Offering a unifying theoretical perspective not readily available in any other text, this innovative guide to econometrics uses simple geometrical arguments to develop students' intuitive understanding of basic and advanced topics, emphasizing throughout the practical applications of modern theory and nonlinear techniques of estimation. One theme of the text is the use of artificial regressions for estimation, reference, and specification testing of nonlinear models, including diagnostic tests for parameter constancy, serial correlation, heteroscedasticity, and other types of mis-specification. Explaining how estimates can be obtained and tests can be carried out, the authors go beyond a mere algebraic description to one that can be easily translated into the commands of a standard econometric software package. Covering an unprecedented range of problems with a consistent emphasis on those that arise in applied work, this accessible and coherent guide to the most vital topics in econometrics today is indispensable for advanced students of econometrics and students of statistics interested in regression and related topics. It will also suit practising econometricians who want to update their skills. Flexibly designed to accommodate a variety of course levels, it offers both complete coverage of the basic material and separate chapters on areas of specialized interest.

Estimation and Inference in Econometrics

Good corporate reputations are critical because of their potential for value creation, but also because their intangible character makes replication by competing firms considerably more difficult. Existing empirical research confirms that there is a positive relationship between reputation and financial performance. This paper complements these findings by showing that firms with relatively good reputations are better able to sustain superior profit outcomes over time. In particular, we undertake an analysis of the relationship between corporate reputation and the dynamics of financial performance using two complementary dynamic models. We also decompose overall reputation into a component that is predicted by previous financial performance, and that which is ‘left over’, and find that each (orthogonal) element supports the persistence of above-average profits over time. Copyright © 2002 John Wiley & Sons, Ltd.

https://www.jstor.org/stable/pdfplus/3094296.pdf

Corporate reputation and sustained superior financial performance

The theory of precautionary saving is shown in this paper to be isomorphic to the Arrow-Pratt theory of risk aversion, making possible the application of a large body of knowledge about risk aversion to precautionary saving, and more generally, to the theory of optimal choice under risk In particular, a measure of the strength of precautionary saving motive analogous to the Arrow-Pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving, and to give a new interpretation of the Oreze-Modigliani substitution effect

Precautionary Saving in the Small and in the Large

Despite the wide use of reputational mechanisms such as eBay's Feedback Forum to promote trust, empirical studies have shown conflicting results as to whether online feedback mechanisms induce trust and lead to higher auction prices. This study examines the extent to which trust can be induced by proper feedback mechanisms in electronic markets, and how some risk factors play a role in trust formation. Drawing from economic, sociological, and marketing theories and using data from both an online experiment and an online auction market, we demonstrate that appropriate feedback mechanisms can induce calculus-based credibility trust without repeated interactions between two transacting parties. Trust can mitigate information asymmetry by reducing transaction-specific risks, therefore generating price premiums for reputable sellers. In addition, the research also examines the role that trust plays in mitigating the risks inherent in transactions that involve very expensive products.

Evidence of the effect of trust building technology in electronic markets: price premiums and buyer behavior

Many have speculated that trust plays a critical role in stimulating consumer purchases over the Internet. Most of the speculations have rallied around U.S. consumers purchasing from U.S.–based online merchants. The global nature of the Internet raises questions about the robustness of trust effects across cultures. Culture may also affect the antecedents of consumer trust; that is, consumers in different cultures might have differing expectations of what makes a web merchant trustworthy. Here we report on a cross-cultural validation of an Internet consumer trust model. The model examined both antecedents and consequences of consumer trust in a Web merchant. The results provide tentative support for the generalizability of the model.

Consumer Trust in an Internet Store: A Cross‐Cultural Validation

https://mpra.ub.uni-muenchen.de/9958/1/mpra_paper_9958.pdf

Investment and the exchange rate: Short run and long run aggregate and sector-level estimates

A general model of optimal choice over risky assets is used to derive an estimable exchange rate equation which is then applied to the UK pound–US dollar exchange rate. Previous models which exclude equities find that government bond and/or money stocks have a weak effect on exchange rates, a result that is also found here. By contrast, equity values are shown to have a significant effect on the value of the pound–dollar exchange rate over the period 1974Q1 to 1988Q3.

Equities and the UK exchange rate

Alberta government needs a revamped resource revenue stabilization fund to overcome the effects of wild swings in resource revenue and spending. Energy prices change substantially and unpredictably, causing revenue planning trouble for the Alberta government. Adjusting to these movements typically involves economic, social, and political costs that need to be factored into the government’s fiscal outlook. The best option for handling this is a resource revenue stabilization fund that collects a fixed proportion of resource revenue each year, and funds the provincial budget each year with a fixed share of the fund’s assets.

/pdf/energy-prices-and-alberta-government-revenue-volatility-3ewbj8wan8.pdf

Energy Prices and Alberta Government Revenue Volatility

Les recettes que le gouvernement de l’Alberta tire de l’exploitation des ressources naturelles sont tres instables, et l’ajustement des depenses du gouvernement aux variations des revenus implique des couts sociaux et economiques. Dans cet article, nous montrons, grâce a des simulations, que, si le gouvernement albertain avait cree au debut des annees 1970 un fonds de stabilisation fonde sur des regles, cela aurait permis de reduire l’instabilite et d’augmenter le bien-etre. Tous les types de fonds ne permettent pas d’augmenter le bien-etre. Le plus performant est celui ou 50 % des recettes de l’exploitation des ressources naturelles sont deposees et dont 25 % des actifs sont retires chaque annee. Par contre, les fonds ou sont accumules de tres grandes quantites d’actifs et ceux qui fondent les depenses sur la simple moyenne mobile des recettes passees entrainent un bien-etre inferieur.

/pdf/government-revenue-stabilization-funds-do-they-make-us-51w3czeum6.pdf

Constance E. Smith

Papers

Investment and the exchange rate: Short run and long run aggregate and sector-level estimates

Equities and the UK exchange rate

Energy Prices and Alberta Government Revenue Volatility

Government Revenue Stabilization Funds: Do They Make Us Better Off?

Government debt spillovers in a monetary union