John Malindretos

Does exchange-rate volatility depress export flows: The case of LDCs

In the area of international trade, few studies have examined whether increases in exchange-rate volatility depress trade flows of LDCs. The aim of this paper is to investigate empirically the impact of exchange-rate volatility on the export flows of 10 developing countries over the quarterly period 1973–98. The econometric analysis exploits the theory of cointegration, given the obvious nonstationarity of the data. Estimates of the cointegrating relations are obtained using Johansens multivariate procedure. Evidence of stability of the cointegrating space is examined using Hansens [1992a] tests. Short-run dynamic modelling is accomplished using the error-correction technique, and the stability test results are obtained using Hansen [1992b] tests. In conformity with theoretical considerations, the results indicate that increases in the exchange-rate volatility exert a significant negative effect upon export demand in both the short-run and the long-run in most of the countries studied. These effects may result in significant reallocation of resources by market participants.

Structural breaks, cointegration, and speed of adjustment Evidence from 12 LDCs money demand

Abstract This article estimates a theoretically coherent and empirically robust money demand function for 12 developing countries. The modeling procedure not only tests for a regime shift in the cointegrating equation, but also in the error correction model. Five specific hypotheses are examined. The article demonstrates that a long-run equilibrium relationship exists between real M1 or M2 balances, real income, inflation, exchange rate, foreign exchange risk, and foreign interest rates in the countries studied. The study provides information on the speed of adjustment to equilibrium and the median and mean time lags for adjustment of real money balances to changes in each determinant. Although our results provide more evidence against M1 than M2, this study clearly establishes that both M1 and M2 must be considered as viable policy tools for less developed countries.

Monetary dynamics, exchange rates and parameter instability: an empirical investigation

This paper examines the existence and stability of both the long‐ and short‐run demand for narrow and broad money balances. The data for Singapore are used as a case study. The quarterly period examined is 1973:2‐1999:3 (105 observations). The study reveals the existence of a systematic long‐run relationship among real money balances, real income, interest rate and exchange rate. Results from testing the hypothesis of a unitary price elasticity confirm that only the broad money aggregate could be used as intermediate target of monetary policy. Using a formal test of parameter constancy designed specifically for cointegrating vectors, it is shown that nonstationarity and time invariance in the demand for money can be resolved by the inclusion of the exchange rate.

Long- and Short-Term Interest Rates in 19 Countries: Tests of Cointegration and Parameter Instability

This paper examines the long-run relationship between short-term and long-term interest rates (both nominal and real) in 19 countries, and explores the possibility that the relationship is statistically stable using Lc, MeanF, and SupF statistics suggested by Hansen [1992]. Empirical results obtained from various cointegration techniques (Johansen, Phillips and Hansen, Stock and Watson, and Park) and quarterly data (1973–1998) show considerable support for the expectations hypothesis in all countries (except the United Kingdom). In a majority of cases, it is also found that a stable relationship exists between the short-term and long-term interest rates.

Are Daily Stock Price Indices in the Major European Equity Markets Cointegrated? Tests and Evidence

This study investigates short-run and long-run linkages among major West European equity markets in London (FTSE100), Frankfurt (DAX30), and Paris (CAC40). Long-run market co-movements of the three price indices are detected employing cointegration and vector error correction methodology. Empirical results of this study support the presence of one cointegrating vector and two common trends. CAC index is found to be weakly exogenous. The short-run dynamics indicate short-run causal links running both ways between FTSE and DAX.

Foreign exchange reserves and import demand in a developing economy: the case of Pakistan

Conventional specifications of import demand in LDCs have commonly been plagued by implausible and unstable parameter estimates. This paper shows the importance of imposing long‐run income homogeneity and of including foreign exchange reserves when estimating import demand function for an LDC. Using several cointegration techniques, it is shown that there is one linear relationship among real imports, real income, relative import prices and real foreign exchange reserves. In addition, by employing stability tests for cointegrated systems by Hansen (1992a), the paper shows that only when foreign exchange reserves and long‐run unit‐income homogeneity are accounted for does a constant parameter, long‐run equilibrium relation emerge for Pakistan. Also, the ensuing short‐run dynamic model is constant and data‐coherent. Finally, the study provides information on the speed of adjustment to equilibrium and the median and mean time lags of adjustments of real imports to changes in their determinants. The results indicate a quick response of real imports to changes in their determinants.

Effects of exchange-rate variability on inflation variability: some additional evidence

This study re-examines the hypothesis that exchange-rate variability is another factor contributing to inflation variability. The analysis uses cross-country data for 41 countries over the current floating exchange-rate era. It employs the instrumental variable estimator, Emerys (1993) specification suggestions, centering of data technique and a longer and more recent sample period (1973Q1-1990Q4). The empirical evidence supports the above hypothesis and strengthens the case for stable exchange-rate policies.

The Gini Coefficient: An Application to Greece

The Gini coefficient is a measure of income inequality. In this study we show that it needs to be adjusted to be a correct measure of income inequality. The result is that decomposition is possible even without the interaction effect. The requirement however, is that there are data on individual incomes. Secondly, the approach is applied to Greece. Third, there is the last section indicating extensions.

A Comparison of the Current Account and the Monetary Theories of Exchange Rate Determination

In this study, we develop a way to test for the two theories, the Monetary and the current account, in explaining exchange rate determination. The approach we develop has two components to it. The first is a test of the appropriate signs. That is, the two theories disagree on the signs of the determining variables. Thus, depending on the sign of the regressors, we can prove the one, or the other. The second sub test is one which has to do with the speed of adjustment. Specifically, importance should be depicted in a quicker speed of adjustment. On that issue, if real(monetary) variables adjust faster, then it supports the traditional (monetary) view.

The Reasons and Evaluations of Mergers and Acquisitions

This paper looks at mergers and acquisitions of companies. Specifically, the paper reviews the backdrop of mergers and takeovers, their history, types and reasons, prospects of productivity, synergy, growth, reduction of risk, and associated challenges. The analysis is conducted in the light of mergers and acquisitions in Europe and the United States, which are hotbeds of M&A activities. Through the selected cases, different pre- and post-merger situations are carefully analyzed. The findings are presented in both quantitative and qualitative forms, and the discussion elucidates the findings in light of existing literature on mergers and acquisitions. The paper concludes with solutions to some of the key challenges that mergers and acquisitions face. This exposition contains both text and graphical information and representation of information regarding mergers and acquisition and it provides succinct but relevant analysis of mergers in the 21 st century.