Time-Varying Liquidity in Foreign Exchange

This paper addresses whether currency trades have greater price impact during periods of rapid public information flow. Central bankers often suggest that expectations are at times “ripe” for coordinated adjustment, and that periods of rapid information flow are such a time. We develop an optimizing model to account for the joint behavior of order flow and returns around announcements. Using transaction data made available by electronic trading, we estimate the price impact of trades in the DM/$ market precisely. We then test whether trades during periods with macroeconomic announcements have higher price impact. They do. We also test for dependence of liquidity on trading volume and return volatility (two other prominent state variables in the literature on liquidity variation). We do not find any evidence that liquidity depends on these variables. The findings provide policy-makers with guidance for the timing and magnitude intervention.

Market Liquidity as a Sentiment Indicator

We build a model that helps explain why increases in liquidity - such as lower bid-ask spreads, a lower price impact of trade, or higher share turnover - predict lower subsequent returns in both firm-level and aggregate data. The model features a class of irrational investors, who underreact to the information contained in order flow, thereby boosting liquidity. In the presence of short-sales constraints, unusually high liquidity is a symptom of the fact that the market is currently dominated by these irrational investors, and hence is overvalued. This theory can also explain how managers might successfully time the market for seasoned equity offerings (SEOs), by simply following a rule of thumb that involves issuing when the SEO market is particularly liquid. Empirically, we find that: i) aggregate measures of equity issuance and share turnover are highly correlated; yet ii) in a multiple regression, both have incremental predictive power for future equal-weighted market returns.

Robotic Wireless Sensor Networks

In this chapter, we present a literature survey of an emerging, cutting-edge, and multi-disciplinary field of research at the intersection of Robotics and Wireless Sensor Networks (WSN) which we refer to as Robotic Wireless Sensor Networks (RWSN). We define a RWSN as an autonomous networked multi-robot system that aims to achieve certain sensing goals while meeting and maintaining certain communication performance requirements, through cooperative control, learning and adaptation. While both of the component areas, i.e., Robotics and WSN, are very well-known and well-explored, there exist a whole set of new opportunities and research directions at the intersection of these two fields which are relatively or even completely unexplored. One such example would be the use of a set of robotic routers to set up a temporary communication path between a sender and a receiver that uses the controlled mobility to the advantage of packet routing. We find that there exist only a limited number of articles to be directly categorized as RWSN related works whereas there exist a range of articles in the robotics and the WSN literature that are also relevant to this new field of research. To connect the dots, we first identify the core problems and research trends related to RWSN such as connectivity, localization, routing, and robust flow of information. Next, we classify the existing research on RWSN as well as the relevant state-of-the-arts from robotics and WSN community according to the problems and trends identified in the first step. Lastly, we analyze what is missing in the existing literature, and identify topics that require more research attention in the future

China-Africa’s Emerging Economic Links: A review under the Core-Periphery perspective

This essay has explored the validity of Marxist dependency theories in the context of the emerging China-Africa trade and economic relations. Whereas dependency theory assumes that economic domination runs across north-south geoeconomic patterns, this discussion has shown that the China-Africa economic links represent a distinct south-south dialectic occurring in an emerging new global economic configuration marked by a technology gap. Therefore, the discussion fails to support the idea that China’s involvement in Africa is of a conventional center-periphery type; which suggests the existence of nonexploitative, tough dependent, trade features. This dependence implies that external factors and decisions (included those related to China) also determine the real level of development in the Africa. Also worth mentioning is that for the first time Africa is drastically shifting its trade pattern away from its colonial framework: it too is becoming linked to a rapidly changing economy. Such a shift means that China’s own constant economic and social structural changes make it easy for Africa to adjust to the emerging new global economic order. At the same time, the China-Africa relationship is marked by unavoidable dialectic tensions like labor and competition issues. Even though synergies can be created by considering China’s legitimate interests in Africa and Africa’s own legitimate rights, no matter how well-intentioned China is, Africa must still generate its own technological capacities and rid itself of its legendary rampant corruption. Thus, both sides must admit that there will be no long-run benefit unless each contributes to the emergence of a new economic configuration that is deeply rooted not in mutual but in common or joint interests.China; Africa; Dependency theories; Economic Development; Globalization

From governance to meta-governance in tourism?: Re-incorporating politics,interests and values in the analysis of tourism governance

Despite its theorization in the political and policy sciences in the early 1990s, the concept of metagovernance has gained relatively little recognition in tourism studies. Nevertheless, its significance in the political sciences and policy literature, especially as a result of the perceived failure of governance systems following the recent global financial crisis, has only served to reinforce its relevance. Metagovernance addresses some of the perceived failures of traditional governance approaches and associated interventions, and has enabled the understanding of central-state led regimes of shadowed hierarchical authorities and local-level micro-practices of social innovation and self-government. In contrast, tourism studies have tended to restrict study of the political dimension of tourism governance and the role of the state under the traditional parallelism between government and governance. Examination of how governance is itself governed enables a better understanding of the practices of planning and policy making affecting tourism and destinations. In particular, the applications of concepts of governance are inextricably linked to a given set of value assumptions which predetermine the range of its application. A short example of the application of the metagovernance paradigm is provided from the New Zealand context. It is concluded that governance mechanisms are not value-neutral and instead serve to highlight the allocation of power in a destination and the dominance of particular values and interests

How to Run a Target Zone? Age Old Lessons from an Austro-Hungarian Experiment

This paper considers what we argue was the first experiment of an exchangerate band. This experiment took place in Austria-Hungary between 1896 and1914. The rationale for introducing this policy rested on precisely thoseintuitions that modern target zone literature has recently emphasized: theband was designed to secure both exchange rate stability and monetarypolicy autonomy. However, unlike more recent experiences, such as theERM, this policy was not undermined by credibility problems. In other wordsthe episode provides us with an ideal testing ground for some importantideas in modern macroeconomics: specifically, can formal rules, whenfaithfully adhered to, provide policy makers with some advantages such asshort term flexibility? First, we find that a credible band has a“microeconomic” influence on exchange rate stability. By reducinguncertainty, a credible fluctuation band improves the quality of expectations,a channel that has been neglected in the modern literature. Second, weshow that the standard test of the basic target zone model is flawed anddevelop an alternative methodology. This enables us to understand whyAustro-Hungarian policy makers were so upbeat about the merits ofexchange rate target zones. We believe that these findings shed a new lighton the economics of exchange rate bands.

The monetary instrument matters

This paper revisits the debate over the money supply versus the interest rate as the instrument of monetary policy. Using a dynamic stochastic general equilibrium framework, the authors examine the effects of alternative monetary policy rules on inflation persistence, the information content of monetary data, and real variables. They show that inflation persistence and the variability of inflation relative to money growth depend on whether the central bank follows a money growth rule or an interest rate rule. With a money growth rule, inflation is not persistent and the price level is much more volatile than the money supply. Those counterfactual implications are eliminated by the use of interest rate rules whether prices are sticky or not. A central bank's use of interest rate rules, however, obscures the information content of monetary aggregates and also leads to subtle problems for econometricians trying to estimate money demand functions or to identify shocks to the trend and cycle components of the money stock.Monetary policy ; Money supply ; Interest rates

Federal Reserve Policy viewed through a Money Supply Lens

This paper examines whether the U.S. Federal Reserve has adjusted high-powered money supply in response to macroeconomic indicators. Applying ex-post and real-time data for the postwar period, we provide evidence that nonborrowed reserves responded to expected inflation and the output-gap. While the output-gap feedback has always been negative, the response of money supply to changes in inflation varies considerably across time. The inflation feedback is negative in the post-1979 period and positive, albeit smaller than one, in the pre-1979 period. Applying a standard macroeconomic model, these roperties are shown to be consistent with a welfare maximizing policy, and to ensure equilibrium determinacy. Viewed through the money supply lens, the Fed has thus never allowed for endogenous fluctuations, which contrasts conclusions drawn from federal funds rate analyses.Nonborrowed reserves, monetary policy reaction functions, real-time data, determinacy