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Book part
Publication date: 1 July 2015

Enrique Martínez-García

The global slack hypothesis is central to the discussion of the trade-offs that monetary policy faces in an increasingly more integrated world. The workhorse New Open…

Abstract

The global slack hypothesis is central to the discussion of the trade-offs that monetary policy faces in an increasingly more integrated world. The workhorse New Open Economy Macro (NOEM) model of Martínez-García and Wynne (2010), which fleshes out this hypothesis, shows how expected future local inflation and global slack affect current local inflation. In this chapter, I propose the use of the orthogonalization method of Aoki (1981) and Fukuda (1993) on the workhorse NOEM model to further decompose local inflation into a global component and an inflation differential component. I find that the log-linearized rational expectations model of Martínez-García and Wynne (2010) can be solved with two separate subsystems to describe each of these two components of inflation.

I estimate the full NOEM model with Bayesian techniques using data for the United States and an aggregate of its 38 largest trading partners from 1980Q1 until 2011Q4. The Bayesian estimation recognizes the parameter uncertainty surrounding the model and calls on the data (inflation and output) to discipline the parameterization. My findings show that the strength of the international spillovers through trade – even in the absence of common shocks – is reflected in the response of global inflation and is incorporated into local inflation dynamics. Furthermore, I find that key features of the economy can have different impacts on global and local inflation – in particular, I show that the parameters that determine the import share and the price-elasticity of trade matter in explaining the inflation differential component but not the global component of inflation.

Details

Monetary Policy in the Context of the Financial Crisis: New Challenges and Lessons
Type: Book
ISBN: 978-1-78441-779-6

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Book part
Publication date: 22 November 2012

Enrique Martínez-García, Diego Vilán and Mark A. Wynne

Open-Economy models are central to the discussion of the trade-offs monetary policy faces in an increasingly more globalized world (e.g., Marínez-García & Wynne, 2010)…

Abstract

Open-Economy models are central to the discussion of the trade-offs monetary policy faces in an increasingly more globalized world (e.g., Marínez-García & Wynne, 2010), but bringing them to the data is not without its challenges. Controlling for misspecification bias, we trace the problem of uncertainty surrounding structural parameter estimation in the context of a fully specified New Open Economy Macro (NOEM) model partly to sample size. We suggest that standard macroeconomic time series with a coverage of less than forty years may not be informative enough for some parameters of interest to be recovered with precision. We also illustrate how uncertainty also arises from weak structural identification, irrespective of the sample size. This remains a concern for empirical research and we recommend estimation with simulated observations before using actual data as a way of detecting structural parameters that are prone to weak identification. We also recommend careful evaluation and documentation of the implementation strategy (specially in the selection of observables) as it can have significant effects on the strength of identification of key model parameters.

Details

DSGE Models in Macroeconomics: Estimation, Evaluation, and New Developments
Type: Book
ISBN: 978-1-78190-305-6

Keywords

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Book part
Publication date: 19 November 2014

Enrique Martínez-García and Mark A. Wynne

We investigate the Bayesian approach to model comparison within a two-country framework with nominal rigidities using the workhorse New Keynesian open-economy model of…

Abstract

We investigate the Bayesian approach to model comparison within a two-country framework with nominal rigidities using the workhorse New Keynesian open-economy model of Martínez-García and Wynne (2010). We discuss the trade-offs that monetary policy – characterized by a Taylor-type rule – faces in an interconnected world, with perfectly flexible exchange rates. We then use posterior model probabilities to evaluate the weight of evidence in support of such a model when estimated against more parsimonious specifications that either abstract from monetary frictions or assume autarky by means of controlled experiments that employ simulated data. We argue that Bayesian model comparison with posterior odds is sensitive to sample size and the choice of observable variables for estimation. We show that posterior model probabilities strongly penalize overfitting, which can lead us to favor a less parameterized model against the true data-generating process when the two become arbitrarily close to each other. We also illustrate that the spillovers from monetary policy across countries have an added confounding effect.

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Article
Publication date: 11 September 2009

Robert Bogue

The purpose of this paper is to provide a technical review of recent nanosensor research.

Abstract

Purpose

The purpose of this paper is to provide a technical review of recent nanosensor research.

Design/methodology/approach

This paper describes a number of nanosensor research themes and recent development activities, with an emphasis on work conducted or reported since 2006. It considers a range of emerging nanosensing technologies and two specific areas of application.

Findings

This paper shows that nanosensor technology is developing rapidly and is the subject of a global research effort. Technologies such as nano‐electromechanical system, nano‐opto‐electromechanical system, nanophotonics and the combination of nanotechnology with microtechnology offer prospects to yield sensors for a wide range of chemical, biochemical and physical variables in applications which include healthcare, defence and homeland security, environmental monitoring and light sensing and imaging.

Originality/value

This paper provides a technically detailed, up‐to‐date account of recent nanosensor research.

Details

Sensor Review, vol. 29 no. 4
Type: Research Article
ISSN: 0260-2288

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Article
Publication date: 25 January 2008

Germana Corrado

The paper aims at developing a theoretical model for de facto dollarized small open economies focusing on currency substitution and nominal wages indexation to the exchange rate.

Abstract

Purpose

The paper aims at developing a theoretical model for de facto dollarized small open economies focusing on currency substitution and nominal wages indexation to the exchange rate.

Design/methodology/approach

The analysis is performed in a general equilibrium “New Open Economy Macroeconomics” framework with nominal rigidities and imperfect competition in the nontraded good sector.

Findings

The paper finds that a dollar‐indexed economy with low degrees of payments/financial dollarization could experience higher costs in terms of exchange rate and output fluctuations when nominal shocks dominate real shocks, making stabilization programs more difficult to achieve in a rapid and less costly way.

Practical implications

The speed of adjustment of macro variables is faster in the highly dollarized economy as a response to a higher and more volatile inflation rate. A higher level of financial dollarization increases the frequency of domestic prices and wages revisions to nominal exchange rate shocks. This might explain, in turn, why nominal disturbances are shorter lived in the higher dollarized economies, and the asymmetry between financial and real dollarization

Originality/value

Contrary to the “conventional wisdom” that predicts a positive relationship between the degrees of dollarization and the exchange rate pass‐through, our model shows that the degree of dollarization and the degree of dollar indexation are not necessarily the same or even correlated.

Details

Journal of Economic Studies, vol. 35 no. 1
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 April 2004

C. Lamprecht and G.F. Nel

In the light of the acceleration in the international and local information and knowledge revolution, the University of Stellenbosch (US) has introduced an e‐learning…

Abstract

In the light of the acceleration in the international and local information and knowledge revolution, the University of Stellenbosch (US) has introduced an e‐learning strategy to gain maximum benefit from the developments in information technology. In support of this strategy, the US has implemented WebCT as an electronic course management system. Subsequent consultations have revealed doubt among accounting lecturers and students about the effectiveness of WebCT assessment of tests in Financial Accounting. The purpose of the study was therefore to investigate this perception on the basis of the available literature, our own experience, categories of student learning and feedback from students. The WebCT assessment function was also contrasted with traditional assessment methods. It was concluded that although WebCT is not a quick fix, it could be implemented successfully in bigger classes, provided that innovative lecturers are responsible for these classes.

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Article
Publication date: 12 October 2012

Yonggang Ye and Bote Chen

The purpose of this paper is to analyse the implications of exchange rate fluctuations on China's national macro‐financial stability and evaluate current renminbi (RMB…

Abstract

Purpose

The purpose of this paper is to analyse the implications of exchange rate fluctuations on China's national macro‐financial stability and evaluate current renminbi (RMB) appreciation speed and magnitude.

Design/methodology/approach

The contingent claims analysis method is used to construct the financial risk indicator and evaluate the macro‐financial risk. The paper also implemented computer simulations to generate different scenarios in the macro‐scenario analysis.

Findings

The main conclusion is that there is claims‐based currency mismatch in China's four major economic sectors. The simulation results show that faster appreciation leads to wide fluctuations on asset prices, the size of the base currency and foreign debt in China. In the current risk level, steady speed appreciation style is better than the accelerated appreciation style.

Social implications

The results of this paper imply that current appreciation speed and magnitude are favorable to control macro‐financial risks within safe status, but China needs to promote the reform of RMB exchange rate formation mechanism in the future.

Originality/value

The paper is of historical value in applying the contingent claims analysis method to analyse the implications of exchange rate fluctuations. It provides a new way to measure whether the exchange rate is reasonable.

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Book part
Publication date: 1 July 2015

Abstract

Details

Monetary Policy in the Context of the Financial Crisis: New Challenges and Lessons
Type: Book
ISBN: 978-1-78441-779-6

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Book part
Publication date: 22 November 2012

Eiji Okano, Masataka Eguchi, Hiroshi Gunji and Tomomi Miyazaki

We analyze fluctuations in inflation and the nominal exchange rate under optimal monetary policy with local currency pricing by developing two-country DSGE local currency…

Abstract

We analyze fluctuations in inflation and the nominal exchange rate under optimal monetary policy with local currency pricing by developing two-country DSGE local currency pricing and producer currency pricing models. We estimate our models using Bayesian techniques with Japanese and US data, and calculate impulse response functions. Our estimation results show that local currency pricing is strongly supported against producer currency pricing. From the estimated parameters, we show that completely stabilizing consumer price index inflation is optimal from the viewpoint of minimizing welfare costs and that completely stabilizing consumer price index inflation is consistent with completely stabilizing the nominal exchange rate.

Details

DSGE Models in Macroeconomics: Estimation, Evaluation, and New Developments
Type: Book
ISBN: 978-1-78190-305-6

Keywords

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Article
Publication date: 1 April 2000

D.S. Lubbe, E. Raubenheimer and R. Britz

The amendement of the carriculum for the so‐called four‐year LLB degree that has been presented at universities since 1998 put great pressure on faculties of law at that…

Abstract

The amendement of the carriculum for the so‐called four‐year LLB degree that has been presented at universities since 1998 put great pressure on faculties of law at that time, because they had to reflect on the curriculum for the degree over a relatively short period. Legal Accounting was one of the courses that were probably included by most universities as optional subjects in the curriculum and no longer as a compulsory subject as the situation used to be for the BProc degree. However, the admission examination for attorneys still includes an examination paper on Legal Accounting. Therefore an increasing number of students have to sit for this examination without having attended a course in Legal Accounting. In the light of this situation, two research projects were undertaken in 1997 to determine the views of attorneys and prospective attorneys on accounting training for the two groups. As three years have passed and persons with the four‐year LLB degree are entering the legal profession, it was decided to repeat the project to determine whether the views of the two groups of respondents had changed since the previous project. In this article, the views of the practising attorneys and prospective attorneys are discussed and compared with the results of the 1997 project.

Details

Meditari Accountancy Research, vol. 8 no. 1
Type: Research Article
ISSN: 1022-2529

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