Exchange rate, inflation and unemployment in East European economies: the case of Poland and Hungary*

The aim of the paper is to model the impact of exchange rate on both inflation and unemployment variables in economies which are characterized by important structural changes, i.e. a transition phase moving from centralized economies towards market economies. This phenomenon, which is common to the East European countries, stressed different effects both for what concerns the behaviour of economic agents and for what concerns fiscal and monetary measures adopted by governments and aiming to keep under control the inflation–unemployment trade off. Time series relationships between these variables are investigated within an econometric model. Economic theory and the available data on the hypothetically relevant variables, along with the consideration of the main facts occurred in the period under study, characterize our information set. It is found that single equation analysis yields inefficient inference relative to the whole system analysis, and important structural changes are detected which reflect possible breaks in the structure of the economic system along with a change in economic policy.     

Dynamic Structure of Disequilibrium Models

This paper investigates the dynamic structure of a standard disequilibrium model. By assuming that the model variables are non-stationary time series with respect to ample empirical evidence, we find the following: 1) It is the exogenous variables rather than the price adjustment process that form the real adjustment force of the model; 2) Quantity disequilibrium and price disequilibrium are isomeric in the model, and follow a weakly stationary process when all the variables areI (1) nonstationary; 3) The disequilibrium process has a none-zero mean when the weakly exogenous variables of the demand equation do not cointegrate with those of the supply equation, corresponding to certain 'chronic disequilibrium' phenomena; 4) The isomerism between quantity disequilibrium and price changes makes it unnecessary to lean on the 'min condition' to characterise disequilibrium.     

The Warsaw Stock Exchange in the period 1991–1993. Qualitative problems of its modelling

The paper focuses on the analysis of return on shares quoted on the Warsaw Stock Exchange (WSE) in the period 1991–1993. We found that the WSE specific institutional background resulted in a large variation of return rates, their distributional assymetry and truncations which make hypotheses testing procedures about criteria of investors' choice and the price setting mechanism more complicated.     

Single-product versus uniform SSNIPs

It is common to apply a SSNIP test with a uniform price increase on all products in the candidate market. We show that in situations with asymmetries - for example variations in revenues - a uniform SSNIP test may suggest that the relevant market should include more products even though it could be profitable to increase the price of only one product in the candidate market. Our results are illustrated with some findings from a survey in a local grocery market.     

Privacy law as price control

The median Internet user is concerned about digital advertisers collecting personal information. To address these fears, the European Union passed the Privacy Directive to regulate the common business practice of information collection. This paper investigates the potential effects of this regulation, finding that the law is likely to generate several unintended consequences. Economists and legal scholars acknowledge that personal data serves as the “price” for accessing many digital platforms. I extend this logic to argue that if a regulation enables consumers to stop supplying this information, while continuing to consume the site’s content, it is equivalent to a price control. Next, I discuss unintended consequences that this price control may generate: tie-in sales, investment flight, and altered exchange characteristics. Lastly, I conclude that, just as with traditional price controls, the privacy price control may be a way for government officials to enhance their popularity with the citizenry. In short, my analysis suggests that one of the most well-researched policy interests of economics—the theory of price controls—can shed light on one of economists’ newest interests: digital privacy.     

The communicative impact of terrorist attacks on the financial marketplace: a perspective from the efficient market hypothesis

This study measures patterns following a terrorist attack, from the perspective of market efficiency, to determine the communicative impact of terrorist attacks on the financial marketplace. The Efficient Market Hypothesis postulates that asset prices fully reflect all available information. An important implication is that, because market price changes are determined by new information (or variations in discount rates), it would be highly difficult to “beat the market” with expert stock selection or market timing. Overall, we found that, based on mixed results, terrorist attacks do not lead to a distinguishable pattern in the financial marketplace. Nevertheless, drawing on the Yale Model of Persuasion, these results suggest that terrorists are effective in their communicative goals, and they do lead to a compelling pattern in the proportion of negative returns on the day of the attack. More precisely, terrorists are able to communicate their message on a global scale, thereby resulting in investors adjusting their estimates of value downward. While a possible price correction pattern was found, the lack of statistical analysis performed on the variables, to a certain degree of significance, is a limitation of this study that ultimately renders the results of the study inconclusive.

     

INFORMAL CONTROL AND ILLICIT DRUG TRADE*

Antidrug legislation and enforcement are meant to reduce the trade in illegal drugs by increasing their price. Yet the unintended consequence is an increase in informal control—including retaliation, negotiation, avoidance, and toleration—among drug users and dealers. Little existing theory or research has explored the connections between informal control and drug trading. This article uses the rational choice and opportunity perspectives to explore the question: How and why does the frequency and seriousness of popular justice—as a whole or for each form—affect the price and rate of drug sales? The proposed theory is grounded on and illustrated with qualitative data obtained from drug dealers. This article concludes by discussing the scholarly and policy implications.     

Drunk driving and the ecological fallacy: Comments on a paper by Phillips,Ray, and Votey

Phillips, Ray, and Votey (1984a) used a model of traffic casualties incorporating three independent variables—miles driven, rainfall, and alcohol consumption. They applied it to British data to attempt to determine (1) whether the British Road Safety Act of 1967 had an impact on road casualties and (2) the relative contribution of the three variables to road casualties. They accomplished the first objective using interrupted time series analysis, but fell victim to the ecological fallacy in their interpretation of the second.     

Information exchange through non-binding advance price announcements: an antitrust analysis

We study the welfare effects of non-binding advance price announcements. Applying a simulation-based approach in a differentiated Bertrand model with horizontal products and asymmetric information, we find that such announcements can help firms to gain information on each other thereby allowing them to achieve higher profits. However, our results also show that the overall welfare effects of such announcements in a context of heterogeneous products are not as clear-cut as previous research in a homogeneous products framework has suggested. We conclude that—although non-binding advance price announcements may raise competition concerns—in many settings, their positive effects are likely to outweigh the potential detrimental effects on welfare.     

Exchange rate volatility in high inflation economies: An econometric study of Poland and Brazil

This paper analyses exchange rate series for Poland and Brazil. The Polish series, related to the period soon after the first liberalizing measures, presents a high volatility which is not accounted for by some selected ‘fundamentals’. The Brazilian series, though also keeping evidence of excessive volatility, is cointegrated with fundamentals similar to those of the Polish case. This raises the issue of a learning process taking place during persistent inflations. Unsuccessful one-shot stabilization plans can reinforce this process, leaving a lasting imprint in the excessive volatility pattern. The message seems clear, though maybe not easy to implement: agents take some time to learn to live in non-stable environments; to avoid this by one-shot measures — if unsuccessful — can have a very high cost and pre-empt future corrections.     

Specification of dynamic wage-price relations in Poland (1980–1991)

This paper focuses on the analysis of wage-price relationships during the period 1980–1991 in Poland. The dynamics of wage and price series under radical structural changes are examined, as well as the impact of earlier sharp price increases. The process of wages-to-prices adjustment both in the long- and short-term is analysed. The hypothesis that the introduction of economic reform (at the beginning of 1990) would result in a tendency towards the stabilization of real wages is investigated. This is done through integration and cointegration analysis of wage and price series with special attention being paid to the problems arising from theI(2) character of the variables investigated. The concept of polynomial cointegration is applied to formulate error correction terms for the short-run model of wages. The computations have been made using quarterly data. The results reflect an inhomogeneity of the period investigated, especially the effects of the introduction of economic reform at the beginning of 1990. The nonstationarity of real wages is confirmed, but not their tendency towards stabilization.     

Advance price announcements and antitrust policy

This paper analyzes the competitive significance of advance price announcements. In the model, advance price announcements are used by firms to communicate private information on demand or cost. By so sharing the information, the firms are able to set their prices at more profitable levels. When the advance price announcements resolve demand uncertainty, profits rise and consumer surplus falls. Interestingly, when the advance price announcements resolve cost uncertainty, both profits and consumer welfare rise. Finally, we examine U.S. antitrust policy regarding price announcements.     

Campaigns and the Selection of Policy-Seeking Representatives

Can voters learn meaningful information about candidates from their electoral campaigns? As with job market hiring, voters, like employers, cannot know the productivity of candidates, especially challengers, when they elect them. The real productivity of representatives only reveals itself after the election. We explore if the information revealed during the “hiring process” is a good signal of the legislative effort of elected representatives. In the incomplete information environment of election campaigns, candidates should turn to credible signals to indicate their “type” to voters. Campaigns—and campaigning—are means by which candidates can, in principle, signal their motivations to voters. Is a candidate’s behavior on the campaign trail informative about his or her behavior and effort as a legislator? Does it, for example, reveal whether a candidate will be more hard working and legislatively active? Using evidence from the European Parliament, we show that campaign activity prior to the election is not related to policy-seeking behavior in the legislature post-election. The finding also holds in two national-level settings and across a variety of measures of legislative effort. Those who campaign harder do seem more likely to win the election, but campaign effort seems to provide a poor guide to what the winner does once elected.     

Post-motivational Progression and the Possibility of Aborting Protracted Crime

The idea for this article emerged from a cursory examination of the National Crime Victimization Survey (US Department of Justice, 1997–2004). Unbeknownst to the authors (and possibly to most of the readers) is a trend confirming that about 2/3 of all violent crimes in the United States end up as attempted crimes, as opposed to completed crimes. Equally intriguing is that international crime figures confirm, almost exactly, the US Survey statistics. If these figures are accurate, then criminologists and crime control agents should ask the question: if 2/3 of all violent crimes fail to materialize—for whatever reason—under their own weight, why cannot criminologists and crime control agents in the future develop a clinical competency that can exploit this failure and further reduce the completion rate of violent crime to technically zero? If that can be accomplished, then violent crimes can theoretically be aborted. Such a futuristic design should not be considered farfetched in light of the current advancements in today’s technology, including the military practice of laser-bombing a car speeding on the road several miles below, or the on going military testing of “shooting a missile with a missile”. This article focuses on the undiscovered, yet enormous, role of post-motivational criminology, which—when the desired clinical competency is developed—can literally change the trajectory of violent crimes and possibly abort them in progress. While this article cannot promise answers for the next decades, it can, at least, stimulate the criminological community to think beyond its traditional boundaries and to engage in quantum research consortiums that can study the dynamics of post-motivational progressions and eventually resolve why some bullets miss or can intentionally be made not to hit.     

Lessons for parents,teachers, and juvenile probation officers: seven ideal criteria for constructively evaluating discipline

By delineating a basic set of terms, this paper seeks to enhance the appreciation, understanding, and discussion of constructive discipline. Advocating initiative by our nation's juvenile probation officers, the author views this cadre of some 18,000 JPOs as an important catalyst in the never-ending task of delinquency prevention. In an era of growing harshness toward youthful offenders, we must remain cognizant that much of the chronic violence which we justly abhor has roots in prior parental malpractice. Our approach provides a model to place three major role-players — parents, teachers, JPOs — all “on the same page,” to borrow a popular metaphor. We focus on seven criteria for evaluating discipline by each participant, while furnishing a supplementary framework to amplify task awareness. Despite already having excessive caseloads, JPOs are encouraged to serve as outreach agents in a common cause. The tables seek to provide officers a basic set of “handouts” for distribution at panels, workshops, seminars, school visits, and parent conferences. Parents should especially appreciate that the seven criteria give guidelines not only for their disciplinary practices, but also for those of teachers and JPOs     

Risk Governance of the Swedish Customs Service: Negotiating Security,Efficiency, and Poor Information

During the last decade, ‘risk management’ has become the common language through which different and sometimes contradictory expectations are brokered in the Swedish customs service. Security concerns, corporate interests and managerial reforms are all phrased—or re‐phrased—as considerations of risk. These considerations are then used to direct organizational strategy and resources. The crucial moment is the operationalization of risks, which are negotiated at the policy level, all the way down through the organization. I will argue that this has happened in the Swedish customs service during the last decade. The successive operationalizations of drugs, violation of intellectual property rights and organized crime have enabled a streamlining of the organization along the policy level risks. The resulting risk governance is mainly about managing the customs as an organization. Yet it also affects the customs' use of force by changing the way border crossers are singled out for control. The traditional, informal risk assessment at the border is being replaced—or supplemented—by formal risk profiles, constructed from the booking information provided by transportation companies. As a consequence, the control selection is increasingly based on a set of impersonal indicators such as mode of payment and possible rebooking.     

Using Bayes’ theorem in behavioural crime linking of serial homicide

Purpose. The study extends research by Santtila et al. (2008) by investigating the effectiveness of linking cases of serial homicide using behavioural patterns of offenders, analysed through Bayesian reasoning. The study also investigates the informative value of individual behavioural variables in the linking process. Methods. Offender behaviour was coded from official documents relating to 116 solved homicide cases belonging to 19 separate series. The basis of the linkage analyses was 92 behaviours coded as present or absent in the case based on investigator observations on the crime scene. We developed a Bayesian method for linking crime cases and judged its accuracy using cross‐validation. We explored the information added by individual behavioural variables, first, by testing if the variable represented purely noise with respect to classification, and second, by excluding variables from the original model, one by one, by choosing the behaviour that had the smallest effect on classification accuracy. Results. The model achieved a classification accuracy of 83.6% whereas chance expectancy was 5.3%. In simulated scenarios of only one and two known cases in a series, the accuracy was 59.0 and 69.2%, respectively. No behavioural variable represented pure noise but the same level of accuracy was achieved by analysing a set of 15, as analysing all 92 variables. Conclusion. The study illustrates the utility of analysing individual behavioural variables through Bayesian reasoning for crime linking. Feasible applied use of the approach is illustrated by the effectiveness of analysing a small set of carefully chosen variables.     

Strategies to enhance price and quality competition in health care: lessons learned from tracking local markets

Drawing on observations from tracking changes in local health care markets over the past ten years, this article critiques two Federal Trade Commission and Department of Justice recommendations to enhance price and quality competition. First, we take issue with the notion that consumers, acting independently, will drive greater competition in health care markets. Rather we suggest an important role remains for trusted agents who can analyze inherently complex price and quality information and negotiate on consumers' behalf. With aggregated information identifying providers who deliver cost-effective care, consumers would be better positioned to respond to financial incentives about where to seek care and thereby drive more meaningful competition among providers to reduce costs and improve quality. Second, we take issue with the FTC/DOJ recommendation to provide more direct subsidies to prevent distortions in competition. In the current political environment, it is not practical to provide direct subsidies for all of the unfunded care that exists in health care markets today; instead, some interference with competition may be necessary to protect cross subsidies. Barriers can be reduced, though, by revising pricing policies that have resulted in marked disparities in the relative profitability of different services.     

Ilium growth study: applicability in sex and age diagnosis

The use of coxal elements for age and sex diagnosis from the skeleton is the primary and most widespread way of bringing us closer to the identity of dead individuals in archaeological and certain forensic scenarios. Diagnosis in sub-adults, especially in fetus and infant age, is not clear; and further studies are needed. This work presents the analysis of the growth of six variables in the ilium, from birth to 97 years of age, in order to evaluate its significance and its capacity for age and sex determination during and after growth. The materials used were 327 specimens from four documented Western European collections. Growth curves were calculated for the three classical variables of the ilium (width, length and index) and three new variables of the acetabulum area (horizontal and vertical diameter of the ilium acetabular surface and the ilium acetabular index). None of the curves showed a lineal growth, except those of the horizontal diameter of the ilium acetabular surface for the male series. The ilium width has the most complicated growth and it is explained by a four-degree polynomial. All the variables studied can be useful for adult sex discrimination with the exception of the ilium width and ilium acetabular index. Furthermore, the most useful variables for subadult and adult age estimation in archaeological samples, as well as in forensic samples, are the absolute measurements (ilium length and width, horizontal and vertical diameter of the ilium acetabular surface); however, the ilium width is the best variable, as this can be applied to all growth ages using both sexual series together up to 20 years of age.