on the determinants of direct foreign investment evidence from east and southeast asia abstract a model of derived demand for foreign capital by a multiple product monopolist is estimated for seven asian countries direct foreign investment dfi inflows are estimated to be less elastic with respect to the costs of capital including taxes than to wages and to be more elastic with respect to aggregate demand in export markets than domestic demand the output deterrent effect of higher wages is estimated to outweigh any substitution toward greater capital intensity the estimates also suggest that dfi rises with greater costs within the investors home countries no similar effect occurs with respect to costs in rival host countries and concerns for political stability have overlain economic determinants

state characteristics and the location of foreign direct investment within the united states a conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the united states is developed and estimated the authors results for 1981 83 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively more foreign direct investment in addition higher wages deterred foreign direct investment while higher unemployment rates attracted it surprisingly higher unionization rates were associated with increased foreign direct investment overall higher taxes deterred foreign direct investment however more extensive transportation infrastructures and larger promotional expenditures were associated with increased foreign direct investment copyright 1991 by mit press

diversifying entry some ex ante explanations for postentry survival and growth links between theoretically determined preentry conditions and the postentry performance of diversifying entries made by large industrial firms are examined industry firm and relatedness variabl

is there a role for monetary aggregates in the conduct of monetary policy abstract we examine the potential policy role of monetary aggregates by attempting to use them as effectively as possible in the analysis of empirical relationships we focus on their role as information variables since any more ambitious use such as in a policy rule would presuppose some information content in the aggregates our results show that in the united states since 1979 the monetary aggregates fall considerably short of those requirements and results with german m3 are hardly more favorable we also investigate whether empirical relationships are not reflective of information relationships because of the use of these variables in countercyclical policy the results are not consistent with that interpretation

microeconomic consequences and macroeconomic causes of foreign direct investment in southern african economies the authors use a new data set on firms in thirteen countries of the southern african development community sadc and comparators from other regions to identify the benefits and determinants of foreign direct investment fdi in this region fdi has facilitated local development in the sadc foreign owned firms perform better than domestic firms are larger and locate in richer and better governed countries and in countries with more competitive financial intermediaries they are also more likely to export than domestic firms and evidence suggests that they might have positive spillover effects on domestic firms based on a standard empirical model the sadc is attracting the inward fdi per capita the region s level of income would predict but this means that there are less capital inflows per capita to the region than there are to wealthier parts of the developing world moreover the sadc is attracting less fdi than comparators for reasons that are possibly more fundamental than current income namely countries past growth record demographic structure and the quality of physical infrastructure interestingly inward fdi is less sensitive to variation in income within the sadc than in other parts of the world but is more responsive to changes in country s openness to trade

monetary policy strategies for latin america the authors examine possible monetary policy strategies for latin america that may help lock in the gains the region attained in the fight against inflation in the 1990s instead of focusing the debate about the conduct of monetary policy on whether the nominal exchange rate should be fixed or flexible the focus should be on whether the monetary policy regime appropriately constrains discretion in monetary policymaking three basic frameworks deserve serious discussion as possible long run strategies for monetary policy in latin america the authors examine the advantages and disadvantages of a hard exchange rate peg monetary targeting and inflation targeting in light of monetary policy s recent track record in several latin american countries looking for clues about which of the strategies might be best suited to economies in the region the answer it depends on the country s institutional environment some countries appear not to have the institutions to constrain monetary policy if discretion is allowed in those countries there is a strong argument for hard pegs including full dollarization that allow little or no discretion to monetary authorities in countries such as chile which can constrain discretion inflation targeting is likely to produce a monetary policy that keeps inflation low yet appropriately copes with domestic and foreign shocks monetary targeting as a strategy for latin america is not viable because of the likely instability of the relationship between inflation and monetary aggregates of which there is ample international evidence no monetary strategy can solve the basic problems that have existed in latin american economies for a long time the authors welcome the recent move in latin american countries toward inflation targeting but say no policy will succeed unless government policies also create the right institutional environment

the locational determinants of direct investments among industrialized countries abstract market size and growth rate as well as tariff barriers have already been shown to influence u s direct investments in the eec the present paper enlarges the field of observation to all bilateral flows of direct investments among six industrialized countries the united states germany france the united kingdom the netherlands and belgium over the years 1969 1982 it also tests the impact of two other would be locational determinants of foreign direct investments namely unit labour costs and export flows moreover a new and alternative specification is put forward and tested which assumes that in the investment decision process foreign locations are in competition not only with each other but also with the home country of the investor

inflation targeting and inflation performance a comparative analysis this article examines how the impact of inflation targeting on inflation performance depends on the choice of country samples adoption dates time periods and methodological approaches we apply two different estimation methods difference in differences and propensity score matching for our sample of 25 advanced and 59 emerging and developing countries over the period 1985 to 2011 our findings suggest that distinguishing countries by economic development is crucial as no effect of inflation targeting is found for advanced economies whereas the results suggest a significant negative effect of inflation targeting on inflation in emerging and developing countries the results are robust to the methodology used for the analysis

mne subsidiaries versus domestic enterprises an analysis of their ownership and location specific advantages this paper compares the ownership advantages of multinational enterprises mnes subsidiaries and domestic enterprises dmes in greece previous studies have tested the hypothesis that ownership specific advantages oa are a major source of firm differences this study analyses the processed food sector sic 20 the leading industrial sector in greece with the highest inward and outward internationalization degree using a panel data set of 75 firms and 5 years the findings of a probabilistic regression analysis indicate that there are significant differences between the two groups of firms in the degree of possession of observed ownership advantages mne subsidiaries have higher market shares use multiplant operations and have higher advertising and r d to sales ratios compared to dmes dmes use their well established position knowledge of domestic and regional market conditions and size economies in order to compete effectively with mne subsidiaries it is inferred that pursuit of domestic ma

total protection a new measure of the impact of government interventions on investment profitability host country interventions in goods markets e g tariffs and quotas and factor markets e g tax holidays and training grants for workers are recognized as having substantial effects on the profitability of foreign direct investments this study proposes two new comprehensive measures total protection and an internationalized version of the marginal effective rate of taxation that incorporate all government interventions in a single easily understood common denominator readily applicable to empirical research empirical estimates of the total protection measure for europe suggest that for new investments government interventions in factor market increase profitability more than trade interventions

distinction between intermediate and finished products in intra firm trade abstract although intra firm trade has been viewed as associated with vertical integration which exploits opportunities for exchange between inherently dissimilar economies it is more common between developed countries where horizontal integration is expected to dominate using unique data from 1974 to 1990 on swedish firms application of a tobit model explains variations in majority owned manufacturing affiliates internal imports of intermediate and finished goods on the basis of firms international organization of production effects which are unobservable in aggregate figures show up only when finished and intermediate goods are separated

towards credibility from inflation targeting the brazilian experience this article analyses the use of the basic interest rate after the adoption of inflation targeting in brazil and the credibility of this monetary regime through two indices that consider the cukierman and meltzer 1986 definition for credibility it also shows the main theoretical and practical motives for changes in the conduction of the monetary policy in the 1970s the way that inflation targeting strategy is inserted in rules vs discretion analysis and the main points that characterize the literature concerning inflation targeting the findings denote that the strategy implemented in brazil is not a good mechanism to develop credibility

foreign direct investment theories entry barriers and reverse investments in u s manufacturing industries this paper investigates empirically whether industrial organization oriented fdi theories explain the recent phenomenon of reverse foreign direct investment in the u s based on the distribution of fdi in two digit sic manufacturing industries we find that capital and advertising intensities act as entry barriers to foreign investments in the u s we also observe that foreign multinationals are attracted by the u s market size and that they invest heavily in industries with intensive r d combined with marketing efforts

entry order market share and competitive advantage a study of their relationships in new corporate ventures abstract this research explored the extent to which entry order the decision to enter a market early as a pioneer or to wait and follow determines not only market share but other competitive factors such as position and promotion that late entrants might hope to employ to overcome a pioneer s advantages the study analyzed data on 119 nonservice new corporate ventures consumer and industrial from the profit impact of marketing strategy pims research data base str4 based on a review of the strategic management and marketing literatures three hypotheses on the effects of entry order were generated and subsequently tested the first hypothesis states that pioneers achieve higher market shares than followers since a priori the market share for the pioneer has to be larger than the market share split among later entrants the issue is the rate at which the early entrant s market share will decrease as additional businesses enter what we term the degree of lateness effect later entrants have the choice of being an early follower that is entering the industry soon after the pioneers or waiting until the industry matures late entrants a high degree of lateness effect would indicate that early followers would gain higher market shares than late entrants an analysis of the data indicated that pioneers have significantly higher market shares than followers and that little degree of lateness effect existed between early and late entrants the second hypothesis states that pioneers will achieve differentiation advantages in such areas as product and service quality promotion and technological positioning greater than followers there is considerable theoretical and empirical evidence that pioneers are able to generate competitive advantages through name recognition image leadership the establishment of technical standards which make switching to other products difficult and superior consumer information advantages due to market lead times an analysis of the data indicated that pioneers have significant competitive advantages in product service quality and technology over followers the one area where pioneers did not have a competitive advantage over followers was in advertising and promotion the third hypothesis states that followers will achieve cost advantages greater than pioneers while learning curve theory suggests that pioneers will enjoy cost price advantages contrasting arguments can be made that followers can enjoy lower costs by coattailing on the pioneer s efforts to educate consumers develop a dominant design and create an infrastructure to span the gap from raw material suppliers to finished good deliveries we suggest that because pioneers are likely to have attained differentiation advantages followers will have only one alternative left compete on the basis of price and become the lowest cost producer an analysis of the data indicates that while followers do appear to have lower prices than pioneers followers do not have significantly lower cost structures this result implies a lower level of profitability for a follower strategy overall the results of this study advance the notion that new corporate ventures should enter as pioneers rather than as followers pioneers had higher market shares and stronger competitive positions higher quality more differentiated products and better service than followers followers appear to have few successful competitive options available outside of promotion for gaining market share

anchoring inflation expectations in the face of oil shocks in the proximity of zlb a tale of two targeters this paper applies a n ardl framework to two longstanding inflation targeting policy regimes in order to assess the relation between oil prices dynamics and inflation expectations and the further consequences created by a proximal zlb situation the application is based on data from january 1994 to june 2018 for new zealand and the uk we focus on oil price shocks as a variable of interest and this was found to have an asymmetric effect on inflation expectations one further key finding is that the real effective exchange rate has significant impacts on inflation expectations and this is indicative of an exchange rate pass through to inflation via an inflation expectations channel in general we find that inflation exchange rate money supply output growth unemployment and fiscal deficit surplus have significant implications for inflation expectations inflation expectations are also influenced by their past behaviour indicating adaptive inflation expectations this study contributes to the debate on the inflation targeting at zlb

international organization of production and variation in exports from affiliates there is no simple relationship between internationalization of firms operations and expanding trade the variation in exports from swedish affiliates is here shown to be influenced by properties related to their degree of vertical and horizontal integration affiliates propensity to export is positively affected by production in few countries intermediate imports from the parent plant size income level of the host country and a location in the european community and is negatively affected by r d intensity and the size of the host country market

intangible assets entry strategies and venture success in industrial markets abstract this study assesses the impact of intangible assets on the venture success of firms as they enter into industrial markets that are new to them a new market is one that is geographically new for the firm or is a product market where this firm did not originally compete the analysis is based on the profit impact of market strategy database which contains information on 91 new ventures into industrial markets five hypothesis were tested in this study 1 h1 high levels of intangible assets will be positively associated with performance of firms entering new markets 2 h2 high levels of intangible assets increase the likelihood of success regardless of the timing of entry 3 h3 in explaining venture performance there will be a positive interaction effect between promptness of entry and level of intangible assets pioneer entrants will benefit substantively more from high levels of intangible assets then will later entrants 4 h4 high levels of intangible assets enhance success irrespective of aggressiveness of entry 5 h5 in explaining performance there will be a positive interaction between level of intangible assets and aggressiveness of entry firms with high levels of intangible assets will gain substantively more from aggressive pricing promotion and high quality than firms with low levels of intangible assets one specific intangible asset corporate image is empirically analyzed and the results support our hypotheses a strong corporate image enables the firm to achieve greater success when they enter into new ventures and the interaction of image with aggressive promotional pricing and quality strategies is significant in explaining this success implications for practioners are high image firms reap enormous benefits from increased promotional efforts high quality and aggressive entry low image firms are severely penalized when they aggressively enter a market and may he better off entering the market slowly and at low prices

the ownership advantage in latin american fdi a sectoral study of us direct investment in mexico this article develops a model which tests the hypothesis that sectoral fdi flows from the united states to mexico over a four year period can be explained by the ownership advantages of us multinationals theoretical developments in the concept of ownership advantage are used to guide the formulation of the research the findings suggest that direct investment into us mnes affiliates in mexico is driven by benefits derived from embedded human knowledge technology embodied advantages and possibly from scale advantages local r d is negatively associated with fdi

how do exchange rates co move a study on the currencies of five inflation targeting countries abstract this paper does three things first it explores the type of asymmetry in exchange rate correlation for five inflation targeting countries we show their currencies co move more closely with the currencies of some influential foreign countries during joint appreciations than joint depreciations against a world currency second it establishes empirically the linkage between interest rate differentials and exchange rate correlation we find evidence that both widening and narrowing interest rate differentials will reduce the correlation third it proposes a new version of the asymmetric dynamic conditional correlation model the model proves to be capable of providing great insight into the two issues investigated

u s canada trade liberalization and mnc production location using confidential firm level panel data from the bureau of economic analysis we examine how the bilateral trade flows of u s multinational corporations mncs and their canadian affiliates responded to u s canadian tariff reductions from 1983 to 1992 we find that canadian affiliate sales to the united states are negatively correlated with canadian tariffs but u s parent sales to canadian affiliates have little association with canadian tariffs these results contradict the notion that canadian tariff reductions would lead to a hollowing out of canadian manufacturing we also find substantial heterogeneity in mnc responses to tariff changes within narrowly defined manufacturing industries overall bilateral trade liberalization is trade creating as u s mncs integrated their north american production such that canadian affiliates increased sales to the united states and reduced domestic sales

partner contributions as predictors of equity share in international joint ventures the type of expertise that a company contributes to a joint venture may affect the amount of equity that it owns this research observes the ownership patterns associated with four common combinations of partner expertise in international joint ventures the results rank company assets with respect to the contributor s ability to negotiate majority ownership in the original joint venture contract and that company s tendency to buy up equity from the partner later on

flexible inflation targets forex interventions and exchange rate volatility in emerging countries abstract emerging economies with inflation targets it face a dilemma between fulfilling the theoretical conditions of strict it which imply a fully flexible exchange rate or applying a flexible it which entails a de facto managed floating exchange rate with foreign exchange forex interventions to moderate exchange rate volatility using a panel data model for 37 countries we find that although it lead to higher exchange rate instability than alternative regimes forex interventions in some it countries have been more effective to lower volatility than in non it countries which may justify the use of flexible it by policymakers

inflation forecast targeting implementing and monitoring inflation targets abstract inflation targeting is shown to imply inflation forecast targeting the central bank s inflation forecast becomes an explicit intermediate target inflation forecast targeting simplifies both implementation and monitoring of monetary policy the weight on output stabilization determines how quickly the inflation forecast is adjusted towards the inflation target money growth or exchange rate targeting is generally inferior than inflation targeting and leads to higher inflation variability commitment to target rules may be better than commitment to instrument rules

two targets two instruments monetary and exchange rate policies in emerging market economies abstract this paper examines the case for using two instruments the policy interest rate and sterilized foreign exchange market intervention in emerging market countries seeking to stabilize inflation and output while attenuating disequilibrium currency movements we estimate policy reaction functions for central banks documenting that indeed both instruments tend to be deployed we show that whether discretionary monetary policy or inflation targeting is preferable depends on the volatility of shocks relative to the central bank s time inconsistency problem the use of fx intervention as a second instrument improves welfare under both regimes but more so under inflation targeting overall a regime of two way sterilized intervention cum inflation targeting can result in better outcomes in the presence of imperfect capital mobility asset substitutability yielding similar gains to a discretionary policy while still delivering the inflation target

monetary policy and inflation expectations in latin america long run effects and volatility spillovers this paper uses multiple cointegration analysis to estimate simultaneously a monetary reaction function and the determinants of expected inflation for brazil chile colombia and mexico in addition m garch modeling is used to test for the presence of volatility spillovers between the monetary stance and inflation expectations the analysis shows that there are long term relationships between the interest rate expected inflation and the inflation target and that greater volatility in the monetary stance increases the volatility of expected inflation in brazil colombia and mexico

equity ownership in international joint ventures the impact of source country factors this study examines the impact of four source country factors on the equity ownership in international joint ventures ijvs these factors are exchange rate cost of borrowing export capability and management orientation based on a sample of 8 078 ijvs in china this study shows that equity ownership tends to be higher for parent firms from a source country with strong currency low cost of borrowing strong export capability and high uncertainty avoidance

the role of exports fdi and imports in development evidence from sub saharan african countries the disappointing economic performance of sub saharan african ssa economies in the late 1980s prompted reforms in foreign trade and foreign direct investment fdi in the early 1990s using the autoregressive distributed lag ardl approach and pedroni panel estimation procedures that allow for heterogeneity this study found that exports and fdi have a significant impact on economic growth granger type causality tests show the interrelatedness of exports fdi imports and income variables the results also provide evidence of a two stage causal chain of exports imports and income this article calls for more market oriented policy reforms in ssa countries

the role of product specific factors in intra firm trade of u s manufacturing multinational corporations this study examines the role of major product specific factors in the product patterns of intra firm trade of u s manufacturing mncs using pooled time series 1982 86 cross sectional nineteen products regression analysis this study finds that the technology intensity of a product has a strong positive effect on the propensity of the product to intra firm trade in contrast the economies of scale level appears to have a constraining effect on the propensity finally the vertical integration intensity and the international production intensity are found to have no significant bearings on the propensity

the determinants of interindustry variation of foreign ownership in canadian manufacturing using two stage least squares to allow for the presence of simultaneous relationships this study obtains results which support the view that the pattern of foreign ownership in canada s manufacturing sector is determined in part by the ability of foreign firms to exploit intangible assets by producing in canada in addition the empirical findings suggest that managerial resources and relative labour costs are significant influences on the foreign firm s decision concerning direct investment in canada however the strongest influence on the extent of foreign ownership in canadian manufacturing industries appears to be simply the extent of multi plant development in the corresponding u s industries les facteurs determinants de la variation inter industrielle de la propriete etrangere dans le secteur manufacturier au canada a partir d une analyse utilisant la methode des moindres carres en deux etapes pour tenir compte de la presence de rapports simultanes entre variables on obtient des resultats qui soutiennent le point de vue de ceux qui disent que le pattern de propriete etrangere dans le secteur manufacturier canadien est determine en partie par l aptitude des entreprises a tirer profit d actifs intangibles en produisant au canada les resultats empiriques suggerent que les ressources manageriales et les couts relatifs de travail ont aussi une influence determinante sur la decision de la firme etrangere de faire un investissement direct au canada cependant l influence la plus forte sur le degre de propriete etrangere dans un secteur manufacturier canadien semble etre le developpement de l entreprise a plusieurs etablissements comme pattern de production dans le secteur industriel americain correspondant

the location of overseas production and production for export by u s multinational firms abstract the location of overseas manufacturing production is influenced by common factors that operate in all industries notably proximity to the united states and to other markets within industries opposites attract low wage and low capital intensity parents choose high wage countries production for export is attracted by large internal markets in host countries economies of scale in production presumably make large markets economical as export bases another factor is high trade propensities of host countries u s firms tend to export from high wage countries but labor cost is not in general a major influence on the location of export production

does the federal reserve care about the rest of the world many economists are accustomed to thinking about federal reserve policy any economists are accustomed to thinking about federal reserve policy in terms of the institution s dual mandate which refers to price stability in terms of the institution s dual mandate which refers to price stability and high employment and in which the exchange rate and other interand high employment and in which the exchange rate and other international variables matter only insofar as they infl uence infl ation and the output national variables matter only insofar as they infl uence infl ation and the output gap which is to say not very much gap which is to say not very much in fact this conventional view is heavily shaped by the distinctive and pecuin fact this conventional view is heavily shaped by the distinctive and peculiar circumstances of the last three decades when the infl uence of international liar circumstances of the last three decades when the infl uence of international considerations on fed policy has been limited in this paper i will discuss how the considerations on fed policy has been limited in this paper i will discuss how the federal reserve paid signifi cant attention to international considerations in its fi rst federal reserve paid signifi cant attention to international considerations in its fi rst two decades followed by relative inattention to such factors in the two plus decades two decades followed by relative inattention to such factors in the two plus decades that followed then back to renewed attention to international aspects of monetary that followed then back to renewed attention to international aspects of monetary policy in the 1960s before the recent period of benign neglect of the international policy in the 1960s before the recent period of benign neglect of the international dimension this longer perspective is a reminder that just because the fed has not dimension this longer perspective is a reminder that just because the fed has not attached priority to international aspects of monetary policy in the recent past we attached priority to international aspects of monetary policy in the recent past we have no guarantee that it will not do so in the future indeed i will argue in the have no guarantee that it will not do so in the future indeed i will argue in the conclusion that in the next few decades international aspects are likely to play a conclusion that in the next few decades international aspects are likely to play a larger role in federal reserve policy making larger role in federal reserve policy making 1

tobin s q and the importance of focus in firm performance using tobin s q as a measure of performance we seek to estimate the relative importance of industry focus and share effects in determining firm performance our methods are analogous to those of richard schmalensee and like him we find that industry effects account for the majority of the explained variance however we also find that firm effects exist in the form of focus effects that is narrowly diversified firms do better than widely diversified firms we interpret this finding as consistent with profit maximization by firms with different factor endowments

competing destinations gravity model an application to the geographic distribution of fdi the competing destinations formulation of the gravity model ensues from the fact that unlike the classical version this approach explicitly acknowledges the interdependence of the flows between a set of alternative locations i e country recipients are competing for foreign direct investment fdi this article examines empirically a range of theoretical hypotheses about the determinants of fdi location in a panel data regression framework the results of the estimation of a gravity model lend support to the proximity concentration and internalization hypotheses also the fact that fdi has been found to be decreasing in the competition posed by alternative locations is suggestive of the superiority of the competing destinations version of the gravity equation over its classical formulation

home country political risk and foreign direct investment in the united states this study investigates the proposition that home country political risk factors influence outward foreign direct investment investment data from the u s department of commerce is used to model investment activity in the united states from various industrialized source countries foreign direct investment is regressed on home country domestic and international economic and political risk measures for the western industrial countries results indicate that investment activity from the ics in the u s is dependent on home country economic and political conditions

the decision maker and export entry and expansion this paper examines the varied empirical findings of the relationship between firm individual characteristics and foreign entry expansion behavior the results support the view that such activity is neither exclusively determined by structural or managerial factors and is really the result of interaction between both types of variables the paper proposes that foreign entry and expansion can best be understood as an adoption of innovation type behavior

internalization an event study test abstract the internalization theory of multinational firms proposes that direct international investment occurs when a firm has information related intangible assets with public good properties we find that firms with characteristics suggesting the presence of information based assets experience a significantly positive stock price reaction upon announcing a foreign acquisition on the other hand firms apparently lacking such assets experience at best zero abnormal returns upon announcing overseas acquisitions

relatedness and corporate venturing does it really matter abstract although many studies have focused on the issue of relatedness in corporate venturing it is still unclear whether high or low levels of relatedness between a new venture and the parent firm leads to success as measured by venture performance in this study we raise the question of whether or not relatedness plays a determinant role in affecting success at the venture level the study analyzes data on 88 new industrial product corporate ventures from str4 the corporate start up database of the pims project based on a review of the strategic management and corporate entrepreneurship literature this study generates five hypotheses concerning the relationships among relatedness the intangible assets of the parent firm the entry strategy of the new venture and the venture s market share two rival hypotheses on the general impact of relatedness on venture performance are generated theoretical and empirical evidence suggest that highly related ventures benefit from existing resources exploiting corporate know how and sharing experience effects this leads to the first hypothesis which states that high related ventures achieve higher market shares relative to low related ventures on the other hand the disadvantages generally associated with high levels of relatedness such as higher coordination costs political problems associated with resource sharing appear to negatively affect the profitability e g r01 or the direct costs of the venture leading to the rival hypothesis results indicate that there are no significant differences in the market shares achieved by high medium and low related ventures and that therefore relatedness does not affect venture performance the third hypothesis predicts that given the parent firm has developed high levels of intangible assets high related ventures achieve higher market shares than low related ventures prior research has shown that intangible assets have a positive effect on venture performance high related ventures make possible higher levels of exploitation of the intangible assets held by the parent firm than low related ventures other things being equal if well managed these assets can neutralize the negative effects of high relatedness thus a positive interaction between relatedness and intangible assets should take place results support the hypothesis and show that the highest market shares are achieved by those ventures with high levels of relatedness and high levels of intangible assets two rival hypotheses concerning relatedness and its effects on the aggressiveness of entry strategy of the venture as measured by relative price relative promotional effort and relative product quality are generated the first hypothesis states that the more related the venture the more aggressive the entry strategy high relatedness implies high levels of resource sharing that should decrease the incremental costs needed to launch the venture thus high related ventures have greater amounts of resources to be used for aggressive entry strategies than low related ventures the rival hypothesis states that the less related the venture the more aggressive the entry strategy there is empirical evidence that increased resource sharing is associated with increased direct costs thus as compared with low related ventures high related ventures might be handicapped in pursuing aggressive entry strategies results indicate that there is no significant relationship between relatedness and the aggressiveness of the entry strategy overall this study suggests that the decision concerning the degree of relatedness does not explain by itself venture performance nor does it explain the entry strategy chosen at the venture level only when combined with the intangible assets held by the firm at the corporate level does relatedness appear to determine venture success implications for practioners are top management cannot decide a priori whether or not a new corporate venture should be highly related to the parent firm high image firms should only venture in highly related businesses building image at the corporate level pays if various high related ventures are present suggestions for further research are also offered

monetary policy and macroeconomic stability in latin america the cases of brazil chile colombia and mexico abstract in 1999 new monetary policy regimes were adopted in brazil chile colombia and mexico combining inflation targeting with floating exchange rates these regime changes have been accompanied by lower volatility in the monetary stance in brazil colombia and mexico despite higher inflation volatility in brazil and colombia this paper estimates a conventional new keynesian model for these four countries and shows that i the post 1999 regime has been associated with greater responsiveness by the monetary authority to changes in expected inflation in brazil and chile while in colombia and mexico monetary policy has become less counter cyclical ii lower interest rate volatility in the post 1999 period owes more to a benign economic environment than to a change in the policy setting and iii the change in the monetary regime has not yet resulted in a reduction in output volatility in these countries

advertising as an intangible asset profitability and entry barriers a comment on reekie and bhoyrub 1985 advertising as an intangible asset profitability and entry barriers a comment on reekie and bhoyrub applied economics vol 17 no 4 pp 603 617

transactions cost economics and the multinational enterprise an assessment abstract this paper applies transactions cost principles to the multinational enterprise in order to ascertain its distinctive properties as a mode of economic organization the analysis helps identify just when and where contractual alternatives to the multinational firm are likely to be viable this turns out to depend upon the nature of the technology the regime of appropriability within which the firm operates and the characteristics of the markets in question transactions cost analysis is also extended to the multinational enterprise host country relationship implications for management and public policy are derived

inflation targeting a new framework for monetary policy he world s central bankers and their staffs meet regularly in venues from basle to washington to share ideas and discuss common problems perhaps these frequent meetings help explain why changes in the tactics and strategy of monetary policymaking such as the adoption of money growth targets in the 1970s the intensification of efforts to reduce inflation in the 1980s and the recent push for increased institutional independence for central banks tend to occur in many countries more or less simultaneously whatever their source major changes in the theory and practice of central banking are of great importance for both individual countries and the international economy in this article we discuss a new strategy for monetary policy known as inflation targeting which has sparked much interest and debate among central bankers and monetary economists in recent years this approach is characterized as the name suggests by the announcement of official target ranges for the inflation rate at one or more horizons and by explicit acknowledgment that low and stable inflation is the overriding goal of monetary policy other important features of inflation targeting include increased communication with the public about the plans and objectives of the monetary policymakers and in many cases increased accountability of the central bank

the importance of focus to market entrants abstract one of the most difficult questions facing entrepreneurs is how broadly to serve a heterogeneous market that is whether it is better to serve a narrow segment of the market hoping to flourish by gaining a relatively high and increasing market share within that segment or whether it is better to attempt to appeal to a broader cross section of the market thereby allowing the firm to succeed with a lower market share among the customers whom it is targeting a narrower focus permits more concentrated use of fixed resources facilitates the building of customer loyalty and lowers the threat of retaliation from generalist incumbents but requires a much higher market share within the firms target market to succeed porter 1980 has identified three generic strategies available to firms low cost differentiation and focus by focus he means that the firm should develop the ability to serve a particular target customer group very well often at the expense of other potential customer groups implicit in the firm s choice to adopt a focus strategy is that it must address the question of how broadly to focus in terms of any given product attribute given its resources and opportunities a fundamental element of the firm s choice of focus is that it is affected by and in turn affects that of its rivals that is focus is a strategic variable in the sense of the word strategic meant by game theorists each firm s optimal choice of action depends on the actions taken by other firms the literature on the optimal degree of focus for new ventures has reached very mixed conclusions the early authors looking at the question were fairly consistent in their recommendation that a highly focused or niche strategy was generally most appropriate later authors recommended that new ventures should enter markets aggressively facing larger incumbents head on the latest studies develop what we describe as a contingency approach arguing that the best approach depends on industry conditions we think that this literature is now at a point where we can advance our understanding by looking at specific industries in some detail as our understanding expands broader empirical work is becoming increasingly difficult because of the number of factors that must be built into any cross sectional model of new venture performance we hope then to develop an understanding of one industry that is generally similar in nature to many other industries from this understanding conclusions of interest to both researchers and practitioners can be drawn future studies of other industries with different fundamental structures will provide similar benefits more specifically this paper is an empirical inquiry into the microbrewery segment of the u s brewing industry designed to investigate the relative merits of specialist firms different degrees of focus the question addressed is whether focus affects specialist firms short run performance in an industry where there are entrenched generalists as well as many new entrpreneurial specialist entrants the analysis confirms several widely held beliefs of industry participants and observers that microbreweries are far more likely to attempt to serve too broad a market segment than to focus too narrowly that microbreweries are in direct competition with imports and that microbreweries benefit from having many microbrewery rivals within the same state furthermore there appear to be some small learning and or reputation effects in the operation of microbreweries as well as a minor novelty factor that benefits recently opened establishments we must note however that the majority of the variation in the performance of microbreweries stems from differences in the management organization or market of individual breweries not captured explicitly by other variables included in the study this finding perhaps should not be surprising given the huge variation in the backgrounds skills and outlooks of microbrewery owners during the segment s early days the lessons learned from this research are of obvious importance to entrepreneurs in many industries it is a very common situation for an entrepreneur to enter a stable industry in which established firms are already in place serving a broad cross section of the market our findings show that in such circumstances a narrowly focused approach to the market is best we can think of numerous examples of where entrepreneurs have either succeeded by focussing on a particular segment of the market or failed by not doing so in fact there are many cases in which firms have done first one and then the other for example and people express airlines at first flourished by focussing on the needs of budget conscious leisure travellers and then collapsed in part because it began to try to serve business travelers and others who are less price sensitive on certain routes one of the hallmarks of an entrepreneurial business is that it suffers severe resource constraints because the entrepreneur s choice of breadth of focus will have profound effects on the resource requirements of the business it is clear that the choice of which segment or segments of the market on which to focus is a fundamental decision made by all entrepreneurs this paper serves to illustrate the importance of this focus decision and to provide some guidance for entrepreneurs concerning the appropriate degree of focus to adopt in entering an established market

international experiences with different monetary policy regimes any views expressed in this paper are those of the author only and not those of columbia university or the national bureau of economic research abstract this paper examines the international experiences with four basic types of monetary policy regimes 1 exchange rate targeting 2 monetary targeting 3 inflation targeting and 4 monetary policy with an implicit but not an explicit nominal anchor the basic theme that emerges from this analysis is that transparency and accountability are crucial to constraining discretionary monetary policy so that it produces desirable long run outcomes because the devil is in the details in achieving transparency and accountability what strategy will work best in a country depends on its political cultural and economic institutions as well as on its past history

corporate versus independent new ventures resource strategy and performance differences abstract this study examines differences between independent ventures ivs which are established by individual entrepreneurs and corporate ventures cvs which are controlled by larger companies it focuses on differences between these ventures related to the resources strategies and performance of firms in the computer and communications equipment manufacturing industries thus the findings increase the understanding of the different challenges faced by each venture type and provide insight into how each venture type should be managed the study finds that managers of cvs and ivs emphasized different resources and strategies specifically cvs emphasized the following resources internal capital sources proprietary knowledge and marketing expertise ivs emphasized external capital sources technical expertise and development of brand identification they also differed in their strategies ivs pursued greater strategic breadth more customer service and focused more on specialty products the findings that cvs had less strategic breadth was surprising in that cvs emphasized resources such as internal capital sources which could make pursuing broad strategies more feasible for cvs it is possible that some cvs do not pursue broad strategies because they may be infringing upon someone else s turf within the corporation and thus may be discouraged in spite of finding significant strategy and resource differences the study found that ivs and cvs did not differ in performance and that resources were not directly related to performance based on the concept of equifinality it follows that both venture types can be equally successful even if they follow different roads to success success may be less a function of the different resources ivs and cvs have and more a function of what strategies the firms choose based upon their resources strategy variables did relate to performance a low cost strategy lowered performance regardless of venture type and the influence of an aggressive strategy i e wide strategic breadth on performance depended upon venture origin managers pursuing a low cost strategy may have had lower performance if they became penny wise and pound foolish missing opportunities in their efforts to lower costs this suggests that regardless of venture type managers of new ventures in these industries and perhaps in other volatile industries may need to be opportunistic this study indicates that pursuing broad strategies increased the performance of ivs and decreased the performance of cvs this finding was surprising in that cvs had greater resources which one might think would lead to successful implementation of aggressive strategies in securing enough resources to pursue aggressive strategies from their parents cvs may lose the freedom of action they need to cope with the dynamism of high technology industries this suggests that managers of cvs within the computer and communications equipment manufacturing industries should either not pursue broad strategies or if pursuing broad strategy they should maintain their flexibility in contrast ivs that pursued broad strategies achieved higher performance indicating that perhaps ivs unencumbered by the bureaucracy that characterizes cvs may be able to pursue aggressive strategies while simultaneously maintaining flexibility thus this study offers iv and cv managers several valuable insights first it argues that managers of each type of venture may need to pursue different strategies to increase venture performance and make optimal use of their unique resources furthermore it suggests that cv managers encounter difficulties in applying resources to strategies and not in accessing resources whereas political obstacles may occur cv managers may primarily encounter these difficulties when trying to implement strategies rather than when accumulating resources from the parent suggesting a pitfall that managers of cvs and their parents need to avoid although this study has indicated that both venture types can be equally successful it suggests that they may face different obstacles and follow different roads to success

does inflation targeting make a difference in developing countries we evaluate the treatment effect of inflation targeting in thirteen developing countries that have adopted this policy by the end of 2004 using a variety of propensity score matching methods we show that on average inflation targeting has large and significant effects on lowering both inflation and inflation variability in these thirteen countries however the effectiveness of inflation targeting on lowering inflation is found to be quite heterogeneous the performance of a given inflation targeting regime can be affected by country characteristics such as government s fiscal position central bank s desire to limit the movements of exchange rate its willingness to meet the preconditions of policy adoption and the time length since the policy adoption

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

exchange rate regimes and independent central banks a correlated choice of imperfectly credible institutions theory and empirical evidence show that low inflation is a precondition for economic growth independent central banks and fixed exchange rates are institutional mechanisms that help keep inflation low by lending monetary policy credibility to governments however the two institutions are commonly analyzed as substitutes that tie the hands of inflation prone governments thus the literature has difficulties describing why governments would adopt both institutions and the interaction between them this paper presents a model that allows policymakers the simultaneous choice of monetary institutions and shows that imperfectly credible institutions will overlap when exchange rates are fixed but adjustable and central bank independence is not fully ascertainable governments choose both institutions more generally the paper generates hypotheses about the conditions that make fixed exchange rates and independent central banks complements or substitutes thus contributing to an explanation of the diversity of global monetary institutions in the post bretton woods period

financial performance patterns of new corporate ventures an alternative to traditional measures abstract this paper describes some of the limitations involved in using traditional performance measures to evaluate new ventures and suggests an alternative we argue that the use of traditional performance measures in the new venture setting can produce misdirected decision making by managers and misleading model development by researchers the traditional performance measures evaluated are return on investment cashflow market share gain and returns to stockholders the alternative performance measured presented is based upon an evaluation of patterns of improvement in return on investment across time these patterns of performance are mapped using regression analysis return on investment is regressed against time and the parameters of the resulting models parameters are themselves used as performance measures the beta coefficient is used to measure the overall rate of change in financial performance from year to year and the coefficient of determination r 2 is used to measure the predictability of change to combine the information available in each of these parameters into a single variable we multiply by r 2 and call the result v thus v is a measure of the velocity of improvement in financial performance across time adjusted for the level of variability in the performance trend much work remains to be done that could substantially improve the usefulness of v to managers and researchers more sophisticated approaches than the one used here might include weighting either or r 2 to fit the particular goal orientation of a given management team other model parameters might be used in conjunction with or in place of or r 2 to increase or improve the information captured in v measures of financial performance other than return on investment roi could also be used as the basis of calculating v even in its current simple form however v appears to be a useful performance measure in 87 of 112 ncvs studied v provided a useful summary of the pattern of performance s development in 25 of 112 cases there were important characteristics of performance that could not be captured by v the most important managerial implication of v entails the shift to evaluating a new venture on the basis of its progress toward a desirable end rather than on the end itself this provides a logical means of evaluating the financial performance of a new venture at an earlier time than would be possible otherwise

entry modes for direct investment determined by the composition of firm specific skills when undertaking direct investment in a foreign country a firm can choose between different modes of entry broadly speaking an investor may either acquire an existing firm or set up a new venture i e perform a greenfield investment the mainstream perspective on this choice stipulates that takeovers are less risky than greenfield investments but yield a lower expected rate of return cf caves 1982 consequently a firm would become more willing to perform greenfield investments as greater capabilities and international experience increase its ability to handle risks according to dubin 1976 and stopford 1976 firms with a large and geographically diversified portfolio of already established subsidiaries have a greater propensity to undertake greenfield investment the greater a firm s diversification in terms of industries and the faster its growth indicating less knowledge and experience per unit of activity the greater the propensity to use takeovers in the last decades however there has been a marked tendency towards more takeovers and less greenfield investments see un 1992 this is hardly consistent with the conventional view as the bulk of direct investment is established by a relatively small number of multinational corporations which continuously upgrade their experience and capabilities rather the riskiness as well as expected profitability of alternative modes of entry depend on the nature of skills and capabilities this analysis distinguishes between organizational and managerial skill on the one hand and skill which is related to specific technology on the other com

re evaluating the effectiveness of inflation targeting abstract this paper estimates the treatment effect of inflation targeting on macroeconomic variables using a semiparametric single index method by taking into account the model misspecification of parametric propensity scores our study uses a broader set of preconditions for inflation targeting and macroeconomic outcome variables than the existing literature the results suggest no significant difference in the inflation level and inflation volatility between targeters and non targeters after the adoption of inflation targeting we find that inflation targeting reduces sacrifice ratio and interest rate volatility in the developed economies and that it enhances fiscal discipline in both the industrial and developing countries

monopolistic advantages and the international operations of firms disaggregated evidence from u s based multinationals the paper presents statistical evidence supporting the proposition that the kind of monopolistic advantage possessed by the firm is decisive as to which form of involvement it will choose to penetrate into foreign markets exporting versus producing abroad a decomposition of export flows into exports to affiliates intra company trade and exports to unaffiliated buyers proves to be a crucial element in the empirical test of this proposition

inflation targeting and exchange rate management in less developed countries abstract we analyze coordination of monetary and exchange rate policy in a two sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets our central finding is that tight management of the exchange rate greatly enhances the efficacy of inflation targeting in a flexible exchange rate system inflation targeting incurs a high risk of indeterminacy moreover small inflation shocks may escalate into much larger increases in inflation ex post both problems disappear when the central bank fixes the path of the nominal exchange rate or leans heavily against the wind in a managed float

product innovation and start up business market share performance this empirical study estimates the impact of several product innovation attributes on initial market share we find that the product s advantage relative to competing products has the strongest market share impact incompatibility with customers existing way of doing things does not have a meaningful market share impact by reducing market share a new and proprietary product technology tends to act as a barrier to adoption unless the effect is offset by a major product advantage

factors affecting inter industry variation of foreign ownership of manufacturing industry a set of hypotheses incorporating various explanations to foreign direct investment are developed and tested on a simultaneous equation model on australian data the analysis shows that foreign ownership of industry tends to be higher in the humanskill intensive and technology intensive industries high protection seems to be an important inducement for multinational enterprises participation in australian industry the results demonstrate how a major bias can be introduced when the simultaneity involved in the determination of foreign ownership is ignored

the conduct of monetary policy nowadays the central bank of a country is the monopoly supplier of legal tender currency the commercial banks are committed to making their deposits convertible at par into such currency so the banks need to keep reserves in the form of currency and deposits at the central bank the central bank primarily conducts its policy by buying and selling financial securities e g treasury bills or foreign exchange in exchange for its own liabilities i e open market operations academic economists generally regard such operations as adjusting the quantitative volume of the banks reserve base and hence of the money stock with rates prices in such markets simultaneously determined by the interplay of demand and supply central bank practitioners almost always view themselves as unable to deny the banks the reserve base that the banking system requires and see themselves as setting the level of interest rates at which such reserve requirements are met with the quantity of money then simultaneously determined by the portfolio preferences of private sector banks and non banks this difference in perceptions is discussed again in section iii whether the monetary policy operations of central banks should be viewed primarily in terms of quantity or rate setting actions though of course one is the dual of the other these had allowed inflation and inflationary expectations to become entrenched by the end of the i970s a selection of representative statistics for a number of the leading industrialised countries is given in table i below this table indicates a common pattern among the countries of interaction between interest rates inflation and the growth of output the first period i969 78 is marked by high inflation negative real interest rates and slightly above average growth the second period i979 82 by very high nominal and high real interest rates high but falling inflation and very low output growth the final period i983 7 is marked by much lower inflation lower nominal but still high real interest rates and a recovery in output growth in some cases to above average rates in contrast the relationship in these countries between the growth of their chosen key monetary aggregate and nominal incomes appears much weaker also see clinton and chouraqui i987 especially p 7 whether measured in terms of monetary growth or in terms of real interest rates i e after adjustment for prospective future inflation policy during the

offshore sourcing reaction maturation and consolidation of u s multinationals the authors conducted a quasi longitudinal investigation of u s multinationals r d manufacturing offshore sourcing strategies and resultant global market performance implications utilizing comprehensive data collected by the 1977 1982 and 1989 benchmark surveys of u s direct investment abroad hypotheses were tested in a path analytic framework despite increased competition at home and abroad causing their global market share positions to weaken in recent years u s multinationals have maintained and even may have improved their global consolidated profitability levels by skillfully exploiting their technological prowess through technology transfer and off shore sourcing rapidly changing roles of u s parent firms and their foreign affiliates in technology development and global sourcing relationships portend a maturing yet arduous shift toward a global rationalization

determinants of foreign direct investment a tale of nine theoretical models abstract this paper presents a review of nine theoretical models of foreign direct investment fdi discussed are early studies of determinants of fdi 1 as well as determinants of fdi based on the neoclassical trade theory 2 ownership advantages 3 aggregate variables 4 the ownership location and internalization advantage framework 5 horizontal and vertical fdi models 6 the knowledge capital model 7 diversified fdi and risk diversification models 8 and policy variables 9 from each of the nine theories the relevant determinants of fdi are derived empirical studies indicate the importance of these determinants in the real world the paper shows that there is not one single theory of fdi but a variety of theoretical models attempting to explain fdi and the location decision of multinational firms therefore any analysis of determinants of fdi should not be based on a single theoretical model instead fdi should be explained more broadly by a combination of factors from a variety of theoretical models such as ownership advantages or agglomeration economics market size and characteristics cost factors transport costs protection risk factors and policy variables

corporate ventures into industrial markets dynamics of aggressive entry abstract this article reports a study of the effect of aggressive entry by firms venturing into new industrial markets there are three main sets of results first there is a significant correlation between the competitive attractiveness of the target industry and the initial share objective set by the corporation venturing into that industry second the downstream share objective set at the launch of the venture is significantly correlated with several key marketing strategy and investment strategy options made by the firm at the start of operations third if most of these key strategy decisions are made under the assumption that a high share position will rapidly be achieved their resulting performance in terms of both market share and roi is superior to firms which enter with less aggressive share aspirations these results are particularly appealing to the large established firm which has the resources and thus can both afford to absorb the cost of failure and afford to make significant front end investments in aggressive initial marketing expenses and investments in initial plant capacity for such firms a feasible strategy for a new venture into an industrial market could be to if possible but not essential seek industries markets to enter which are less likely to provoke rivalrous responses set aggressive market share targets invest aggressively in initial plant capacity develop aggressive sales force sales promotion advertising service quality and or pricing programs relative to competitors as appropriate to the particular industry being entered the reason we suggest that the programs be aggressive as appropriate is that different strategic options are likely to be more effective in one industry than another for instance aggressive advertising and sales promotions could be more effective for consumables while aggressive sales calling programs and superior service delivery could be the more effective route for capital goods businesses

to steal or not to steal firm attributes legal environment and valuation data on corporate governance and disclosure practices reveal wide within country variation that decreases with the strength of investors legal protection a simple model identifies three firm attributes related to that variation investment opportunities external financing and ownership structure using firm level governance and transparency data from 27 countries we find that all three firm attributes are related to the quality of governance and disclosure practices and firms with higher governance and transparency rankings are valued higher in stock markets all relations are stronger in less investor friendly countries demonstrating that firms adapt to poor legal environments to establish efficient governance practices

does clarity of central bank communication affect credibility evidences considering governor specific effects central banks have made great efforts to increase transparency and accountability to the public since then studies seek empirical evidences about the effects of monetary policy communication over

vertical intra industry trade and fragmentation an empirical examination of the us auto parts industry the global auto industry has undergone a significant structural transformation in the last two decades as a result of the international fragmentation of production this increase in cross border production sharing activities in the auto industry led to intra industry trade iit in auto parts in this study the extent of iit in the us auto parts industry is examined by decomposing trade into inter industry trade vertical iit and horizontal iit then the development of vertical iit is analysed as an indicator of international fragmentation between the us and 29 trading partners several country specific hypotheses suggested by the fragmentation literature are tested for the period 1989 2006 the results indicate that a substantial portion of iit in the us auto parts industry is vertical iit and the econometric results generally support the hypotheses drawn from the theory in particular the findings show that the extent of the us vertical iit is positively correlated with average market size differences in market size differences in factor endowments and outward foreign direct investment while it is negatively correlated with distance and differences in per capita gdp

the causality between fdi and sector specific production in turkey evidence from threshold cointegration with regime shifts abstractthis article considers bidirectional nonlinear cointegration relation between fdi and industrial output in turkey the data cover the monthly period 2005 1 2013 10 for the time series of total industrial production 36 sub industrial sectors production and fdi following nonlinear threshold cointegration and vecms the article yields that i total industrial production and nine sub industrial productions have positive long run impact on fdi with significant error corrections ii six sub industrial productions have short term influence on fdi iii fdi has long run positive impulse on total industrial production and nine sub industrial productions with some significant error corrections and iv fdi affects four sub industrial productions in the short run as well as in the long run the results of vecms from i also reveal that the all short term adjustment parameters are found significant and powerful in 10 typical regimes regime 1s and in 5 extreme regimes regime 2s finally the outcom

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market

the mirage of exchange rate regimes for emerging market countries this paper argues that much of the debate on choosing an exchange rate regime misses the boat it begins by discussing the standard theory of choice between exchange rate regimes and then explores the weaknesses in this theory especially when it is applied to emerging market economies it then discusses a range of institutional traits that might predispose a country to favor either fixed or floating rates and then turns to the converse question of whether the choice of exchange rate regime may favor the development of certain desirable institutional traits the conclusion from the analysis is that the choice of exchange rate regime is likely to be of second order importance to the development of good fiscal financial and monetary institutions in producing macroeconomic success in emerging market countries this suggests that less attention should be focused on the general question whether a floating or a fixed exchange rate is preferable and more on these deeper institutional arrangements a focus on institutional reforms rather than on the exchange rate regime may encourage emerging market countries to be healthier and less prone to the crises that we have seen in recent years

transitions to inflation targeting panel evidence from panel estimates of an extended version of the taylor rule reaction function that adds lagged inflation output gaps and exchange rates we confirm that inflation is more central to the setting

global foreign direct investment flows the role of governance infrastructure abstract it is widely argued that a country s economic performance over time is determined to a great extent by its political institutional and legal environment we refer to these institutions and policies as the governance infrastructure of a country we utilize newly developed indices to examine the effects of governance infrastructure on both foreign direct investment fdi inflows and outflows for a broad sample of developed and developing countries over 1995 97 in addition we examine the role of other forms of infrastructure including human capital and the environment the results clearly indicate that governance infrastructure is an important determinant of both fdi inflows and outflows investments in governance infrastructure not only attract capital but also create the conditions under which domestic multinational corporations emerge and invest abroad it would appear that investments in governance infrastructure are subject to diminishing returns so that the benefits in terms of inflows are most pronounced for smaller and developing economies

canaries and vultures a quantitative history of monetary mismanagement in brazil during the last two decades of the twentieth century brazil went through a sequence of failed stabilization plans that tried to cope with an enduring hyperinflation this paper uses a money demand model to evaluate monetary policies during those episodes consistency between money supply and expected conditional money demand growth rates is considered for each plan it is shown that unsuccessful programs were marked by excessive liquidity the results not only suggest that monetary mismanagement led to the failure of the plans but also that the excessive liquidity could have been predicted