Lessons from Iraq and Chilcot

The UK’s Chilcot Report into the 2003 invasion of Iraq, has some essential lessons for all Ministries of Defence to take on board when it comes to ensuring troops have the equipment and support they need, before the next major military operation starts

International Stock Market Efficiency: A Non-Bayesian Time-Varying Model Approach

This paper develops a non-Bayesian methodology to analyze the time-varying structure of international linkages and market efficiency in G7 countries. We consider a non-Bayesian time-varying vector autoregressive (TV-VAR) model, and apply it to estimate the joint degree of market efficiency in the sense of Fama (1970, 1991). Our empirical results provide a new perspective that the international linkages and market efficiency change over time and that their behaviors correspond well to historical events of the international financial system.Comment: 21 pages, 2 tables, 6 figure

Capital Account Liberalization, Institutions and Financial Development: Cross Country Evidence

The empirical relationship between capital controls and the financial development of credit and equity markets is examined. We extend the literature on this subject along a number of dimensions. Specifically, we (1) investigate a substantially broader set of proxy measures of financial development; (2) create and utilize a new index based on the IMF measures of exchange restrictions that incorporates a measure of the intensity of capital controls; and (3) extend the previous literature by systematically examining the implications of institutional (legal) factors. The results suggest that the rate of financial development, as measured by private credit creation and stock market activity, is linked to the existence of capital controls. However, the strength of this relationship varies with the empirical measure used, and the level of development. These results also suggest that only in an environment characterized by a combination of a higher level of legal and institutional development will the link between financial openness and financial development be readily detectable. A disaggregated analysis indicates that in emerging markets the most important components of these legal factors are the levels of shareholder protection and of accounting standards.

What Matters for Financial Development? Capital Controls, Institutions, and Interactions

We extend our earlier work, focusing on the links between capital account liberalization, legal and institutional development, and financial development, especially that in equity markets. In a panel data analysis encompassing 108 countries and twenty years ranging from 1980 to 2000, we explore several dimensions of the financial sector. First, we test whether financial openness can lead to equity market development when we control for the level of legal and institutional development. Then, we examine whether the opening of the goods sector is a precondition for financial opening. Finally, we investigate whether a well-developed banking sector is a precondition for financial liberalization to lead to equity market development and also whether bank and equity market development complements or substitutes. Our empirical results suggest that a higher level of financial openness contributes to the development of equity markets only if a threshold level of general legal systems and institutions is attained, which is more prevalent among emerging market countries. Among emerging market countries, a higher level of bureaucratic quality and law and order, as well as the lower levels of corruption, increases the effect of financial opening in fostering the development of equity markets. We also find that the finance-related legal/institutional variables do not enhance the effect of capital account opening as strongly as the general legal/institutional variables. In examining the issue of the sequencing, we find that the liberalization in cross-border goods transactions is found to be a precondition for capital account liberalization. Our findings also indicate that the development in the banking sector is a precondition for equity market development, and that the developments in these two types of financial markets have synergistic effects.

Anglo-French defence cooperation in the age of austerity

This paper seeks to assess, from a predominantly UK perspective, the potential benefits of enhanced Anglo-French defence cooperation, not only to the two countries concerned but also to Western Europe and the USA. The paper will mainly focus on defence cooperation and not the subordinate agreement regarding limited cooperation on nuclear weapons, which addressed cooperation on the safety and security of nuclear weapons, stockpile certification and countering nuclear and radiological terrorism but seemed to be driven by "acute financial pressures, symptomatic of severe structural deficiencies"

Current Account Balances, Financial Development and Institutions: Assaying the World "Savings Glut"

We investigate the medium-term determinants of the current account using a model that controls for factors related to institutional development, with a goal of informing the recent debate over the existence and relevance of the "savings glut." The economic environmental factors that we consider are the degree of financial openness and the extent of legal development. We find that for industrial countries, the government budget balance is an important determinant of the current account balance; the budget balance coefficient is 0.21 in a specification controlling for institutional variables. More interestingly, our empirical findings are not consistent with the argument that the more developed financial markets are, the less saving a country undertakes. We find that this posited relationship is applicable only for countries with highly developed legal systems and open financial markets. For less developed countries and emerging market countries we usually find the reverse correlation; greater financial development leads to higher savings. Furthermore, there is no evidence of "excess domestic saving" in the Asian emerging market countries; rather they seem to have suffered from depressed investment in the wake of the 1997 financial crises. We also find evidence that the more developed equity markets are, the more likely countries are to run current account deficits.

The Financial Crisis, Rethinking of the Global Financial Architecture, and the Trilemma

This paper extends our previous paper (Aizenman, Chinn, and Ito 2008) and explores some of the unexplored questions. First, we examine the channels through which the trilemma policy configurations affect output volatility. Secondly, we investigate how trilemma policy configurations affect the output performance of the economies under severe crisis situations. Thirdly, we look into how trilemma configurations have evolved in the aftermath of economic crises in the past. We find that trilemma policy configurations and external finances affect output volatility mainly through the investment channel. While a higher degree of exchange rate stability could stabilize the real exchange rate movement, it could also make investment volatile, though the volatility-enhancing effect of exchange rate stability on investment can be cancelled by holding higher levels of international reserves (IR). Greater financial openness helps reduce real exchange rate volatility. These results indicate that policymakers in a more open economy would prefer pursuing greater exchange rate stability and greater financial openness while holding a massive amount of IR. We also find that the crisis economies could end up with smaller output losses if they entered the crisis situation with more stable exchange rates or if they continue to hold a high level of IR and maintain greater exchange rate stability during the crisis period. Lastly, we find that developing countries are often found to have decreased the level of monetary independence and financial openness, but increased the level of exchange rate stability in the aftermath of a crisis, especially for the last two decades. This finding indicates how vulnerable developing countries, especially emerging market ones, are to volatile capital flows as a result of global financial liberalization.economic crisis, financial crisis, trilemma, financial openess, exchange rate stability

Stability of accelerating cosmology in two scalar-tensor theory: Little Rip versus de Sitter

We develop the general reconstruction scheme in two scalar model. The quintom-like theory which may describe (different) non-singular Little Rip or de Sitter cosmology is reconstructed. (In)stability of such dark energy cosmologies as well as the flow to fixed points is studied. The stability of Little Rip universe which leads to dissolution of bound objects sometime in future indicates that no classical transition to de Sitter space occurs.Comment: LaTeX 27 pages, 12 figures, version appeared in Entrop

Token Jumping in minor-closed classes

Given two $k$-independent sets $I$ and $J$ of a graph $G$, one can ask if it is possible to transform the one into the other in such a way that, at any step, we replace one vertex of the current independent set by another while keeping the property of being independent. Deciding this problem, known as the Token Jumping (TJ) reconfiguration problem, is PSPACE-complete even on planar graphs. Ito et al. proved in 2014 that the problem is FPT parameterized by $k$ if the input graph is $K_{3,\ell}$-free. We prove that the result of Ito et al. can be extended to any $K_{\ell,\ell}$-free graphs. In other words, if $G$ is a $K_{\ell,\ell}$-free graph, then it is possible to decide in FPT-time if $I$ can be transformed into $J$. As a by product, the TJ-reconfiguration problem is FPT in many well-known classes of graphs such as any minor-free class