Equity Markets, the Money Market, and Long-Run Monetary Neutrality

This paper outlines a process for teaching long-run neutrality of money, drawing an analogy between equity markets and the money market. The key points in the discussion include the following: (1) What is the price of money? (2) Why does the long-run demand for money trace out a rectangular hyperbola? (3) Why does the slow adjustment of goods and service prices to changes in the stock of money lead to a different short-run demand for money? and (4) Why does a successful currency reform generate similar short-run movements in the price of money as movements in equity share prices after a change in the supply of shares? I have used this approach successfully for over 30 years at all levels, wherever I need to discuss the money market in a macroeconomic model.

Changes in the foreign trade structure of the Russian Far East under the process of transition toward a market economy

Under the process of transition toward a market economy, the economic connections of the Russian Far East (RFE) with external regions changed from a division of labor among the regions of the USSR (Russia) to an international division of labor. This happened due to factors including the liberalization of the trade system away from a state monopoly, the presence of rich natural resources and of developed industries related to these resources, the advantage of geographically proximity to Asia-Pacific countries, and the political and economic division of the once unified national economic space during the process of transition. The economic connections of RFE with external economies changed radically under the transition toward the market economy. First, the value of foreign trade increased dramatically and the importance of foreign trade for the RFE economy increased enormously. Second, however, different territories of RFE traveled along different trajectories, due to factors involving their industrial structure and geographical conditions. Third, in recent years connections with China, in the areas of both exports and imports, have grown. Fourth, the share within exports of "fuel, mineral resources and metal" increased radically from the end of the 1990s, and the share of "machine, facilities and transportation means" increased from 2002 year within imports. Under this situation, especially since 2002, there has been a major change in the structure of foreign trade.

Exposure to Chinese imports andlocal labor market outcomes. An Analysis for Spanish provinces

In the period 1999-2007 Spanish imports from China multiplied by six, making that Asian country the fourth largest supplier to the Spanish economy. In this paper, we analyse whether this massive increase in imports impacted on the labour markets of Spanish provinces to differing degrees, due to differences in their initial productive specialization. Our results show that Spanish provinces with a higher exposure to Chinese imports experienced larger drops in manufacturing employment as a share of the working-age population. However, this reduction was compensated for by increases in non-manufacturing employment.

Electricity without borders: a plan to make the internal market work. Bruegel Blueprint Series 20, 5 September 2013

The most straightforward European single energy market design would entail a European system operator regulated by a single European regulator. This would ensure the predictable development of rules for the entire EU, significantly reducing regulatory uncertainty for electricity sector investments. But such a first-best market design is unlikely to be politically realistic in the European context for three reasons. First, the necessary changes compared to the current situation are substantial and would produce significant redistributive effects. Second, a European solution would deprive member states of the ability to manage their energy systems nationally. And third, a single European solution might fall short of being well-tailored to consumers’ preferences, which differ substantially across the EU. To nevertheless reap significant benefits from an integrated European electricity market, we propose the following blueprint: First, we suggest adding a European system-management layer to complement national operation centres and help them to better exchange information about the status of the system, expected changes and planned modifications. The ultimate aim should be to transfer the day-to-day responsibility for the safe and economic operation of the system to the European control centre. To further increase efficiency, electricity prices should be allowed to differ between all network points between and within countries. This would enable throughput of electricity through national and international lines to be safely increased without any major investments in infrastructure. Second, to ensure the consistency of national network plans and to ensure that they contribute to providing the infrastructure for a functioning single market, the role of the European ten year network development plan (TYNDP) needs to be upgraded by obliging national regulators to only approve projects planned at European level unless they can prove that deviations are beneficial. This boosted role of the TYNDP would need to be underpinned by resolving the issues of conflicting interests and information asymmetry. Therefore, the network planning process should be opened to all affected stakeholders (generators, network owners and operators, consumers, residents and others) and enable the European Agency for the Cooperation of Energy Regulators (ACER) to act as a welfare-maximising referee. An ultimate political decision by the European Parliament on the entire plan will open a negotiation process around selecting alternatives and agreeing compensation. This ensures that all stakeholders have an interest in guaranteeing a certain degree of balance of interest in the earlier stages. In fact, transparent planning, early stakeholder involvement and democratic legitimisation are well suited for minimising as much as possible local opposition to new lines. Third, sharing the cost of network investments in Europe is a critical issue. One reason is that so far even the most sophisticated models have been unable to identify the individual long-term net benefit in an uncertain environment. A workable compromise to finance new network investments would consist of three components: (i) all easily attributable cost should be levied on the responsible party; (ii) all network users that sit at nodes that are expected to receive more imports through a line extension should be obliged to pay a share of the line extension cost through their network charges; (iii) the rest of the cost is socialised to all consumers. Such a cost-distribution scheme will involve some intra-European redistribution from the well-developed countries (infrastructure-wise) to those that are catching up. However, such a scheme would perform this redistribution in a much more efficient way than the Connecting Europe Facility’s ad-hoc disbursements to politically chosen projects, because it would provide the infrastructure that is really needed.

Rural Labour Market Developments in the Former Yugoslav Republic of Macedonia. Factor Markets Working Paper No. 5, September 2011

The significant changes in the quantitative and qualitative characteristics of human resources in rural Macedonia can be explained by the continued trend of emigration from villages to urban areas and abroad. The intensity of emigration has altered the demographic structure and reproductive base of the rural population, along with the income of rural households. The rural and agricultural labour market faces a mismatch with respect to the unfavourable age, education and spatial distribution of the total labour force. A reduction in the participation of women in the agricultural labour force is a new feature. The overall transformation is apparent in the income structure of rural households. An increase in the share of households with mixed income sources notably stems from households that receive remittances and foreign currency funds from family members abroad. The demographic revitalisation of rural areas depends on economic revitalisation, with a more rational use of the labour force and human resources, as well as a restructuring of agricultural production and agricultural holdings. In addition, improvements are necessary in the functioning of market institutions to better meet the needs of smaller farmers and the rural economy.

Developments in the Agricultural and Rural Capital Market of the Former Yugoslav Republic of Macedonia. Factor Markets Working Paper No. 9, October 2011

The undeveloped rural capital market in the Former Yugoslav Republic of Macedonia is constrained by an urban–rural development gap, with limited capacities for rural development and imperfections in the rural capital market. Among the most striking hindrances are the illegal status of a large share of agricultural buildings and other real estate in rural areas, particularly on the individual family farms that prevail in the country, and the insufficient knowledge and abilities of individual farmers in applying for credit. National, EU and other donor funds are being used to improve knowledge, skills and other human resources, and to address the illegal status of buildings and facilities. In recent years, government support for agricultural, rural and regional development has been introduced to promote good agricultural practices, production and economic activity in rural areas. The elimination of imperfections and improvements to the functioning of the capital market – making access to credit and funds easier, especially for small-scale family farms and for rural development – are seen as measures contributing to agriculture and more balanced rural and regional development.

Falling Labor Share and Rising Unemployment: Long-Run Consequences of Institutional Shocks? CES Germany & Europe Working Papers, No. 00.2, 1999

The literature on unemployment has mostly focused on labor market issues while the impact of capital foonation is largely neglected Job-creation is often thought to be a matter of encouraging more employment on a given capital stock. In contrast, this paper explicitly deals with the long-run consequences of institutional shocks on capital foonation and employment. It is shown that the usual trade off between employment and wages disappears in the long run. In line with an appropriation model, the estimated values for the long-run elasticities of substitution between capital and labor for Germany and France are substantially greater than one.

The Digital Market for Local Services: A one-night stand for workers? An example from the on-demand economy. CEPS Special Report, No. 133/April 2016

This case study provides a snapshot of the dynamics in the digital market for locally provided personal services. Based on a case study for a Belgium platform with 14,113 identified workers and 9,459 posted tasks, the findings suggest that the current intermediation is inefficient. Only a limited share of the tasks posted on the platform are being completed, whereas the characteristics of the not-completed tasks are fairly limited. Moreover, just a small share of the workers participating in the platform is actually performing the completed tasks. Their average earnings per hour are in most cases above the minimum wage and even above the median wage in the offline market. At the present time, however, the limited earnings for individual workers prevent this mode of working from becoming an alternative to a conventional job. In addition to the standard determinants of workers’ earnings (e.g. gender, age, occupation, etc.), the characteristics and evaluation mechanism of the platform have a large influence on the distribution of tasks and earnings.

'Seeing the market': Technical analysis in trading styles

Whilst financial markets are not strangers to academic and professional scrutiny, they still remain epistemologically contested. For individuals trying to profit by trading shares, this uncertainty is manifested in the varying trading styles which they are able to utilize. This paper examines one trading style commonly used by non-professional share traders-technical analysis. Using research data obtained from individuals who identify themselves as technical analysts, this paper seeks to explain the ways in which individuals understand and use the technique in an attempt to make trading profits. In particular, four distinct subcategories or ideal types of technical analysis can be identified, each providing an alternative perceptual form for participating in financial markets. Each of these types relies upon a particular method for seeing the market, these visualization techniques highlighting the existence of forms of professional vision (as originally identified by Goodwin (1994)) in the way the trading styles are comprehended and acted upon.

Stock repurchases and treasury share sales: Do they stabilize price and enhance liquidity?

The article studies the impact of a firm’s trading in its own shares on the volatility and market liquidity of the firm’s stock in the Italian stock market. In the study, both stock repurchases and treasury share sales executed on the open market are defined as trading in own shares. The study finds that Italian firms can reduce the volatility of their stock and boost market liquidity by trading their own shares.

Stock market efficiency, the small firm effect and cointegration

The cointegration methodology commonly used for testing the efficiency of the foreign exchange market is applied to a sample of UK share prices. Specifically we test for static market efficiency in the share prices of small and large firms, using monthly data from January 1975 to December 1989. The empirical findings provide evidence of market efficiency for portfolios of large firms but of inefficiency for small firm portfolios. These results are indicative of a small firm effect in the UK stock market.

An empirical investigation of the effect of rights issue announcements on share returns and the determinants of abnormal returns on the Kuala Lumpur Stock Exchange

This thesis examines the effect of rights issue announcements on stock prices by companies listed on the Kuala Lumpur Stock Exchange (KLSE) between 1987 to 1996. The emphasis is to report whether the KLSE is semi strongly efficient with respect to the announcement of rights issues and to check whether the implications of corporate finance theories on the effect of an event can be supported in the context of an emerging market. Once the effect is established, potential determinants of abnormal returns identified by previous empirical work and corporate financial theory are analysed. By examining 70 companies making clean rights issue announcements, this thesis will hopefully shed light on some important issues in long term corporate financing. Event study analysis is used to check on the efficiency of the Malaysian stock market; while cross-sectional regression analysis is executed to identify possible explanators of the rights issue announcements' effect. To ensure the results presented are not contaminated, econometric and statistical issues raised in both analyses have been taken into account. Given the small amount of empirical research conducted in this part of the world, the results of this study will hopefully be of use to investors, security analysts, corporate financial managements, regulators and policy makers as well as those who are interested in capital market based research of an emerging market. It is found that the Malaysian stock market is not semi strongly efficient since there exists a persistent non-zero abnormal return. This finding is not consistent with the hypothesis that security returns adjust rapidly to reflect new information. It may be possible that the result is influenced by the sample, consisting mainly of below average size companies which tend to be thinly traded. Nevertheless, these issues have been addressed. Another important issue which has emerged from the study is that there is some evidence to suggest that insider trading activity existed in this market. In addition to these findings, when the rights issue announcements' effect is compared to the implications of corporate finance theories in predicting the sign of abnormal returns, the signalling model, asymmetric information model, perfect substitution hypothesis and Scholes' information hypothesis cannot be supported.

The law and finance of share repurchases in Europe

This article analyses the impact of the EU market abuse law on share repurchases. We find that the Member States' previous rules differed considerably, and therefore it can be said that the Regulation on share repurchases has provided uniformity as to the availability of a safe harbour for share repurchases. The picture, however, gets more difficult to assess if we consider our findings on the actual effect of the law. Our results do not confirm a “simple law and finance story“ according to which market participants would have just reacted as expected by the new legal rules. Rather, it seems to be the case that the value of legal certainty and the positive signal of common legal rules have also had an impact on the propensity to repurchase own stock.

Evolutionary market agents for resource allocation in decentralised systems

We introduce self-interested evolutionary market agents, which act on behalf of service providers in a large decentralised system, to adaptively price their resources over time. Our agents competitively co-evolve in the live market, driving it towards the Bertrand equilibrium, the non-cooperative Nash equilibrium, at which all sellers charge their reserve price and share the market equally. We demonstrate that this outcome results in even load-balancing between the service providers. Our contribution in this paper is twofold; the use of on-line competitive co-evolution of self-interested service providers to drive a decentralised market towards equilibrium, and a demonstration that load-balancing behaviour emerges under the assumptions we describe. Unlike previous studies on this topic, all our agents are entirely self-interested; no cooperation is assumed. This makes our problem a non-trivial and more realistic one.

Fogyasztói magatartás a hazai utazási szolgáltatások piacán - a hibrid vásárlói magatartás vizsgálata (Consumer behaviour on market of the Hungarian travel services – Examination of hybrid consumption)

A szerzők kutatási projektjükben a hazai lakosság utazással kapcsolatos fogyasztási, vásárlási magatartását vizsgálták, különös tekintettel a hibrid fogyasztói viselkedés alakulására. A kutatás a rendszeresen utazó vagy az utazás iránt érdeklődő csoportra terjedt ki. Az első, kvalitatív fázisban a nyaralás értelmezését, a keresés és döntés kritériumait tárták fel, majd következő lépésben statisztikai elemzésekkel vizsgálták a fogyasztói magatartás jellemzőit. Indexszámítás alapján besorolták a válaszadókat a hibrid fogyasztás kategóriáiba. Besorolásuk szerint a megtakarításorientált olcsón vásárlók és a komfortorientált márkavásárlók jelentik a legnagyobb csoportokat, az előbbi 31,9%-ot, az utóbbi 29,6%-ot képviselve a mintában. A megtakarítás-orientált márkavásárlók 21%-ot, a komfortorientált olcsón vásárlók 17,5%-ot tesznek ki. Elemzésük igazolta, hogy a hibrid vásárlói magatartás elméleti megközelítése jól használható a hazai utazási piac elemzésekor. ________ Recent study examines travelling behaviour in Hungary with special emphasis on hybrid consumption. Using qualitative and quantitative analysis the study explore the decision making process related to hybrid consumption in travel services. Based on indexes the authors classified respondents into categories of hybrid consumption. According to their classification the main groups are savings-oriented budget shoppersand comfort-oriented brand shoppers, representing 31,9% and 29,6% share in the total sample, accordingly. Based on their analysis the approach of hybrid consumption proved to be useful to analyse consumer behaviour in travel services.