A DYNAMIC FRAMEWORK FOR THE RELATIONS BETWEEN FOREIGN EXCHANGE RATES, SAVINGS AND INVESTMENTS

The Meese-Rogoff forecasting puzzle states that foreign exchange (FX) rates are unpredictable. Since one country’s macroeconomic conditions could affect the price of its national currency, we study the dynamic relations between the FX rates and some macroeconomic accounts. Our research tests whether the predictability of the FX rates could be improved through the advanced econometrics. Improving the predictability of the FX rates has important implications for various groups including investors, business entities and the government. The present thesis examines the dynamic relations between the FX rates, savings and investments for a sample of 25 countries from the Organization for Economic Cooperation and Development. We apply quarterly data of FX rates, macroeconomic indices and accounts including the savings and the investments over three decades. Through preliminary Augmented Dickey-Fuller unit root tests and Johansen cointegration tests, we found that the savings rate and the investment rate are cointegrated with the vector (1,-1). This result is consistent with many previous studies on the savings-investment relations and therefore confirms the validity of the Feldstein-Horioka puzzle. Because of the special cointegrating relation between the savings rate and investment rate, we introduce the savings-investment rate differential (SID). Investigating each country through a vector autoregression (VAR) model, we observe extremely insignificant coefficient estimates of the historical SIDs upon the present FX rates. We also report similar findings through the panel VAR approach. We thus conclude that the historical SIDs are useless in forecasting the FX rate. Nonetheless, the coefficients of the past FX rates upon the current SIDs for both the country-specific and the panel VAR models are statistically significant. Therefore, we conclude that the historical FX rates can conversely predict the SID to some degree. Specifically, depreciation in the domestic currency would cause the increase in the SID.

Manufacturing 'authenticity' : a case study of the Niagara wine cluster

In this thesis, I use "Fabricating Authenticity," a model developed in the Production of Culture Perspective, to explore the evolving criteria for judging what constitute "real" and authentic Niagara wines, along with the naturalization of these criteria, as the Canadian Niagara wine cluster has come under increasing stress from globalization. Authenticity has been identified as a hallmark of contemporary marketing and important to cultural industries, which can use it for creating meaningful differentiation; making it a renewable resource for securing consumers, increasing market value; and for relationships with key brokers. This is important as free trade and international treaties are making traditional protective barriers, like trade tariffs and markups, obsolete and as governments increasingly allocate industry support via promotion and marketing policies that are directly linked to objectives of city and regional development, which in turn carry real implications for what gets to be judged authentic and inauthentic local culture. This research uses a mixed methods research strategy, drawing upon ethnographic observation, marketing materials, newspaper reports, and secondary data to provide insight into the processes and conflicts over efforts to fabricate authenticity, comparing the periods before and after the passage of NAFT A to the present period. The Niagara wine cluster is a good case in point because it has little natural advantage nor was there a tradition of quality table wine making to facilitate the naturalization of authenticity. Geographic industrial clusters have been found particularly competitive in the global economy and the exploratory case study contributes to our understanding of the dynamic of '1abricating authenticity," building on various theoretical propositions to attempt to derive explanations of how global processes affect strategies to create "authenticity," how these strategies affect cultural homogeneity and heterogeneity at the local level, and how the concept of "cluster" contributes to the process of managing authenticity.