Less of a Puzzle: a new look at the forward forex market

The two-country monetary model is extended to include a consumption externality with habit persistence. The model is simulated using the artificial economy methodology. The 'puzzles' in the forward market are re-examined. The model is able to account for: (a) the low volatility of the forward discount; (b) the higher volatility of expected forward speculative profit; (c) the even higher volatility of the spot return; (d) the persistence in the forward discount; (e) the martingale behavior of spot exchange rates; and (f) the negative covariance between the expected spot return and expected forward speculative profit. It is unable to account for the forward market bias because the volatility of the expected spot return is too large relative to the volatility of the expected forward speculative profit.

The visual processing of motion-defined transparency

Our understanding of how the visual system processes motion transparency, the phenomenon by which multiple directions of motion are perceived to co-exist in the same spatial region, has grown considerably in the past decade. There is compelling evidence that the process is driven by global-motion mechanisms. Consequently, although transparently moving surfaces are readily segmented over an extended space, the visual system cannot separate two motion signals that co-exist in the same local region. A related issue is whether the visual system can detect transparently moving surfaces simultaneously, or whether the component signals encounter a serial â??bottleneckâ?? during their processing? Our initial results show that, at sufficiently short stimulus durations, observers cannot accurately detect two superimposed directions; yet they have no difficulty in detecting one pattern direction in noise, supporting the serial-bottleneck scenario. However, in a second experiment, the difference in performance between the two tasks disappears when the component patterns are segregated. This discrepancy between the processing of transparent and non-overlapping patterns may be a consequence of suppressed activity of global-motion mechanisms when the transparent surfaces are presented in the same depth plane. To test this explanation, we repeated our initial experiment while separating the motion components in depth. The marked improvement in performance leads us to conclude that transparent motion signals are represented simultaneously.

Transmission loss allocation in a deregulated electrical energy market

This paper presents a new method for transmission loss allocation in a deregulated electrical power market. The proposed method is based on physical flow through transmission lines. The contributions of individual loads to the line flows are used as basis for allocating transmission losses to different loads. With minimum assumptions, that sound to be reasonable and cannot be rejected, a novel loss allocation formula is derived. The assumptions made are: a number of currents sharing a transmission line distribute themselves over the cross section in the same manner; that distribution causes the minimum possible power loss. Application of the proposed method is straightforward. It requires only a solved power flow and any simple algorithm for power flow tracing. Both active and reactive powers are considered in the loss allocation procedure. Results of application show the accuracy of the proposed method compared with the commonly used procedures.

The impact of equity markets and corporate governance on labour market flexibility

Drawing from various literatures, this article explores links between equity markets and labour market flexibility. Various data sources are used to test relationships for a set of OECD countries, controlling for other likely influences on flexibility such as government and industrial relations institutions. The results are generally supportive as regards employment flexibility: equity market trading activity is associated with shorter job tenure, higher activity rates, and greater employment change over the cycle. However, the relationship between equity markets and pay flexibility is less statistically robust to the addition of controls.