Exchange Rate Interventions and Insurance: Is “Fear of Floating” a Cause For Concern?

Fear of floating” is one of the central empirical characteristics of exchange rate regimes in emerging markets. However, while some view “fear of floating” in terms of the optimal ex post monetary response to external shocks, protecting balance sheets and avoiding inflation, others have argued that from an ex ante perspective such a policy leads to private sector underinsurance against sudden stops. A commitment to floating during potential crises would increase the incentives of the private sector to conserve international liquidity. This paper develops a model of the optimal exchange rate regime when both ex ante and ex post concerns are present. Since it is only “fear of floating” during potential sudden stops which undermines insurance, we reexamine the data on exchange rate regimes for evidence that exchange rate flexibility is state-contingent. We find most emerging markets exhibit non-contingent policies with a uniformly low level of flexibility, which together with an absence of substituteinsurance policies supports the claim that greater exchange rate flexibility during sudden stops would be desirable for such countries. However, more recent floats with intermediate levels of credibility exhibit little state contingency because of a uniformly high degree of flexibility. More established floats with high credibility exhibit statecontingent regimes, retaining a capacity for discretionary intervention, but floating during potential crises. Exchange rate flexibility is associated with increased private sector hoarding of dollar assets and reduced incidence of sudden stops. Together the evidence suggests that the insurance benefits to floating for emerging markets can be substantial and that the credibility of the monetary policy framework is central to successful implementation of this policy.

Prospects for the In Situ detection of Comet C/2019 Y4 ATLAS by Solar Orbiter

The European Space Agency's Solar Orbiter spacecraft will pass approximately downstream of the position of comet C/2019 Y4 (ATLAS) in late May and early June 2020. We predict that the spacecraft may encounter the comet's ion tail around 2020 May 31-June 1, and that the comet's dust tail may be crossed on 2020 June 6. We outline the solar wind features and dust grain collisions that the spacecraft's instruments may detect when crossing the comet's two tails. Solar Orbiter will also pass close to the orbital path of C/2020 F8 (SWAN) on 2020 May 22, but we believe that it is unlikely to detect any material associated with that comet.Comment: 3 pages, 1 figur

"Seize the state, seize the day": state capture, corruption, and influence in transition

The main challenge of the transition has been to redefine how the state interacts with firms, but little attention has been paid to the flip side of the relationship : how firms influence the state - especially how they exert influence on, and collude with public officials to extract advantages. Some firms in transition economies have been able to shape the rules of the game to their own advantage, at considerable social cost, creating what the authors call a"capture economy"in many countries. In the capture economy, public officials, and politicians privately sell under-provided public goods, and a range of rent-generating advantages"a la carte"to individual firms. The authors empirically investigate the dynamics of the capture economy, on the basis of new firm-level data from the 1999 Business Environment and enterprise performance survey (BEEPS), which permits the unbundling of corruption into meaningful, and measurable components. they contrast state capture (firms shaping, and affecting formulation of the rules of the game through private payments to public officials, and politicians) with influence (doing the same without recourse to payments), and with administrative corruption ("petty"forms of bribery in connection with the implementation of laws, rules, and regulations). They develop economy-wide measures for these phenomena, which are then subject to empirical measurement utilizing the BEEPS data. State capture, influence, and administrative corruption are all shown to have distinct causes, and consequences. Large incumbent firms with formal ties to the state tend to inherit influence as a legacy of the past, and tend to enjoy more secure property, and contractual rights, and higher growth rates. To compete against these influential incumbents, new entrants turn to state capture as a strategic choice - not as a substitute for innovation, but to compensate for weaknesses in the legal, and regulatory framework. When the state under-provides the public goods needed for entry and competition,"captor"firms purchase directly from the state, such private benefits as secure property rights, and removal of obstacles to improved performance - but only in a capture economy. Consistent with empirical findings in previous research on petty corruption, administrative corruption - unlike both capture and influence - is not associated with specific benefits for the firm. The focus of reform should be shifted toward channeling firms'strategies in the direction of more legitimate forms of influence, involving societal"voice", transparency reform, political accountability, and economic competition, Where state capture has distorted reform to create (or preserve) monopolistic structures, supported by powerful political interests, the challenge is particularly daunting.Roads&Highways,Corruption&Anitcorruption Law,Decentralization,Economic Theory&Research,National Governance,National Governance,Governance Indicators,Economic Theory&Research,Corruption&Anitcorruption Law,Microfinance

Weak and strong comets in the solar wind

When within the inner solar system, comets possess gaseous atmospheres. The gases therein are ionized, and eventually join the solar wind. This thesis describes an investigation of the interaction of comets with the solar wind. The work begins with an overview of the processes involved in the comet-solar wind interaction region, and the domains and boundaries that exist in the region. A review of remote observations of cometary ions is given. The characteristics of visible plasma features are summarized, together with the theories proposed to explain them. An overview of the Giotto spacecraft and its instruments, and a description of its mission to two comets are presented. Ground-based observations were obtained of the ion features present in Comet C/1996 B2 Hyakutake. The morphologies and motions of the comet's plasma features are described. The formation of tail rays was captured during a high temporal resolution image sequence. A gas production rate estimate is derived from the observations, and a model of ray morphologies is proposed, based partly upon observational evidence. 45P/Honda-Mrkos-Pajdusakova and C/1996 Q1 Tabur were also observed; however, no strong ion features were detected. An analysis of the plasma features of 26P/Grigg-Skjellerup then follows. A description of the solar wind conditions at that comet during the Giotto encounter is given, and an estimate of its production rate is made. Ground-based observations of Grigg-Skjellerup are compared to in-situ Giotto data. Morphological features were detected in ground-based images; it is proposed that they could have been linked to certain solar wind discontinuities. A qualitative description of a model of ion ray formation then follows. The thesis concludes with a summary of the main results

Far From Home: Do Foreign Investors Import Higher Standards of Governance in Transition Economies?

Based on the Business Environment and Enterprise Performance Survey (BEEPS) of firms in transition countries, which unbundles corruption to measure different types of corrupt transactions and provide detailed information on the characteristics and performance of firms, we find that: i) corruption reduces FDI inflows and attracts lower quality investment in terms of governance standards; ii) in misgoverned settings, FDI firms may magnify the problems of state capture and procurement kickbacks, while paying a lower overall bribe burden than domestic firms; iii) FDI firms undertake those forms of corruption that suit their comparative advantages, generating substantial gains for them and challenging the premise that they are coerced, which makes it difficult to develop effective constraints on such behavior; and, iv) transnational legal restrictions to prevent bribery had not led to higher standards of corporate conduct among foreign investors by the year 2000. Rather than being construed as a case against foreign investment; we argue that state capture is created and maintained through restrictions on competition and entry in strategic sectors. Thus, enhancing competition by attracting a wider, more diverse set of FDI firms is critical to the broader strategic framework of fighting state capture and corruption.foreign direct investment, FDI, kickbacks, state capture, bribery, corporate governance, corruption, governance, transition economies

Measuring governance, corruption, and State capture - how firms and bureaucrats shape the business environment in transition economies

As a symptom of fundamental institutional weaknesses, corruption needs to be viewed within a broader governance framework. It thrives where the state is unable to reign over its bureaucracy, to protect property and contractual rights, or to provide institutions that support the rule off law. Furthermore, governance failures at the national level cannot be isolated from the interface between the corporate and state sectors, in particular from the heretofore under-emphasized influence that firms may exert on the state. Under certain conditions, corporate strategies may exacerbate mis-governance at the national level. An in-depth empirical assessment of the links between corporate behavior and national governance can thus provide particular insights. The 1999 Business Environment and Enterprise Performance Survey (BEEPS) - the transition economies component of the ongoing World Business Environment Survey - assesses in detail the various dimensions of governance from the perspective of about 3,000 firms in 20 countries. After introducing the survey framework and measurement approach, the authors present the survey results, focusing on governance, corruption, and state capture. By unbundling governance into its many dimensions, BEEPS permits an in-depth empirical assessment. The authors pay special attention to certain forms of grand corruption, notably state capture by parts of the corporate sector - that is, the propensity of firms to shape the underlying rules of the game by"purchasing"decrees, legislation, and influence at the central bank, which is found to be prevalent in a number of transition economies. The survey also measures other dimensions of grand corruption, including those associated with public procurement, and quantifies the more traditional ("prettier") forms of corruption. Cross-country surveys may suffer from bias if firms tend to systematically over- or underestimate the extent of problems within their country. The authors provide a new test of this potential bias, finding little evidence of country perception bias in BEEPS.Small Scale Enterprise,Decentralization,Corruption&Anitcorruption Law,Public Sector Corruption&Anticorruption Measures,Small and Medium Size Enterprises,National Governance,Governance Indicators,Corruption&Anitcorruption Law,Public Sector Corruption&Anticorruption Measures,Economic Policy, Institutions and Governance

Measuring Governance, Corruption and State Capture: How Firms and Bureaucrats Shape the Business Environment in Transition Economies

Recent studies have focussed on the characteristics and policies of the state to explain the extent and causes of corruption, with little attention paid to the role played by firms. Consequently, the links between corporate governance and national governance have been unexplored. This paper summarises the results of the Business Environment and Enterprise Performance Survey (BEEPS) across 20 transition economies, providing an assessment of governance and corruption from the perspective of firms. The BEEPS is part of the global World Business Environment Survey being carried out by the World Bank. The survey design permits an in-depth empirical analysis of governance and corruption, unbundling governance into its component dimensions. This allows a more detailed quantitative assessment of corruption, a more nuanced understanding of the causes of the problem and as a result a stronger foundation for policy advice. Particular attention is paid to 'state capture' by parts of the corporate sector (i.e. the propensity of firms to shape the underlying 'rules of the game' including 'purchase' of legislation and court decisions). The survey also provides measures of other dimensions of 'grand corruption', such as that related to public procurement. Typically, cross-country surveys suffer from a potential bias if firms have a tendency to systematically over- or under-estimate the extent of problems in their own country. We implement a simple method for evaluating the extent of this 'country perception bias' and find little evidence pointing to such bias in the BEEPS.Governance, corruption, state capture, transition economies

Solar Wind Velocities at Comets C/2011 L4 Pan‐STARRS and C/2013 R1 Lovejoy derived using a New Image Analysis Technique

The ion tails of bright comets have long been considered as natural tracers of the solar wind near these objects. Studies of comets and their ion tails allow inexpensive monitoring of key solar wind structures in the inner heliosphere, much of which is otherwise only accessible by in situ solar wind spacecraft measurements. Here, we present a novel technique to mine the rich archive of amateur, professional and spacecraft observations of cometary ion tails. To demonstrate this, we focus on Near-Sun comet C/2011 L4 (Pan-STARRS) during Carrington Rotations (CR) 2134 and 2135 and comet C/2013 R1 (Lovejoy) during CR 2118. We outline the technique’s shortcomings, including its geometric limitations, and present a catalogue of radial solar wind velocities derived in the near-comet environment and information on the heliospheric conditions inferred from the measured solar wind. Complementary measurements, derived from folding ion rays and a velocity profile map built from consecutive images, are provided as an alternative means of quantifying the solar wind-cometary ionosphere interaction. We find that comets are generally good indicators of solar wind structure, but the quality of the results is strongly dependent on the observing geometry