WP Series Archive

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Working Paper Series



50. Bown, Chad P. (The World Bank) & McCulloch, Rachel, "Antidumping and Market Competition: Implications for Emerging Economies" (2012).

Abstract: While the original justification of the antidumping laws in the industrial economies was to protect domestic consumers against predation by foreign suppliers, by the early 1990s the laws and their use had evolved so much that the opposite concern arose. Rather than attacking anti-competitive behavior, dumping complaints by domestic firms were being used to facilitate collusion among suppliers and enforce cartel arrangements. This paper examines the predation and anti-competitiveness issues from the perspective of the “new users” of antidumping—the major emerging economies for which antidumping is now a major tool in the trade policy arsenal. We examine these concerns in light of important ways in which the world economy and international trading system have been changing since the early 1990s, including more firms and more countries participating in international trade, but also more extensive links among suppliers and consumers through multinational firm activity and vertical specialization.  

49. Osler, Carol, & Wang, Xuhang, "The Microstructure of Currency Markets" (2012).

Abstract: This paper describes the structure and microeconomics of the foreign exchange market. It begins by outlining the major participants and the instruments they trade, highlighting the vast institutional changes that accompanied the emergence of electronic trading since the 1990s. It then discusses how and why order flow drives exchange rates; the economics of liquidity provision; the price discovery process; and volatility. 

48. Osler, Carol, "Market Microstructure and the Profitability of Currency Trading" (2012).

Abstract: Currency trading is a vast and highly profitable business. This paper examines the profitability of two popular currency trading strategies in light of currency-market microstructure research. The carry-trade strategy involves borrowing a low-interest currency and investing the proceeds in a high-interest currency. Technical trading strategies are determined exclusively on the basis of past asset prices and trading volumes. Under the efficient markets hypothesis, neither of these approaches to speculative trading should produce excess returns. The review shows that the profitability of carry-trade investing and technical trading strategies can represent rational long-run equilibria given the structure of currency markets and the incentives and constraints faced by traders.

47. Mann, Catherine, & Klachkin, Oren, "U.S. Treasury Auction Yields During Boom, Bust, and Quantitative Easing: Role for Fed and Foreign Purchasers" (2012). 

Abstract: Since 2007, three actors have been particularly important in U.S. Treasury auctions: The U.S. government, issuing $8.4 trillion in U.S. Treasury securities in 2010 alone; foreign official entities, purchasing $398 billion in U.S. Treasury securities in 2010 alone; and finally the Federal Reserve, which intervened in the U.S. Treasury market by purchasing $900 billion U.S. Treasury securities during 2009 and 2010.  Using our unique data set of every U.S. Treasury auction from May 2003 to year-end 2011, we find first, that the yield at auction compared to the pevious-day’s matched-maturity instrument varies significantly across the maturity of the instrument, as well as the time period of boom and bust.  Similarly, the bid-cover ratios are importantly related to the auction yield and to macroeconomic environment.  Third, we find that indirect bidders, a proxy for foreign official entities, although not allocated the largest shares at the auctions, were the relatively more important group in determining the auction yield on long-term U.S. Treasury securities.  Finally, we find that all of these relationships change significantly when the Federal Reserve entered the Treasury market.   

46. Mann, Catherine, "Information technology, social surplus, startups, small businesss" (2012).

Abstract: Using the detailed Statistics of US Business and the Annual Input-Output accounts, this paper addresses the employment dynamics of establishments of different sizes, in different sectors, and of different intensity of use of information technology hardware, software and IT-services over the time period 2001 to 2009. Findings include (1): IT-using sectors that are above-average in IT-intensity started out being three times more IT-intensive and ended up being more than four-times the IT-intensity as the below-average using sectors. Hence, there is widening dispersion in IT-intensity across sectors in the US economy.  (2) IT producers are a small part of the economy, only about 3% of employment.  However, IT-software and services establishments have tended to add jobs on net, particularly at smaller establishments (size 1-99 employees).  This suggests that IT again is the hot-bed of entrepreneurship.  (3) Small IT-intensive service establishments account for only about 5% of overall employment.  However, net job creation at these small-IT-intensive using establishments accounted for between 13% and 68% of the economy-wide net job change from 2001 to 2009. Entrepreneurship in these IT-using services appears to be promoted by the availability of IT-software and IT-services themselves. (4) Establishments that use IT-intensively both in the manufacturing and services sectors, expand and contract employment over the business cycle relatively more than non-IT-intensive manufacturing and service establishments.  This employment management strategy is more dramatic for manufacturing than for services.  (5) Three approaches to quantifying the direct and indirect gains to the US economy of lower IT prices and increased IT-intensity add up to between $810 and $935 billion for the five years considered 2002-2007. Including IT-services such as computer design, yields a ball-park round $1 trillion as reasonable figure for the gain to the US economy of broad-based use of information technology hardware, software and IT-services for the mid-decade 2000s five-year time period.

45. Bui, Linda, "What we Know About What we Know About Toxic Polluter Behavior from the TRI: Evidence from (almost) Twenty Years of TRI Data in The Petroleum Refining Industry" (2012). 

Abstract: Using the TRI to understand polluting behavior can pose challenges due to the limited number of chemicals that are reported, the potential confounding effect of several regulatory programs that affect TRI substances, the lack of output information, and judgments regarding appropriate measures of releases.  In an effort both to help illustrate and clarify these issues, I study TRI data from the petroleum refining industry using a balanced panel of 199 refineries from 1988-2003.  I find that (1) although both aggregate and toxicity-weighted releases exhibited large declines over the period of study, the pattern of releases were substantially different, strongly suggesting that any inference that is drawn from the data will be sensitive to the measure of releases; and (2) regulatory programs can affect TRI releases both directly and indirectly.  The direct effect occurs because emissions of several TRI substances are simultaneously regulated under the CAA and CWA (and other environmental programs and policies.  The indirect effect occurs when regulatory programs induce changes in the set of inputs or the production process, leading to changes in TRI releases of substances that are not directly regulated under these programs.  Thus, simply “netting-out” CAA and CWA substances from the TRI will not necessarily remove the confounding effects of these regulatory programs.

44. Graddy, Kathryn, "The Extraordinary Art Critic Roger de Piles (1635-1709): An Empirical Analysis of his Rankings and Sale Prices " (2012).

Abstract: Roger de Piles (1635-1709) was a French art critic who decomposed the style and ability of each artist into areas of composition, drawing, color and expression, rating each on a 20 point scale. Based on evidence from two datasets that together span from the mid-eighteenth century to the present, this paper shows that de Piles’ four characteristics are each both currently and historically correlated with prices achieved at auction. The effect of de Piles’ drawing characteristic on price has steadily decreased over the period 1736-1960 while the effect of de Piles’ color characteristic appears to have increased over the same period. De Piles’ overall ratings have also withstood the test of a very long period of time, with estimates indicating that the works of his higher-rated artists achieved a greater return than his lower rated artists.  The annual returns of all artists that he rated achieved comparable returns to other art indices.

43. Avriel, Mordecai (Technion-Israel IT), Hilscher, Jens, & Raviv, Alon, "Inflation Derivatives Under Inflation Target Regimes" (2012).

Abstract: Inflation targeting -- the central bank practice of attempting to keep inflation levels within fixed bounds around a quantitative target -- has been adopted by more than twenty economies. Such practice has an important impact on the stochastic nature of inflation and, consequently, on the pricing of inflation derivatives. We develop a flexible model of inflation targeting in which the central bank's intervention to steer inflation towards the target depends on past deviations and the policymaker's ability or will to enforce the target. We use our model to price inflation derivatives and demonstrate the impact of inflation targeting on derivative pricing.

42. Gulosin, Charisse (Columbia), & Sisli-Ciamarra, Elif, "Founders and Financially Affiliated Directors on Charter School Boards and Their Impact on Financial Performance and Academic Achievement" (2012).

Abstract: This study uses a hand-collected dataset for charter school boards in Massachusetts between 2001 and 2009 to examine the relationship between financial performance and the presence of founders and financially affiliated directors.  School-level financial performance suggests that founder presence on a board has a negative effect on both financial and academic performance of a charter school. On the other hand, the presence of financially affiliated directors on the charter school governing board is positively related to financial performance, but unrelated to academic achievement. The results are consistent with the literature on corporate and nonprofit boards that have attributed financially affiliated directors with greater incentives to monitor financial targets, while founders are less likely to achieve performance expectations. 

41. Bhattara, Saroj (Penn State), Eggertsson, Gauti (NY Fed) & Schoenle, Raphael, "Is Increased Price Flexibility Stabilizing? Redux" (2012).

Abstract: We study the implications of increased price flexibility on aggregate output volatility in a dynamic stochastic general equilibrium (DSGE) model. First, using a simplified version of the model, we show analytically that the results depend on the shocks driving the economy and the systematic response of monetary policy to inflation: More flexible prices amplify the effect of demand shocks on output if interest rates do not respond strongly to inflation, while higher flexibility amplifies the effect of supply shocks on output if interest rates are very responsive to inflation. Next, we estimate a medium-scale DSGE model using post-WWII U.S. data and Bayesian methods and, conditional on the estimates of structural parameters and shocks, ask: Would the U.S. economy have been more or less stable had prices been more flexible than historically? Our main finding is that increased price flexibility would have been destabilizing for output and employment.