Globalization

In this paper we study the determination of forward foreign exchange rates. An exchange rate is the price of one currency in terms of another currency, and a forward rate is a contractual exchange rate established at a point in time for a transaction that will take place at the maturity date on the contract in the future. Well-organized forward markets exist for all major currencies of the world for various maturities, with the most active contract lengths being one, three, six, and twelve months.

This paper examines the hypothesis that the expected rate of return to speculation in the forward foreign exchange market is zero; that is, the logarithm of the forward exchange rate is the market's conditional expectation of the logarithm of the future spot rate. A new computationally tractable econometric methodology for examining restrictions on a k-step-ahead forecasting equation is employed. Using data sampled more finely than the forecast interval, we are able to reject the simple market efficiency hypothesis for exchange rates from the 1970s and the 1920s.

A global portrait of the phase plane for a fishery model is obtained for any acceptable values of the parameters. Three different structures of the phase plane are recovered. The first predicts an eventual collapse of the fishery. The second predicts an unstable limit cycle and an eventual stability of solutions which start inside the limit cycle. The last structure predicts two possible stable equilibria, one with high catch rate, and the other with no catch. Each structure corresponds to a different domain in the parameter space.

Bank balance sheet lending is commonly viewed as the predominant form of lending. We document and study two margins of adjustment that are usually absent from this view using microdata in the $10 trillion U.S. residential mortgage market. We first document the limits of the shadow bank substitution margin: shadow banks substitute for traditional “deposit-taking” banks in loans which are easily sold, but are limited from activities requiring on-balance-sheet financing.

A growing body of research has revealed that firms leverage nationalism in their strategies. However, it is unclear why some firms are more likely to do so than others. This paper uses institutional theory to address this question and examines the influences of domestic and foreign customers. We study firms’ responses to nationalist movements, a type of sociopolitical mobilization arising in response to international controversies.