Rational speculative bubbles: an empirical investigation of the London Stock Exchange

In recent years, a sharp divergence of London Stock Exchange equity prices from dividends has been noted. In this paper, we examine whether this divergence can be explained by reference to the existence of a speculative bubble. Three different empirical methodologies are used: variance bounds tests, bubble specification tests, and cointegration tests based on both ex post and ex ante data. We find that, stock prices diverged significantly from their fundamental values during the late 1990's, and that this divergence has all the characteristics of a bubble.

A model for exchange rates with crawling bands: an application to the Colombian peso

This paper builds upon previous research on currency bands, and provides a model for the Colombian peso. Stochastic differential equations are combined with information related to the Colombian currency band to estimate competing models of the behaviour of the Colombian peso within the limits of the currency band. The resulting moments of the density function for the simulated returns describe adequately most of the characteristics of the sample returns data. The factor included to account for the intra-marginal intervention performed to drive the rate towards the Central Parity accounts only for 6.5% of the daily change, which supports the argument that intervention, if performed by the Central Bank, it is not directed to push the currency towards the limits. Moreover, the credibility of the Colombian Central Bank, Banco de la República’s ability to defend the band seems low.

The underpricing of IPOs on the stock exchange of Mauritius

This paper investigates the underpricing of IPOs on the Stock Exchange of Mauritius (SEM). Taking into account the whole population of firms which went public since the inception of the SEM until 2010, the results show an average degree of underpricing within the range 10 to 20%. Using a regression approach, we demonstrate that the aftermarket risk level and auditor's reputation both have a significant positive impact on initial returns. We propose the use of the Z-score as a composite measure of a firm's ex ante financial strength, and find that it has a significant negative effect on the degree of short-run underpricing.

Issues in language and development in multilingual settings: a case-study of knowledge exchange and teacher education in South Africa

The quality of a country’s human-resource base can be said to determine its level of success in social and economic development. This study focuses on some␣of the major human-resource development issues that surround the implementation of South Africa’s policy of multilingualism in education. It begins by discussing the relationship between knowledge, language, and human-resource, social and economic development within the global cultural economy. It then considers the situation in South Africa and, in particular, the implications of that country’s colonial and neo-colonial past for attempts to implement the new policy. Drawing on the linguistic-diversity-in-education debate in the United Kingdom of the past three decades, it assesses the first phase of an in-service teacher-education programme that was carried out at the Project for Alternative Education in South Africa (PRAESA) based at the University of Cape Town. The authors identify key short- and long-term issues related to knowledge exchange in education in multilingual societies, especially concerning the use of African languages as mediums for teaching and learning.