feasible to use a single large dynamic framework for example twenty variable models for tasks of policy projections copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

highly flexible neighborhood promotes efficient coordination experimental evidence abstract we experimentally investigate group effort coordination games where individuals are occasionally offered opportunities to alter their interaction neighborhood with whom they want to connect and interact we vary the neighborhood flexibility or the rate with which such opportunities arise we find that increasing neighborhood flexibility significantly improves coordination efficiency when players start with a decentralized circle shaped network but the improvement is limited if they start with a highly centralized star shaped network neighborhood flexibility improves coordination through facilitating assortative matching among high effort players in star shaped networks neighborhood flexibility has a side effect of decentralizing the networks which weakens the central player s ability in facilitating coordination hence partially offsets the benefit from assortative matching

structural var models for malaysian monetary policy analysis during the pre and post 1997 asian crisis periods this article conducts an in depth investigation into building a structural vector autoregression svar model and analysing the malaysian monetary policy considerable attention is paid to i the selection of foreign policy and target variables ii establish identifying restrictions and improve the estimates of impulse response functions iii assess the importance of intermediate channels in transmitting monetary policy mechanism and iv the way in which the 1997 asian financial crisis affected the working of monetary policy malaysia is an interesting small open economy to study because following this crisis the government imposed capital and exchange rate control measures the overall results suggest that the crisis and the subsequent major shift in the exchange rate regime have significantly affected the malaysian black box in the pre crisis period domestic variables appear to be more vulnerable to foreign monetary shocks further the exchange rate played a significant role in transmitt

transmission effects of the u s and china monetary policy shocks on the world this paper applies the markov switching model to analyse the transition probabilities and generalized method of moments gmm with newey west heteroscedasticity and autocorrelation consistent covar

enjoying the quiet life corporate governance and managerial preferences much of our understanding of corporations builds on the idea that managers when they are not closely monitored will pursue goals that are not in shareholders interests but what goals would managers pursue this paper uses variation in corporate governance generated by state adoption of antitakeover laws to empirically map out managerial preferences we use plant level data and exploit a unique feature of corporate law that allows us to deal with possible biases associated with the timing of the laws we find that when managers are insulated from takeovers worker wages especially those of white collar workers rise the destruction of old plants falls but the creation of new plants also falls finally overall productivity and profitability decline in response to these laws our results suggest that active empire building may not be the norm and that managers may instead prefer to enjoy the quiet life

strategic loan defaults and coordination an experimental analysis this paper experimentally studies the impact of bank and borrower fundamentals on loan repayment we find that solvent borrowers are more likely to default strategically when the bank s expected strength is low although loan repayment is a pareto dominant nash equilibrium borrowers are also less likely to repay when other borrowers expected repayment capacity is low regardless of banks fundamentals we show that changes in expectations about bank and borrower fundamentals change the risk dominance properties of the borrowers coordination problem and that these changes subsequently explain strategic defaults for the individual borrower loss aversion and negative past experiences reduce repayment suggesting that bank failure can be contagious in times of distress

asymmetric effects of positive and negative money supply shocks this paper examines whether positive and negative money supply shocks have symmetric effects on output the results are consistent with the hypothesis that positive money supply shocks do not have an effect on output while negative money supply shocks do have an effect on output this finding is independent of whether or not expected money is assumed to affect output the results reported in this paper imply that the fed could increase the growth rate of real output by reducing the standard deviation of unexpected changes in the money supply

monetary policy effectiveness and stock market cycles in asean 5 this article examines the asymmetric effects of monetary policy on real output in bull and bear phases of stock market in five asean economies malaysia singapore indonesia the philippines and thailand using the recently developed pooled mean group pmg technique stock market cycles are identified by employing markov switching models and the rule based nonparametric approach estimating the models using monthly data from 1991 1 to 2011 12 the results show that monetary policy measured by short term interest rate has a negative and statistically significant long run effect on real output in bull and bear market periods while the effects are stronger in bear periods than bulls in the short run there is no statistically significant relationship between monetary policy and real output these results are consistent with finance constraints capital market imperfection models that predict that monetary policy is more effective during bear periods than bulls