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The purpose of this paper is to provide an extensive review of the monetary model of exchange rate determination which is the main theoretical framework on analyzing…
The purpose of this paper is to provide an extensive review of the monetary model of exchange rate determination which is the main theoretical framework on analyzing exchange rate behavior over the last 40 years. Furthermore, we test the flexible price monetarist variant and the sticky price Keynesian variant of the monetary model. We conduct our analysis employing a sample of 14 advanced economies using annual data spanning the period 1880–2012.
The theoretical background of the paper relies on the monetary model to the exchange rate determination. We provide a thorough econometric analysis using a battery of unit root and cointegration testing techniques. We test the price-flexible monetarist version and the sticky-price version of the model using annual data from 1880 to 2012 for a group of industrialized countries.
We provide strong evidence of the existence of a nonlinear relationship between exchange rates and fundamentals. Therefore, we model the time-varying nature of this relationship by allowing for Markov regime switches for the exchange rate regimes. Modeling exchange rates within this context can be motivated by the fact that the change in regime should be considered as a random event and not predictable. These results show that linearity is rejected in favor of an MS-VECM specification which forms statistically an adequate representation of the data. Two regimes are implied by the model; the one of the estimated regimes describes the monetary model whereas the other matches in most cases the constant coefficient model with wrong signs. Furthermore it is shown that depending on the nominal exchange rate regime in operation, the adjustment to the long run implied by the monetary model of the exchange rate determination came either from the exchange rate or from the monetary fundamentals. Moreover, based on a Regime Classification Measure, we showed that our chosen Markov-switching specification performed well in distinguishing between the two regimes for all cases. Finally, it is shown that fundamentals are not only significant within each regime but are also significant for the switches between the two regimes.
The results are of interest to practitioners and policy makers since understanding the evolution and determination of exchange rates is of crucial importance. Furthermore, our results are linked to forecasting performance of exchange rate models.
The present analysis extends previous analyses on exchange rate determination and it provides further support in favor of the monetary model as a long-run framework to understand the evolution of exchange rates.
The importance of the adverse impacts of network degradation has stimulated substantial international research interest in transport network reliability, that is, the…
The importance of the adverse impacts of network degradation has stimulated substantial international research interest in transport network reliability, that is, the ability of degraded transport networks to cope with travel demand. Most of the recent research effort has focused on the reliability of urban passenger transport networks, in terms of the probability that the network will deliver a required standard of performance. This situation is characterised by high levels of congestion, a dense road network, and quantifiable probability of degradation of the network. Outside major urban centres, the situation is very different. The main dominant consideration in transport network infrastructure provision is accessibility - linking urban centres, providing regional coverage, and basic levels of accessibility for the non-urban community and economy. The network is sparse, congestion is not a significant issue, and access to essential community services and to markets is the major driving force underlying network development. In this context, the vulnerability of the network is perhaps more important than ‘reliability’. This paper develops the concept of network vulnerability. It begins by reviewing the current state of research into network reliability, then proposes extensions and adaptations to the reliability concepts that are more appropriate for strategic-level multi-modal transport systems. Several alternative definitions for vulnerability are proposed. The paper also discusses the development of algorithmic and visualisation tools that may be used to identify specific ‘weak spots’ in a network, where failure of some part of the transport infrastructure would have the most serious effects on access to specific locations and on overall system performance. Finally, the paper describes potential applications of network vulnerability concepts, and proposes directions for further research.
The author argues that we must stop and take a look at what our insistence on human labour as the basis of our society is doing to us, and begin to search for possible alternatives. We need the vision and the courage to aim for the highest level of technology attainable for the widest possible use in both industry and services. We need financial arrangements that will encourage people to invent themselves out of work. Our goal, the article argues, must be the reduction of human labour to the greatest extent possible, to free people for more enjoyable, creative, human activities.
We test the determinacy properties of the standard and financial-sector-augmented Taylor rules in a new Keynesian model with a presence of banking activities. We extend…
We test the determinacy properties of the standard and financial-sector-augmented Taylor rules in a new Keynesian model with a presence of banking activities. We extend the basic fully rational environment to the setting with heterogeneous expectations. We observe that the benefits from extra financial targeting are limited. Financial targeting, if well designed, can compensate for the improper output-gap targeting through the financial-production channel. The analysis demonstrates however possible threats resulting from the misspecification of the augmented rule. A determinate mix of output-gap and inflation weights can turn indeterminate if compensated by too extreme financial targeting. The results are robust to the presence of heterogeneous expectations.
De‐institutionalisation and resettlement have had a significant impact on offenders with learning disabilities (LD) who are now more visible in the wider community than…
De‐institutionalisation and resettlement have had a significant impact on offenders with learning disabilities (LD) who are now more visible in the wider community than before. Perhaps because of the challenges presented by people who were previously contained in institutions, there has been a growth of interest in their characteristics, the services and clinical interventions required to support them.This narrative review presents and discusses recent developments concerning offenders with LD. It looks at the historical association between crime and low intelligence, and then examines the evidence concerning the prevalence of offending by people with LD and recidivism rates. Recent research concerning service pathways for this population is summarised and progress in the development of actuarial, dynamic and clinical assessments of the future risk of offending is outlined.The second half of the paper focuses on a review of the evidence for and recent developments in the treatment of offending behaviour (anger/aggression, sexual offending and fire‐setting), utilising broadly cognitive behaviourally‐based approaches. Finally, future directions for research and practice innovation are proposed.