The Euro as an International Currency: explaining puzzling first evidence from the foreign exchange markets

This paper presents evidence that the bid-ask spreads in euro rates increased relative to the corresponding bid-ask spreads in the German mark (DM) prior to the creation of the currency union. This comes with a decrease in transaction volume in the euro rates relative to the previous DM rates. The starkest example is the DM(euro)/yen rate in which the spread has risen by almost two-thirds while the volume decreased by more than one third. This outcome is surprising because the common currency concentrated market liquidity in fewer external euro rates and higher volume tends to be associated with lower spreads. We propose a microstructure explanation based on a change in the information environment of the FX market. The elimination of many cross currency pairs increased the market transparency for order flow imbalances in the dealership market. It is argued that higher market transparency adversely affects the inventory risk sharing efficiency of the dealership market and induces the observed euro spread increase and transaction volume shortfall.

Endogenous Two-Sided Markets with Repeated Transactions

We consider homogeneous two-sided markets, in which connected buyer-seller pairs bargain and trade repeatedly. In this infinite market game with exogenous matching probabilities and a common discount factor, we prove the existence of equilibria in stationary strategies. The equilibrium payoffs are given implicitly as a solution to a system of linear equations. Then, we endogenize the matching mechanism in a link formation stage that precedes the market game. When agents are sufficiently patient and link costs are low, we provide an algorithm to construct minimally connected networks that are pairwise stable with respect to the expected payoffs in the trading stage. The constructed networks are essentially efficient and consist of components with a constant buyer-seller ratio. The latter ratio increases (decreases) for a buyer (seller) that deletes one of her links in a pairwise stable component.

Identification and bisection of temporal durations and tone frequencies: Common models for temporal and non-temporal stimuli.

Two experiments examined identification and bisection of tones varying in temporal duration (Experiment 1) or frequency (Experiment 2). Absolute identification of both durations and frequencies was influenced by prior stimuli and by stimulus distribution. Stimulus distribution influenced bisection for both stimulus types consistently, with more positively skewed distributions producing lower bisection points. The effect of distribution was greater when the ratio of the largest to smallest stimulus magnitude was greater. A simple mathematical model, temporal range frequency theory, was applied. It is concluded that (a) similar principles describe identification of temporal durations and other stimulus dimensions and (b) temporal bisection point shifts can be understood in terms of psychophysical principles independently developed in nontemporal domains, such as A. Parducci's (1965) range frequency theory.

Laboratory trials on the effects of different diets on growth and survival of the common whelk, Buccinum undatum L. 1758, as a candidate species for aquaculture.

Newly hatched juvenile Buccinum undatum can be reared under laboratory conditions. Good was growth is achieved when juveniles were fed on combined diets (blue mussel, cod, and fish pellets). Juveniles reached shell heights of 33.0 ± 4.2 mm, 26.9 ± 3.8 ± mm, 23.2 ± 2.2 mm, and 20.1 ± 1.6 mm, after 14 months of fedding on a combined diet, blue mussel, cod, and fish pellets, respectively under ambient sea temperature and salinity. After 14 months juveniles fed blue mussel had the highest survival rates (67%) followed by those fed a combination of all other experimental diets (61%), cod waste (53%) and fish-feed pellets (46%). High mortalities were recorded in most treatments during the summer months between June and September. This species appears to have an aquaculture potential, as juveniles readily feed on artificial diets at an early age, show high survival rates and could potentially reach market size in 2 years or less. The major constraint in realising this potential at present, is the relatively low value of the species; if market values increased as a result of serious depletion of natural populations, hatchery production of juveniles for intensive aquaculture or restocking could become economically viable.