Economics Insights @ CBS

It is argued that a more realistic picture of the true diversification benefits from emerging equity markets is available from 3 investment vehicles that provide access to emerging market returns, while circumventing many of the restrictions and costs that limit the conclusions of previous emerging market research.

This paper develops a variance reduction technique for Monte Carlo simulations of path-dependent options driven by high-dimensional Gaussian vectors. The method combines importance sampling based on a change of drift with stratified sampling along a small number of key dimensions. The change of drift is selected through a large deviations analysis and is shown to be optimal in an asymptotic sense. The drift selected has an interpretation as the path of the underlying state variables which maximizes the product of probability and payoff—the most important path.

Previous research has shown that wages in industries characterized by higher rates of technological change are higher. In addition, there is evidence that skill-biased technological change is responsible for the dramatic increase in the earnings of more educated workers relative to less educated workers that took place during the 1980s.

Marketers all over the world agree that the Internet will have a major impact on the way firms do business. What changes will exactly occur, however, is hard to predict as the Internet is in a phase of rapid growth and constant change. Patterns are difficult to isolate, especially since despite its explosive growth, today, the Net is still in its infancy, only being available to a small proportion of people. In spite of this general lack of reliable patterns, one consensus among managers seems to be that the Internet is likely to intensify price competition.