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This paper develops a model of exchange rate determination in partially liberalized post-socialist economy that operates under soft budget constraints in nontradable sectors. The model captures the factors that determine the evolution of a country's external balance during the initial phase of economic liberalization. Three types of disturbances are the center of analysis: liberalization of trade and foreign exchange regime, devaluation, and price liberalization. We show that the real exchange rate appreciation may either improve or worsen the trade balance depending on the sources of this appreciation. Thus, we argue that the real exchange rate cannot reflect true country's competitiveness unless all sectors are equally exposed to hard budget constraints. The model implications are further analyzed through the empirical evidence on the relationship between the real exchange rate and trade balance in three selected East European countries.

In an experts-assisted decision making paradigm, the information collection design becomes a strategic variable under a weak assumption that the final decision is dependent on the design used to collect information as well. As a result, the same information of the experts and the decision maker about the problem can potentially produce different final decisions for different information collection designs. The implication is that a decision maker can strategically select a design which serves his/her objective. This paper uses a Bayesian estimation methodology for combining experts' information with the decision maker's prior. An information collection process is designed by setting constraints on this model. Several designs are developed here using such controlled factors as a one-stage versus a two-stage decision process, experts' rank ordering, and group versus individual lobbying/consultation. An example is provided to illustrate the applicability of the concept. It is shown that the information produced in the process of producing a decision can also give insights into the impacts of the decision maker and the experts on the decision.

P¿Countries are showing interest in accumulating foreign reserves to ensure macroeconomic stability. There has been some debate whether to beef up the level of nations' foreign reserves or make it lower, especially in developing countries like Nigeria. Whereas some argue that the foreign reserve determines the country's rating in the global market, others hold opposing views. In this light, this paper examined the interactive influence of foreign reserve (FRS) on some macroeconomic variables such as: economic size (GDP); trade; level of capital inflows (KFL); exchange rate (EXR); and inflation. Analyzing secondary data from CBN statistical bulletins (1970-2007), the econometric results obtained from cointegration test, vector error correction (VEC) within the framework of autoregressive distributed lags (ARDL) revealed the following: (1) existence of a long-run relationship between the variables and two cointegrating equations; (2) possibility of convergence of the variables from the short run to the long run with slow speed of adjustment. It is thus the conclusion of this paper that accumulation of large foreign reserves is not very productive in Nigeria due to its inability to induce some of the macroeconomic variables.

In this paper, we examine the differences in information asymmetry and financing patterns and a generalized version of the trade-off theory across countries with different institutional environments. We find that firms in Civil law countries have higher information asymmetry, rely more on internally generated funds, and use more short-term debt to finance their financing deficit, relative to those in Common law countries. In both Civil law and Common law countries, factors suggested by the trade-off theory explain the financing deficit coefficient in the generalized version of the trade-off model. Overall, the generalized version of the trade-off theory provides a better explanation for the changes in capital structure relative to the pecking order theory, even in countries with higher information asymmetry.

How do noise and manipulation affect the accuracy of collective decision rules? This paper presents simulation results that measure the accuracy of ten well known collective decision rules under noise and manipulation. When noise is low these rules can be divided into accurate ("good") and inaccurate ("bad") groups. The bad rules' accuracy improves, sometimes significantly, when noise increases while the good rules' performance steadily worsens with noise. Also, when noise increases the accuracy of the good rules deteriorates at different rates. Manipulation delays the effects of noise: Accuracy improvement and deterioration due to noise emerge only at higher noise levels with manipulation than without it. In some cases at high noise levels there is only a negligible difference between the accuracy of good and bad collective decision rules. © 2009 Springer-Verlag Berlin Heidelberg.

For small open economies, an understanding of movements in the exchange rate is imperative in analyzing trade and capital flows. In addition, reliable forecasting of exchange rate volatility is important in risk-taking assessment and investment decision-making, both of which are critical to long-term growth. Using an asymmetric GARCH-type approach, this paper examines the implications of economic liberalization on the stochastic behavior of the exchange rate series in a sample of sub-Sahara African (SSA) countries over the 1970-2004 period. The results indicate that exchange rate volatility is variable, and is less volatile under fixed exchange rate regime (pre-economic liberalization) and higher under flexible regime (post-economic liberalization), that is, it is asymmetric. For most of the countries, the EGARCH and TGARCH models are robust to parameter stability and gives better forecasting performance compared to the standard GARCH model.

Emerging market stock returns have been characterized as having higher volatility than returns in the more developed markets. But previous studies give little attention to the fundamentals driving the reported levels of volatility. This paper investigates whether dynamics in key macroeconomic indicators like exchange rates, interest rates, industrial production and money supply in four Latin American countries significantly explain market returns. The MSCI world index and the U.S. 3-month T-bill yield are also included to proxy the effects of global variables. Using a six-variable vector autoregressive (VAR) model, the study finds that the global factors are consistently significant in explaining returns in all the markets. The country variables are found to impact the markets at varying significance and magnitudes. These findings may have important implications for decision-making by investors and national policymakers. © 2006 Elsevier Inc. All rights reserved.

In an attempt to predict a peak in the US economy using a classical statistical decision methodology and a Bayesian methodology and using the 1996 revised composite leading economic indicators (CLI), it is learned that the Bayesian models have generally outperformed the classical statistical ones and, among the Bayesian models, the two using two and three consecutive CLI growth rates are superior in reliability and in accuracy. These two models, however, failed to correctly predict the 2001 recession. In investigating the reasons behind their failures, we learned that: (1) if the concurrent data for the economic structure of 1983-1999 are used for the prediction, they have also been able to predict the 2001 recession correctly, but their overall reliability is not as strong as before; (2) given the overwhelming weight of the monetary policy tools in the CLI-1996 design and the combination of the economic and political events in the year 2000, the less than expected effectiveness of the monetary policy since 2001 has contributed to this failure; and (3) a possible structural change in the US economy since 2000 has also contributed to this prediction failure. © World Scientific Publishing Company.

The U.S. Department of Agriculture expects companies to disclose genetically modified (GM) ingredients in foods and beverages by January 2022. While food companies fear that the stigma of GM labels could cause GM food sales to decline, eco-labeling could lessen the impact of GM-labeling. The results of the present research indicate that neither the eco-labeling alone nor the eco-labeling accompanied by information about the environmental benefits of GM crops influence consumers’ willingness to buy. Based on the mediation analysis, however, trust of eco-labels mediates the relationship between GM foods’ environmental friendliness information and consumers’ willingness to buy eco-labeled GM food. The theoretical and practical implications of the findings are discussed. © 2020

With the continuously increasing number of new confirmed COVID-19 cases, many health experts worried about the possibility of a ‘second wave’ outbreak, which might cause more deaths and hit economies even worse. This article looks at the experiences of fighting COVID-19 from three Asia-Pacific countries and discusses whether it is a wise decision to open up America again at this time.

The paper investigates how some drivers of technology diffusion shape the volatility and irregularity of the diffusion process. It presents an agent-based simulation model of technology diffusion that includes variables to control technology generations, social pressures, market size, and network randomness. Several variable combinations are defined, technology diffusions are simulated, and the volatility and irregularity of the process are measured. The paper explores scenarios with unusually high volatility and/or irregularity in more detail. It shows that technology generations mostly affect volatility, social pressures impact irregularity, while network randomness and market size amplify the other two factors' effects. Also, the paper argues that market structure changes generated by the factor combinations in question indirectly affect diffusion volatility and irregularity and these indirect effects may explain very high levels of, and unexpected changes in the volatility and irregularity of the technology diffusion process. (C) 2016 Elsevier Inc All.rights reserved.

This study investigates the relationship between bank ownership structure, non-interest income and risk in an emerging market setting. Our analysis shows that the relationship between product diversification and bank risk is significantly influenced by asset size and ownership structure. In contrast to large banks, small banks are exposed to higher risk when the income share of non-traditional banking activities rise. We also find strong evidence of differences in risk exposure of banks to non-interest income after controlling for ownership structure. Private domestic and private foreign banks experience lower risk with higher non-interest income while the converse is true for public domestic banks. Furthermore, we show that the speed with which risk adjust to non-income activities is faster for domestic private banks than for foreign banks. These results could provide useful information to investors and regulators of banking institutions as they seek to reconcile the important issues of bank ownership structure, income diversification and size on the one hand with the level of risk exposure on the other hand. © 2016, Banking and Finance Review.

This paper examines sustainability conditions when the stock effects of renewable resources prevail, and characterizes the maximal critical level of initial pollution emissions such that Pigovian tax alone ensures sustainable growth. (C) 2016 Elsevier B.V. All rights reserved.