Testing for rational speculative bubbles in the Brazilian residential real-estate market

Speculative bubbles have been occurring periodically in local or global real estate markets and are considered a potential cause of economic crises. In this context, the detection of explosive behaviors in the financial market and the implementation of early warning diagnosis tests are of critical importance. The recent increase in Brazilian housing prices has risen concerns that the Brazilian economy may have a speculative housing bubble. In the present paper, we employ a recently proposed recursive unit root test in order to identify possible speculative bubbles in data from the Brazilian residential real-estate market. The empirical results show evidence for speculative price bubbles both in Rio de Janeiro and Sao Paulo, the two main Brazilian cities

Effects of the current financial and economic crisis on the rural landscape as well as the agri-food sector in Europe and Central Asia

This paper reviews the expected effects of the current financial crisis and subsequent recession on the rural landscape, in particular the agri-food sector in Europe and Central Asia (ECA) on the basis of the structure of the rural economy and of different organisations and institutions. Empirical evidence suggests that the crisis has hit the ECA region the hardest. Agriculture contributes about 9% to gross domestic product (GDP) for the ECA region as a whole with 16% of the population being employed in the agricultural sector. As far as the impact of the financial crisis on the agri-food sector is concerned, there are a few interconnected issues: (1) reduction in income elastic food demand and commodity price decline, (2) loss of employment and earnings of rural people working in urban centres, implying also costly labour reallocation, (3) rising rural poverty originating mainly from lack of opportunities in the non-farm sector and a sizable decline of international remittances, (4) tightening of agricultural credit markets, and the (5) collapse of sectoral government support programs and social safety-net measures in many countries. The paper reveals how the crisis hit farming and broader agri-business differently in general and in the ECA sub-regions

The theory of international business: the role of economic models

This paper reviews the scope for economic modelling in international business studies. It argues for multi-level theory based on classic internalisation theory. It present a systems approach that encompasses both firm-level and industry-level analysis

International Trade and Investment Sanctions

The purpose of this paper is to clarify the theory of international economic sanctions and to provide estimates of the short-run economic impact on South Africa of externally imposed reductions of the imports and capital flows into that country. A macroeconomic picture of South Africa's "dependence" is drawn, and the economy's vulnerability in the short run is seen to be in its capacity to import, not in exports or capital flows. Trade and capital sanctions most clearly damage South Afnca's growth potential; the short-run impact is harder to quantify. A static linear programming model of the South African economy is constructed in an attempt at this quantification. This model estimates that small sanctions would have small impact—i.e., if imports were reduced by less than one-fourth, GDP would be cut by only about one half as large a percentage as imports. Larger import reductions cause greater damage. If imports were to be cut in half, not only would GDP be seriously reduced but massive unemployment and relocation of white labor would occur.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/68182/2/10.1177_002200277902300401.pd

Bitcoin: The road to hell is paved with good promises

In this paper, by using econometric techniques we provide evidence that bitcoin exhibited the formation of speculative bubble in 2017. To conceptually rationalize the results, we delve into the extant theoretical approaches developed by Kindleberger's (1978) speculative bubbles and Minsky's (1992) financial instability hypothesis. Certainly, bitcoin has spurred a revolution in payment technology that, if treated cautiously can facilitate financial intermediation and inclusion. Ultimately, whether or not bitcoin constitutes a bubble is a decision for investors as the road to hell is paved with good promises

The Olympic Bid Cycle as a form of irrational investing: An application of Minskyian theory

Host city bidding for the Olympic Games appears to constitute a form of pro-cyclical irrational investing that leads to multi-billion dollar economic and financial shortfalls and budget over-runs with 100% consistency. The utilisation of Minsky’s Financial Instability Hypothesis (FIH) and Credit Cycle to the Olympic Bid Cycle sheds valuable light on the irrationality of these practices, highlighting a move from stable (hedge) to unstable (speculative) and unsustainable, precarious (ponzi) financing over the life-cycle of an Olympic bid. Application of Minskyian theory to the Olympic Bid Cycle carries important insights for practitioners and policy-makers, extends the analysis of Olympic-Games studies to the post-Classical economics realm, and addresses a wider theoretical call for the utilisation of Minskyian theory outside of a financial markets context. The article concludes with recommendations for further research

Political Regimes and Sovereign Credit Risk in Europe, 1750-1913

This article uses a new panel data set to perform a statistical analysis of political regimes and sovereign credit risk in Europe from 1750 to 1913. Old Regime polities typically suffered from fiscal fragmentation and absolutist rule. By the start of World War I, however, many such countries had centralized institutions and limited government. Panel regressions indicate that centralized and?or limited regimes were associated with significant improvements in credit risk relative to fragmented and absolutist ones. Structural break tests also reveal close relationships between major turning points in yield series and political transformations

Building professional discourse in emerging markets: Language, context and the challenge of sensemaking

Using ethnographic evidence from the former Soviet republics, this article examines a relatively new and mainly unobserved in the International Business (IB) literature phenomenon of communication disengagement that manifests itself in many emerging markets. We link it to the deficiencies of the local professional business discourse rooted in language limitations reflecting lack of experience with the market economy. This hampers cognitive coherence between foreign and local business entities, adding to the liability of foreignness as certain instances of professional experience fail to find adequate linguistic expression, and complicates cross-cultural adjustments causing multi-national companies (MNCs) financial losses. We contribute to the IB literature by examining cross-border semantic sensemaking through a retrospectively constructed observational study. We argue that a relative inadequacy of the national professional idiom is likely to remain a feature of business environment in post-communist economies for some time and therefore should be factored into business strategies of MNCs. Consequently, we recommend including discursive hazards in the risk evaluation of international projects