Foreign Exchange Volume: Sound and Fury Signifying Nothing?

This paper examines whether currency trading volume is informative, and under what circumstances. Specifically, we use transactions data to test whether trades occurring when trading intensity is high are more informative - dollar for dollar - than trades occurring when intensity is low. Theory admits both possibilities, depending primarily on the posited information structure. We present what we call a hot-potato model of currency trading, which explains why low-intensity trades might be more informative. In the model, the wave of inventory-management trading among dealers following innovations in order flow generates an inverse relationship between intensity and information content. Empirically, low-intensity trades are more informative, supporting the hot-potato hypothesis."

Foreign exchange: macro puzzles, micro tools

This paper reviews recent progress in applying information-theoretic tools to long-standing exchange rate puzzles. I begin by distinguishing the traditional public information approach (e.g., monetary models, including new open-economy models) from the newer dispersed information approach. (The latter focuses on how information is aggregated in the trading process.) I then review empirical results from the dispersed information approach and relate them to two key puzzles, the determination puzzle and the excess volatility puzzle. The dispersed information approach has made progress on both.Foreign exchange rates

Explaining Forward Exchange Bias..Intraday

Intraday interest rates are zero. Consequently, a foreign exchange dealer can short a vulnerable currency in the morning, close this position in the afternoon, and never face an interest cost. This tactic might seem especially attractive in times of crisis, since it suggests an immunity to the central bank's interest rate defense. In equilibrium, however, buyers of the vulnerable currency must be compensated on average with an intraday capital gain as long as no devaluation occurs. That is, currencies under attack should typically appreciate intraday. Using data on intraday exchange rate changes within the EMS, we find this prediction is borne out.

Innovation in services: corporate culture and investment banking

The article discusses service innovation in the investment banking industry. Service industry innovations differ from innovations in industries that produce physical products because they rarely have intellectual property and patent protections. However, investment banking services are typically a series of interrelated businesses such as consulting, wealth management and accounting, and innovations require a business wide coordinated approach. The authors argue that a strong corporate culture can support rather than hinder innovation. The creation of such a culture requires strong leadership and an emphasis on innovation in hiring and promotions

Life interrupted and life regained? Coping with stroke at a young age

Stroke is a leading cause of disability across the developed world, affecting an increasing number of younger people. In this article, we seek to understand the experience of stroke as a disabling life situation among young people and the strategies that they use to recover and cope. Directed content analysis was conducted from interviews with 17 community-dwelling stroke survivors aged 55 years and younger across the United Kingdom. The sample was drawn from a larger maximum variation sample of stroke survivors. Using the sociological concepts of biographical disruption and biographical repair as a guide, excerpts from the interviews pertaining to aspects of the patients’ life that were interrupted, in addition to how they coped with the changes, were selected and analysed. All individuals described an ‘‘altered sense of self,’’ a theme that included loss of identity, family disruption, and/or loss of valued activities. Individuals sought to adapt their sense of self by seeking external support, by restoring normality, and/or through positive reflection. Despite the adapted self that emerged, most individuals continued to experience impairments. While young stroke survivors adapt to their illness over time, they continue to experience impairments and disruptions in their personal and work lives.Aholistic model of rehabilitation that helps individuals regain the capacity for everyday activities related to work, family life, and leisure can begin to address the emotional ramifications of diseases such as stroke, restore wellness, and work towards minimizing the burden felt by family caregivers and children

Life interrupted and life regained? Coping with stroke at a young age

Stroke is a leading cause of disability across the developed world, affecting an increasing number of younger people. In this article, we seek to understand the experience of stroke as a disabling life situation among young people and the strategies that they use to recover and cope. Directed content analysis was conducted from interviews with 17 community-dwelling stroke survivors aged 55 years and younger across the United Kingdom. The sample was drawn from a larger maximum variation sample of stroke survivors. Using the sociological concepts of biographical disruption and biographical repair as a guide, excerpts from the interviews pertaining to aspects of the patients’ life that were interrupted, in addition to how they coped with the changes, were selected and analysed. All individuals described an ‘‘altered sense of self,’’ a theme that included loss of identity, family disruption, and/or loss of valued activities. Individuals sought to adapt their sense of self by seeking external support, by restoring normality, and/or through positive reflection. Despite the adapted self that emerged, most individuals continued to experience impairments. While young stroke survivors adapt to their illness over time, they continue to experience impairments and disruptions in their personal and work lives.Aholistic model of rehabilitation that helps individuals regain the capacity for everyday activities related to work, family life, and leisure can begin to address the emotional ramifications of diseases such as stroke, restore wellness, and work towards minimizing the burden felt by family caregivers and children

A New Micro Model of Exchange Rate Dynamics

We address the exchange rate determination puzzle by examining how information is aggregated in a dynamic general equilibrium (DGE) setting. Unlike other DGE macro models, which enrich either preference structures or production structures, our model enriches the information structure. The model departs from microstructure-style modeling by identifying the real activities where dispersed information originates, as well as the technology by which information is subsequently aggregated and impounded. Results relevant to the determination puzzle include: (1) persistent gaps between exchange rates and macro fundamentals, (2) excess volatility relative to macro fundamentals, (3) exchange rate movements without macro news, (4) little or no exchange rate movement when macro news occurs, and (5) a structural-economic rationale for why transaction flows perform well in accounting for monthly exchange rate changes, whereas macro variables perform poorly. Though past micro analysis has made progress on results (1) through (3), results (4) and (5) are new. Excess volatility arises in our model for a new reason: rational exchange rate errors feed back into the fundamentals that the exchange rate is trying to track.

The Role of External Economies in U.S. Manufacturing

This paper develops a method for joint estimation of both the degree of internal returns to scale and the extent of external economies. We apply the method in estimating returns to scale indexes for U.S. manufacturing industries at the two-digit level. Overall, we find that only three of the twenty industry categories show any evidence of internal increasing returns: (1) Primary Metals, (2) Electrical Machinery, and (3) Paper Products. More striking, however, is the very strong evidence of the existence of external economies, where external is defined as external to a given two-digit industry and internal to the U.S.. According to our preferred estimates, if all manufacturing industries simultaneously raise their inputs by 10%, aggregate manufacturing production rises by 13%, of which about 5% is due to external economies. Thus, when an industry increases its inputs in isolation by 10%, its output rises by no more than 8%.