Are Exchange Rates Excessively Variable?

"Unnecessary variation" is defined as variation not attributable to variation in fundamentals. In the absence of a good model of macroeconomic fundamentals, the question "are exchange rates excessively variable?" cannot be answered by comparing the variance of the actual exchange rate to the variance of a set of fundamentals. This paper notes the failure of regression equations to explain exchange rate movements even using contemporaneous macroeconomic variables. It notes as well the statistical rejections of the unbiasedness of the forward exchange rate as a predictor of the spot rate. It then argues that, given these results, there is not much to be learned from the variance-bounds tests and bubbles tests. The paper also discusses recent results on variation in the exchange risk premiums arising from variation in conditional variances, both as a source of the bias in the forward rate tests and as a source of variation in the spot rate. It finishes with a discussion of whether speculators' expectations are stabilizing or destabilizing, as measured by survey data. The paper concludes that it is possible that exchange rates have been excessively variable -- as, for example, when there are speculative bubbles -- but that if policy-makers try systematically to exploit their credibility in order to stabilize exchange rates, they may see their current credibility vanish.

The Arbitration Clause as Super Contract

It is widely acknowledged that the purpose of the Federal Arbitration Act (FAA) was to place arbitration clauses on equal footing with other contracts. Nonetheless, federal and state courts have turned arbitration clauses into “super contracts” by creating special interpretive rules for arbitration clauses that do not apply to other contracts. In doing so, they have relied extensively, and incorrectly, on the Supreme Court’s determination that the FAA embodies a federal policy favoring arbitration. While many scholars have focused attention on the public policy rationales for and against arbitration, few have explored how arbitration clauses should be interpreted. This Article fills that gap and asserts that the judiciary’s inappropriate reliance on the federal policy favoring arbitration distorts state contract law to push cases into arbitration that do not belong there, thereby unfairly depriving litigants of access to the courts. By creating special rules that favor arbitration and that deviate from state contract law, courts are enforcing arbitration agreements in situations where they would not enforce other agreements. This Article challenges the judiciary’s favored treatment of arbitration clauses and identifies several areas in which arbitration clauses are being over‑enforced as a result. The fact that courts send too many disputes into arbitration also is significant because it undermines the perception, common among both academics and judges, that courts remain hostile to arbitration rather than supportive of it. Because the original purpose of the Federal Arbitration Act was to make arbitration clauses just like other contracts, this Article proposes that courts should construe the federal policy favoring arbitration in a way that is consistent with state contract law rather than in a way that uproots it. Doing so best ensures that litigants are not unfairly forced into arbitration where they never agreed to it

Concepcion and Mis-Concepcion: Why Unconscionability Survives the Supreme Court\u27s Arbitration Jurisprudence

States have long relied on the doctrines of unconscionability and public policy to protect individuals against unfair terms in mandatory arbitration provisions. The Supreme Court recently struck a blow to such efforts in AT&T Mobility LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant. In those two cases, the Court established that a challenge to the enforceability of unfairly one-sided arbitration clauses is preempted if it would interfere with fundamental attributes of arbitration. Several commentators have argued that these decisions will dramatically alter the arbitration landscape, by wiping away virtually any contract defense to the validity of an arbitration agreement and giving corporations carte blanche to impose whatever terms they want into an arbitration clause. Many practitioners are aggressively pushing courts to take a similarly broad reading of Concepcion and Italian Colors. This article takes a contrary view. First, this article argues that the cases will have very little impact outside of the context of class action waivers, the subject matter of both Concepcion and Italian Colors. Applying state law to strike down arbitration provisions that are so one-sided as to be unconscionable ordinarily will not interfere with fundamental attributes of arbitration and should not be preempted

Risk Assessment and Immigration Court

Risk assessment and algorithmic tools have become increasingly popular in recent years, particularly with respect to detention and incarceration decisions. The emergence of big data and the increased sophistication of algorithmic design hold the promise of more accurately predicting whether an individual is dangerous or a flight risk, overcoming human bias in decision-making, and reducing detention without compromising public safety. But these tools also carry the potential to exacerbate racial disparities in incarceration, create a false veneer of objective scientific accuracy, and spawn opaque decision-making by “black box” computer programs. While scholars have focused much attention on how judges in criminal cases use risk assessment to inform pretrial detention decisions, they have paid little attention to whether immigration judges should use risk assessment when deciding whether to detain noncitizens. Yet, the federal immigration detention system is one of the largest in the world, incarcerating nearly 400,000 noncitizens a year. Immigration courts contribute to unnecessary detention and deprivation of liberty due to serious structural flaws. Immigration judges are prone to racial bias, they focus on factors unrelated to danger and flight risk, their bond decisions are nontransparent and opaque, and they are subject to undue political influence that encourages judges to err on the side of detention rather than release. Given the rise of algorithmic decision-making, the time has come to investigate whether risk assessment has a role to play in immigration court bond decisions. This Article suggests that while there is no easy answer, a well-designed and transparent risk assessment tool could provide a check against the worst features of the current immigration court bond system. Alternatively, even if risk assessment tools prove to be flawed, the information obtained from using them could provide support for broader reform of immigration detention

The Federal Arbitration Act and Independent Contractors

The misclassification of employees as independent contractors is one of the most serious problems affecting the American workforce. It deprives workers of important employee benefits, civil rights, and wage and hour protections, and deprives the federal and state governments of billions of dollars in tax revenue annually. While workers can seek redress in the courts, businesses are trying to take away that right as well by forcing workers to submit their disputes to binding mandatory arbitration under the Federal Arbitration Act (FAA). Section 1 of the FAA, however, creates an exemption for transportation workers, stating that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees or any other class of workers engaged in interstate commerce.” This term, the Supreme Court is poised to decide whether businesses can evade this exemption by labeling their workers as independent contractors. In other words, it will consider whether the phrase “contracts of employment” is limited to contracts with workers who satisfy the legal definition of employee, or if it was intended to apply to all transportation workers, including independent contractors. Although the Court’s recent history of consistently issuing pro-arbitration decisions may suggest that it is inclined to limit the exemption to employees, this article argues that would be a mistake. The commonly-understood meaning of “contracts of employment” at the time of the FAA’s adoption in 1925, the Act’s legislative history, and policy concerns of preventing companies from intentionally mislabeling employees as independent contractors all favor interpreting Section 1 to apply to all transportation workers, regardless of their status. Such a result is both consistent with the FAA and can mitigate the ongoing exploitation of workers by their employers

The Evolution of Empathy Research: Models, Muddles, and Mechanisms

The word empathy enters the English language in 1909, translated incompletely from German by a British-born psychologist interested in introspection. In the ensuing 100+ years, the term has been defined in a range of different ways by researchers and scholars. The biopsychosocial framework developed by George Engel comes closest to capturing empathy as a biological, psychological and social phenomenon. In this paper, I explore the psychological and social/communicative dimensions of empathy. Psychologists ask the question, How does the capacity for empathy vary across individuals? By contrast, interaction scholars ask, How is empathy communicated from one person (a healthcare provider) to another (a sufferer)? A communication focus involves the accuracy and impact of empathic communication as evidenced in a sufferer’s response. The two views of empathy, as a quality or capacity or as co-created in interaction, are contradictory, and are a source of confusion and contentiousness in the research literature. As in theoretical physics, where an as yet unresolved 80 year controversy has marked the debate about whether light is a particle or wave, research on empathy will likely remain paradoxical, unresolved and a source of creativity and innovation in the science and art of human caring