Real interest rates, inflation and the open economy : a regime-switching perspective on Australia and New Zealand

We investigate the time-series properties of Australian and New Zealand real interest rates within a Markov-switching framework. This enables us to identify characteristics in real interest rate behavior hitherto unacknowledged. We find that rates switch between alternative stationary regimes characterized by differing means, speeds of mean-reversion and volatility. For New Zealand, high rates of inflation increase the probability of remaining in a regime characterized by a faster speed of adjustment. Further application of this methodology considers the real interest rate differential between Australia and New Zealand and points to differing regimes based on volatility rather than persistence.

Credit cycle dependent spread determinants in emerging sovereign debt markets

We address credit cycle dependent sovereign credit risk determinants. In our model, the spread determinants' magnitude is conditional on an unobservable endogenous sovereign credit cycle as represented by the underlying state of a Markov regime switching process. Our explanatory variables are motivated in the tradition of structural credit risk models and include changes in asset prices, interest rates, implied market volatility, gold price changes and foreign exchange rates. We examine daily frequency variations of U.S. dollar denominated Eurobond credit spreads of four major Latin American sovereign bond issuers (Brazil, Colombia, Mexico and Venezuela) with liquid bond markets during March 2000 to June 2011. We find that spread determinants are statistically significant and consistent with theory, while their magnitude remarkably varies with the state of the credit cycle. Crisis states are characterized by high spread change uncertainty and high sensitivities with respect to the spread change determinants. We further document that not only changes of local currencies, but also changes of the Euro with respect to the U.S. dollar are significant spread drivers and argue that this is consistent with the sovereigns' ability to pay.

Switching on the chronometer of history : communism, postcommunism and heritage

The destruction of monuments accompanying the fall of Communism ignited debates about preservation of manifestations of a hated regime. While heritage professionals called for their preservation as ‘historical documents’, many monuments were destroyed or removed. Yampolsky sees anti-Communist iconoclasm as a rejection of the totalitarianism of time embodied in Communist monuments. These ‘intentional monuments’ were intended to ‘negate the march of time and oppose to it the permanence of human action’. They demonstrated the alleged end of history in a classless utopia.

Iconoclastic acts against these monuments involved the crossing of ‘the invisible boundaries of the sacral zone surrounding monuments, switching on the chronometer of history’. In doing so, iconoclasts provide the conditions for reassertion of heritage practices: heritage requires a sense of the flow of time, a difference between past, present and future.

Having restarted the chronometer of history, a society is forced to assess where it stands in relation to its past. Will it continue on a path of ‘wilful forgetting’, or seek to confront the past? The danger of wilful forgetting is the creation of nostalgia. Alternatively, preservation of places of memory helps processing of the past required for movement into the future. ‘One need only consider the way in which Berliners tore down the hated Berlin Wall in the aftermath of 1989’, Fulbrook writes, ‘to understand the desire to rid the landscape of a hated excrescence, a symbol of a rejected political past. But…for those who come after, the effort of historical imagination is all the greater for lack of a topography of experience’.

Heritage preservation can produce a ‘topography of experience’, through which the experience of Communism is examined. Reassertion of a humanistic historical time through heritage practices reveals the arrogant futility of utopian projects seeking to bring history to an end.

Regime dependent causality : equity and credit markets

We apply a Markov switching model to investigate the possibility of an asymmetric causal relationship between the volatility process inferred from the iTraxx CDS options market and the implied volatility from the stock index options market. We find strong evidence that the stock market leads the CDS market and the effect of the implied stock market volatility is more significant during the volatile regime. We also find that a large jump in the stock return, up or down, may indeed be followed by a regime shift.

Introducing personal liability under the continuous disclosure regime : The essentials and non-essentials

Under the Federal Government's CLERP 9 legislation, expected at the time of writing to come into force in July 2004, personal liability will be introduced for the first time under the continuous disclosure regime. Individuals who are 'involved' in a failure to immediately disclose materially price sensitive information to the market will be subject to a civil penalty, in addition to the company being liable. According to the author, the introduction of personal liability per se is not contentious and indeed is a favourable change; what is questionable, however, is whether 'involvement' in a contravention is the appropriate test for imposing personal liability in relation to breaches of the continuous disclosure provisions. Based on the case law to date on the meaning of 'involved', there is particular uncertainty as to whether an individual would need to have actual knowledge that non-disclosed information is 'materially price sensitive' in order to satisfy the test of 'involved' in the context of continuous disclosure, or whether mere knowledge that the information has not been disclosed would be sufficient. This uncertainty arises due to the vague concept of 'essential matters' which the courts have developed as a test for what degree of knowledge a person needs to have in order to be 'involved'. The author argues that all the confusion as to what 'involved' means could be addressed by removing the word 'essential' from the dialogue, so that the test of 'involvement' would simply be based on whether the particular person had actual knowledge of each of the factual elements constituting the offence.

Hydrological regime and macrophyte assemblages in temporary floodplain wetlands: implications for detecting responses to environmental water allocations

This study describes the macrophyte assemblages of temporary floodplain wetlands situated on the floodplain of the Murray River, southeast Australia. Wetlands in the study are subject to flooding, the frequency, duration, and magnitude of which are dictated by the current, regulated river-flow regime. Our aim was to examine the influence of the existing flooding regime on macrophyte assemblages and to trial a monitoring program, based on a multiple before-after-control-impact (MBACI) design, to detect the impact of proposed environmental water allocations (EWAs) on the wetlands. Two categories of flooding regime were identified based on the flow magnitudes required for flooding to occur (flooding thresholds). In this scheme, wetlands with relatively low flooding thresholds are classed as ‘impact’ and those with higher thresholds are classed as ‘control.’ The wetlands were surveyed over a two-year period that incorporated at least one wetting-drying cycle at all wetlands. Results showed significant differences between survey times (season and year), but differences between flooding regime categories were significant only for some components of macrophyte assemblages. Differences between survey dates appear to reflect largely short-term responses to the most recent flood events. However, macrophyte differences observed between control and impact wetlands reflected the cumulative effect of flood events over several years. Differences between control and impact wetlands were strongest for post-flooding surveys based on full assemblages (using ANOSIM) and among specific taxa and functional groups (using ANOVA). Power to detect differences between control and impact wetlands was greatest for species richness and total abundance, but taxa with low variability among wetlands, and hence good power, were actually less sensitive to hydrologic change. We conclude that the MBACI design used in this study will be most effective in detecting wetland ecosystem responses to the implementation of EWAs if response variables are carefully chosen based on their sensitivity to hydrologic change.

Reducing consumer switching intentions following service failure : do empowerment and apology help?

This research explores the effectiveness of apology and empowerment as service recovery actions and their impact on consumers switching intentions within the hospitality industry. It also examines two different types of failure - process failure and outcome and whether consumer-switching intentions vary based on failure type. Results suggest that apology is effective in reducing switching intentions in both types of failure. Employee empowerment reduces switching intentions in outcome failure situations, but increases switching intentions in process settings. There is also an interaction effect of apology and empowerment in the outcome failure setting, but not in the process failure setting. Recommendations for managing service recovery are provided.

Role of organizational service recovery actions on sustomer switching intentions in a process based service failure : does speed of recovery matters?

The study examines how organizational activities of compensation and empowerment impact on consumers switching intentions and also whether these differ based on the speed of service recovery. Data is collected using hypothetical scenarios in a situation of process failure. It is found that there is no direct effect of either compensation or empowerment on switching intent, although the interaction effect is significant when recovery occurs quickly.

The evolution of the temporary protection visa regime in Australia

While the Temporary Protection Visa (TPV) regime was formally introduced in October 1999 by the Howard Government, the concept of temporary protection was not totally alien to the Australian humanitarian landscape. Earlier examples reflected a standard use of temporary protection as a complementary or interim protection mechanism, offering short-term group-based protection where individual assessment under the 1951 Convention was both impractical and untimely. This paper focuses on the wider and more controversial changes in the use of temporary protection mechanisms that were to follow with the introduction of the TPV in 1999, which offered substitute protection for individually assessed Convention refugees who had arrived onshore without valid travel documents. It examines the history and evolution of the TPV policy regime from 1999 to the announcement of its abolition in 2008, arguing that the introduction and subsequent development of the policy may be understood as a product of a conservative, exclusionist political climate in Australia, following the unprecedented impact of the populist One Nation party in 1998, and later, the impact of September 11th. It also examines later amendments to the regime as a response to growing domestic disquiet about the impacts of the policy, and the abolition of the TPV policy under a new Australian government elected in late 2007.