Parity Reversion in Real Exchange Rates: Fast, Slow, or Not at All?

This paper tests for purchasing power parity (PPP) using real effective exchange rate data for 90 developed and developing countries in the post-Bretton Woods period. Support for PPP is found, since the majority of countries experience finite deviations of real exchange rates from parity. The speed of parity reversion is found to be typically much faster for developed countries than for developing countries and to be considerably faster for countries with flexible nominal exchange rate regimes compared with countries having fixed nominal exchange rate regimes. Copyright 2006, International Monetary Fund

Regional business cycles in New Zealand: Do they exist? What might drive them?

We use National Bank of New Zealand Regional Economic Activity data, to identify and characterise classical business cycle turning points, for New Zealand's 14 regions and aggregate New Zealand activity. Using Concordance statistic measures, logistic model and GMM estimation methods, meaningful regional business cycles have been identified and a number of significant associations established. All regions exhibit cyclical asymmetry for both durations and amplitudes, and synchronisations between aggregate NZ activity and each region are contemporaneous. The regional cycles rarely die of old age but are terminated by particular events. The regions most highly synchronised with the NZ activity cycle are Auckland, Canterbury, and Nelson-Marlborough; those least so are Gisborne and Southland. Noticeably strong co-movements are evident for certain regions. Geographical proximity matters, and unusually dry conditions can be associated with cyclical downturns in certain regions. There is no discernable evidence of association with net immigration movements, and no significant evidence of regional cycle movements being associated with real national house price cycles. The agriculture-based nature of the New Zealand economy is highlighted by the strong influence of external economic shocks on rural economic performance. In particular, there is considerable evidence of certain regional cycles being associated with movements in New Zealand's aggregate terms of trade, real prices of milksolids, real dairy land prices and total rural land prices.Classical business cycle; Turning Points; Regional business cycles; Concordance statistics; New Zealand

Regional business cycles in New Zealand:Do they exist? What might drive them?

We use National Bank of New Zealand Regional Economic Activity data, to identify and characterise classical business cycle turning points, for New Zealand’s 14 regions and aggregate New Zealand activity. Using Concordance statistic measures, logistic model and GMM estimation methods, meaningful regional business cycles have been identified and a number of significant associations established. All regions exhibit cyclical asymmetry for both durations and amplitudes, and synchronisations between aggregate NZ activity and each region are contemporaneous. The regional cycles rarely die of old age but are terminated by particular events. The regions most highly synchronised with the NZ activity cycle are Auckland, Canterbury, and Nelson- Marlborough; those least so are Gisborne and Southland. Noticeably strong co-movements are evident for certain regions. Geographical proximity matters, and unusually dry conditions can be associated with cyclical downturns in certain regions. There is no discernable evidence of association with net immigration movements, and no significant evidence of regional cycle movements being associated with real national house price cycles. The agriculture-based nature of the New Zealand economy is highlighted by the strong influence of external economic shocks on rural economic performance. In particular, there is considerable evidence of certain regional cycles being associated with movements in New Zealand’s aggregate terms of trade, real prices of milksolids, real dairy land prices and total rural land prices.Classical business cycle; Turning Points; Regional business cycles; Concordance statistics; New Zealand

Regional Business Cycles in New Zealand: Do they exist? What might drive them?

We use National Bank of New Zealand Regional Economic Activity data, to identify and characterise classical business cycle turning points, for New Zealand’s 14 regions and aggregate New Zealand activity. Using Concordance statistic measures, logistic model and GMM estimation methods, meaningful regional business cycles have been identified and a number of significant associations established. All regions exhibit cyclical asymmetry for both durations and amplitudes, and synchronisations between aggregate NZ activity and each region are contemporaneous. The regional cycles rarely die of old age but are terminated by particular events. The regions most highly synchronised with the NZ activity cycle are Auckland, Canterbury, and Nelson-Marlborough; those least so are Gisborne and Southland. Noticeably strong co-movements are evident for certain regions. Geographical proximity matters, and unusually dry conditions can be associated with cyclical downturns in certain regions. There is no discernable evidence of association with net immigration movements, and no significant evidence of regional cycle movements being associated with real house price cycles. The agriculture-based nature of the New Zealand economy is highlighted by the strong influence of external economic shocks on rural economic performance. In particular, there is considerable evidence of certain regional cycles being associated with movements in New Zealand’s aggregate terms of trade, real prices of milksolids, real dairy land prices and total rural land prices. JEL Classification: C22, E32, R11, R12, R15 Keywords: Classical business cycle; Turning Points; Regional business cycles; Concordance statistics; New Zealand

Foreign Divestment and Employee Disclosure and Consultation in the UK, 1978-1985

This thesis has two main objectives, namely, - to contribute to the theory of foreign divestment through a detailed analysis of the causes of UK plant closures by foreign-owned MNCs, - and to evaluate UK legislation on employee disclosure/consultation, with particular reference to its effect on foreign MNCs. The Financial Times has recorded since 1978 the closure of 96 manufacturing operations majority-owned by foreign MNCs. This thesis analyses 13 of them which involved compulsory redundancy of 500 or more employees in four industrial case studies. A total of 11 MNCs from 5 countries are examined, and the impact of home country culture is assessed. Of the three theoretical explanatory models of foreign divestment, condition-based theory emerges as far more appropriate than the motivation-based, and precipitating- circumstance based theories. The plant closures by foreign MNCs were due to certain unfavourable changes in the business environment, though these were not always sufficient to explain some closures. Deteriorating conditions created strong motives to divest, and new Chief Executives were often appointed. The arrival of a new man should be seen, not as a cause of, but, as a signal to divestment. The Department of Employment is content that workers receive the statutory minimum notification of redundancy, or pay in lieu of notice. Thus, not surprisingly, British employees' representatives were not consulted "at the earliest opportunity", but were informed some months after the decision had been made by the parent company at corporate headquarters. Regardless of market conditions and the parent company's financial situation, Union Officials will always castigate companies which close plants. It matters little whether they receive three months or three years notice, and whether or not their representatives meet the Chief Executive Officer of the parent company. Proponents of greater information disclosure believe that employees would use the knowledge to save Jobs, but in two closures, the fully-informed workforces voted against proposals in the knowledge that rejection endangered their plants. The behaviour of the Dutch, French, German and Canadian MNCs conformed with cultural profiles. Home country culture appears to have had influence on the three European MNCs and on the Canadian firm, but the behaviour of the seven US MNCs is so disparate that national culture appears to have had little impact. The British TUC has accused one foreign-owned firm of breaching the OECD's Guidelines for Multinational Enterprises during the divestment process. This case is analysed and reinforces the view that the key section on Employment and Industrial Relations is of little value. This crucial chapter of the Guidelines has no impact on corporate behaviour and is ineffective because it does not in any way supplement national law. While the EEC's "Vredeling Proposals" would raise the minimum legal requirements, many firms already exceed the UK legal minimum in some respects, eg. period of notice of closure. All of the plant closures examined in this thesis were part of a broader corporate restructuring strategy. Britain has not lost its attraction for foreign investors, though divestment will continue. Delays in restructuring may ultimately prove counterproductive. As the rate of technological change accelerates, the western world must come to grips with its fundamental economic and social problem, ie. a surplus of labour. Protracted debate and discussion on further legislation on employee disclosure and consultation has tended to divert attention from more pressing matters