Do fat tails matter in GARCH estimation? Testing market efficiency in two transition economies

The use of the GARCH-class of models is commonplace when examining stockmarket returns. In this paper we use data on stock markets in two transitioneconomies, the Czech Republic and Romania, to demonstrate the importance ofusing the correct GARCH specification. When residuals are characterised by ‘fattails’ or kurtosis, the use of a GARCH-t specification is appropriate. Diagnostictests suggest that the GARCH-t specification is appropriate for modelling stockmarket returns in Romania, whilst the standard GARCH specification is adequatefor the Czech Republic. Using a standard GARCH specification leads torejection of the null hypothesis of market efficiency in Romania, whereas thisnull hypothesis cannot be rejected using the GARCH-t specification. The nullhypothesis of efficiency cannot be rejected in the Czech Republic using eitherspecification. Thus, we find that the presence of ‘fat tails’ can have importantimplications for inference in the analysis of stock market returns

Monopoly rents and price fixing in betting markets

Betting markets provide an ideal environment in which to examine monopoly power due to the availability of detailed information on product pricing. In this paper we argue that the pricing strategies of companies in the UK betting industry are likely to be an important source of monopoly rents, particularly in the market for forecast bets. Pricing in these markets are shown to be explicitly coordinated. Further, price information is asymmetrically biased in favor of producers. We find evidence, based on UK data, that pricing of CSF bets is characterized by a significantly higher markup than pricing of single bets. Although this differential can in part be explained by the preferences of bettors, it is reasonable to attribute a significant part of the differential as being due to monopoly power

A policy response to the e-commerce revolution: the case of betting taxation in the UK

Several environmental changes in the 1990s – including the introduction of a national lottery, the rise of Internet gambling, and the reduction of trade barriers within the EU – induced the UK government to initiate a large-scale review of betting duty. As a result of this review, the government recently announced a significant reduction in betting taxes. They also decided to replace the current general betting duty (GBD), levied as a proportion of betting stakes, with a gross profits tax (GPT), based on the net revenue of bookmakers. We examine the economic rationale behind these decisions and demonstrate how these tax changes have broad implications regarding optimal levels of taxation for other sources of government revenue

An evaluation of the USDA ESAP program for converting EM data to electrical conductivity at Goodale Research Farm using a GEM2 and an EM38

Non-Peer Reviewe

Shear bands and cracking of metallic glass plates in bending

The thickness dependence of yielding and fracture of metallic glass plates subjected to bending is considered in terms of the shear band processes responsible for these properties. We argue that the shear band spacing (and length) scales with the thickness of the plate because of strain relaxation in the vicinity of the shear band at the surface. This is consistent with recent measurements of shear band spacing versus sample size. We also argue that the shear displacements in the shear band scale with the shear band length and plate thickness, thus causing cracks to be initiated in thicker plates at smaller bending strains. This leads to fracture bending strains that decrease markedly with increasing plate thickness, consistent with recent experiments. These results suggest that amorphous metals in the form of foams might have superior ductility and toughness

The abortion-crime link: evidence from England and Wales

We use panel data from 1983 to 1997 for the 42 police force areas in England and Wales to test the hypothesis that legalizing abortion contributes to lower crime rates. We provide an advance on previous work by focusing on the impact of possible endogeneity of effective abortion rates with respect to crime. Our use of U.K. data allows us to exploit regional differences in the provision of free abortions to identify abortion rates. When we use a similar model and estimation methodology, we are able to replicate the negative association between abortion rates and reported crime found by Donohue and Levitt for the U.S. However, when we allow for the potential endogeneity of effective abortion rates with respect to crime, we find no clear connection between the two.

Economics and euthanasia

This paper argues that a cost-benefit type economic analysis of whether or not to prohibit euthanasia should not be undertaken by health services managers unless ethical issues have been resolved to a particular conclusion. A conclusion on ethical grounds in favour of the prohibition of euthanasia renders the consideration of economic criteria redundant. The case of the German euthanasia programme in the 1930s is used to illustrate the danger of attempting to combine ethical and economic criteria into a single decision rule