Contagious currency crises: first tests

Article Abstract:

A speculative attack elsewhere in the world increases the probability of an attack on the domestic currency by 8%, despite considering various domestic political and economic factors. Empirical evidence gleaned from a systematic analysis of quarterly macroeconomic and political data from 20 industrial nations from 1959 to 1993 supports the hypothesis of contagion in currency crises across countries. A strong positive partial correlation between the incidence of a currency crisis in a country at a given point in time and the incidence of a currency crisis in a different country at the same point in time.

Foreign Currency Management, Analysis, Foreign exchange, Foreign exchange market

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Tests of rational expectations in a stark setting

Article Abstract:

Subjects' forecasts of values in a series are compared with rational expectations in a stark environment. The values are generated by a mechanism unknown to the subjects, which simplifies the testing by removing market factors. The experiment also analyzed the distribution of subjective probability outcomes. The experiment found that forecast deviations are usually unpredictable whether or not subjects are privy to information.

Models, Testing, Forecasting, Rational expectations (Economics)

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High expectations for low-tech

Article Abstract:

The Japanese economy brought major uncertainties in 1995, and in trying to avoid economic crisis, the publically funded Science & Technology Agency is initiating research and development projects. Although this only compromises one-fifth of the total yen spent, the government recognizes that basic science and research may help them avoid major economic problems in the future.

Japan, International aspects, Economic policy, Economic research, Yen (Japan)

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