Are the Baltic Countries Ready to Adopt the Euro? A Generalised Purchasing Power Parity Approach

This paper focuses on macroeconomic interdependencies between the Euro area and three transition economies (Estonia, Lithuania and Latvia), with the aim of establishing whether the latter are ready to adopt the Euro. The theoretical framework is based on the Generalised Purchasing Power Parity (GPPP) hypothesis, which is empirically tested within a Vector Error Correction (VEC) model. Using both monthly and quarterly data over the period 1993-2005, it is found that GPPP holds for the real exchange rate vis-à-vis the Euro of each Baltic country, reflecting a degree of real convergence consistent with Optimum Currency Area criteria. Further, the adopted joint modelling approach for the real exchange rates of the Baltic region outperforms a number of alternative models in terms of out-of-sample forecasts.transition economies, Euro area, (Generalised) Purchasing Power Parity, Vector Error Corrector models

Modelling Long-Run Trends and Cycles in Financial Time Series Data

This paper proposes a very general time series framework to capture the long-run behaviour of financial series. The suggested model includes linear and non-linear time trends, and stationary and nonstationary processes based on integer and/or fractional degrees of differentiation. Moreover, the spectrum is allowed to contain more than a single pole or singularity, occurring at zero and non-zero (cyclical) frequencies. This model is used to analyse four annual time series with a long span, namely dividends, earnings, interest rates and long-term government bond yields. The results indicate that the four series exhibit fractional integration with one or two poles in the spectrum. A forecasting comparison shows that a model with a non-linear trend along with fractional integration outperforms alternative models over long horizons.fractional integration, financial time series data, trends, cycles

Reserve Price Formation in Online Auctions

We use a unique hand collected data set of 6 258 auctions from the online football manager game Hattrick to study micro-patterns of reserve price formation. We find that chosen reserve prices exhibit both, very sophisticated and “irrational” behavior by the sellers. Reserve prices pick up the “birthday effect” in sales prices, documented in Englmaier and Schmöller (2008) and are adjusted remarkably nuanced to the resulting sales price pattern. Moreover, reserve prices are too clustered (around multiples of €50 000) as to be consistent with fully rational behavior. Furthermore, we find evidence for entitlement effects and the sunk cost fallacy as there is a huge positive effect on the reserve price when the player has been acquired previously.auctions, reserve price, bounded rationality, heuristics, entitlement effect

Belief in a Just World and Redistributive Politics

International surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate. At the same time, social ethnographies and experiments by psychologists demonstrate individuals' recurrent struggle with cognitive dissonance as they seek to maintain, and pass on to their children, a view of the world where effort ultimately pays off and everyone gets their just deserts. This paper offers a model that helps explain: i) why most people feel such a need to believe in a "just world"; ii) why this need, and therefore the prevalence of the belief, varies considerably across countries; iii) the implications of this phenomenon for international differences in political ideology, levels of redistribution, labor supply, aggregate income, and popular perceptions of the poor. The model shows in particular how complementarities arise endogenously between individuals' desired beliefs or ideological choices, resulting in two equilibria. A first, "American" equilibrium is characterized by a high prevalence of just-world beliefs among the population and relatively laissez-faire policies. The other, "European" equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state. More generally, the paper develops a theory of collective beliefs and motivated cognitions, including those concerning "money" (consumption) and happiness, as well as religion.

“Every Catholic Child in a Catholic School”: Historical Resistance to State Schooling, Contemporary Private Competition, and Student Achievement across Countries

Nineteenth-Century Catholic doctrine strongly opposed state schooling. We show that countries with larger shares of Catholics in 1900 (but without a Catholic state religion) tend to have larger shares of privately operated schools even today. We use this historical pattern as a natural experiment to estimate the causal effect of contemporary private competition on student achievement in cross-country student-level analyses. Our results show that larger shares of privately operated schools lead to better student achievement in mathematics, science, and reading and to lower total education spending, even after controlling for current Catholic shares.private school competition, student achievement, Catholic schools

Corruption, Seigniorage and Growth: Theory and Evidence

This paper presents an analysis of the effect of bureaucratic corruption on economic growth through a public finance transmission channel. At the theoretical level, we develop a simple dynamic general equilibrium model in which financial intermediaries make portfolio decisions on behalf of agents, and bureaucrats collect tax revenues on behalf of the government. Corruption takes the form of the embezzlement of public funds, the effect of which is to increase the government’s reliance on seigniorage finance. This leads to an increase in inflation which, in turn, reduces capital accumulation and growth. At the empirical level, we use data on 82 countries over a 20-year period to test the predictions of our model. Taking proper account of the government’s budget constraint, we find strong evidence to support these predictions under different estimation strategies. Our results are robust to a wide range of sensitivity tests.corruption, seigniorage, inflation, growth

The Montana Kaimin, January 30, 1931

Student newspaper of the University of Montana, Missoula.https://scholarworks.umt.edu/studentnewspaper/2267/thumbnail.jp

Edward M. Curr and the Tide of History

Edward M. Curr (1820-89) was a pastoralist, horse trader, stock inspector, Aboriginal administrator, author and ethnologist. A prominent figure in the history of the Colony of Victoria, he rose to a senior position in the public service and authored several influential books and essays. He is best remembered for his nostalgic memoir, Recollections of Squatting in Victoria (1883), which has become a standard historical source. This book is the first comprehensive biography of Curr and explores both his life and legacy. In particular, it considers his posthumous influence on the Yorta Yorta native title case (1994-2001), when his written account of the Yorta Yorta ancestors played a key role in the failure of the claim. By exploring Curr’s interactions with Aboriginal people—as a pastoralist and Aboriginal administrator—this book advocates a more nuanced, critical, and historically informed interpretation of Curr’s ethnological writings than was evident in the Yorta Yorta case