ERSA Working Papers released

Half empty, half full and the possibility of agreeing to disagree

By Alexander Zimper, Working Paper 58

Aumann (1976) derives his famous we cannot agree to disagree result under the assumption of rational Bayesian learning. Motivated by psychological evidence against this assumption, we develop formal models of optimistically, resp. pessimistically, biased Bayesian learning within the framework of Choquet expected utility theory.

As a key feature of our approach the posterior subjective beliefs do, in general, not converge to “true” probabilities. Moreover, the posteriors of different people can converge to different beliefs even if these people receive the same information. As our main contribution we show that people may well agree to disagree if their Bayesian learning is psychologically biased in our sense. Remarkably, this finding holds regardless of whether people with identical priors apply the same psychologically biased Bayesian learning rule or not.

A simple example about the possibility of ex-post trading in a financial asset illustrates our formal findings. Finally, our analysis settles a discussion in the no-trade literature (cf. Dow, Madrigal, and Werlang 1990, Halevy 1998) in that it clarifies that ex-post trade between agents with common priors and identical learning rules is only possible under asymmetric information.

Asymmetry and Discrimination in Internet Peering Evidence from the LINX

Alessio D'Ignazio and Emanuele Giovannetti, Working Paper 102

Is the quality of interconnection between Internet operators affected by their asymmetry? While recent game theoretic literature provides contrasting answers to this question, there is a lack of empirical research.

We introduce a novel dataset based on Internet routing policies, and study the interconnection decisions amongst the Internet Service Providers (ISPs) members of the London Internet Exchange Point (LINX).

Our results show that interconnection quality degradation can be significantly explained by asymmetry between providers. We also show that Competition Authorities should focus more on the role played by the “centrality of an operator”, rather than on its market share.

Adaptive Bayesian Analysis for Binomial Proportions

Sonali Das and Sourish Das, Working Paper 103

We consider the problem of statistical inference of binomial proportions for non-matched, correlated samples, under the Bayesian framework. Such inference can arise when the same group is observed a different number of times on two or more inference occasions, with the aim of testing the proportion of some trait. These scenarios can occur when we are interested to infer the proportion of extreme wave height per year, at a certain measuring station, where measurements are made every hour.

Gaps in measurements, either due to a malfunction of the measuring instrument or another reason, can result in an unequal number of observations in different years. For such scenarios, we develop an adaptive Bayesian method, and suggest a heuristic decision procedure to conduct statistical inference. We use the ø-divergence measure to quantify the perturbation of the posterior distribution of the proportion in different time points.

We present a simulation study for frequentist power investigation for both the adaptive Bayesian method, as well as the regular frequentist method, using the Monte Carlo technique. Based on the simulation study of frequentist power, as well as theoretical proof, under certain design, the adaptive Bayesian method is shown to outperform the regular frequentist method.

We administer the developed adaptive Bayesian method to two case studies when the total number of observation instances of the same group are unequal, at different time points of interest.

On attitude polarization under Bayesian learning with non-additive beliefs Alexander Zimper and Alexander Ludwig, Working Paper 104

Ample psychological evidence suggests that people’s learning behavior is often prone to a "myside bias" or "irrational belief persistence" in contrast to learning behavior exclusively based on objective data. In the context of Bayesian learning such a bias may result in diverging posterior beliefs and attitude polarization even if agents receive identical information.

Such patterns cannot be explained by the standard model of rational Bayesian learning that implies convergent beliefs. As our key contribution, we therefore develop formal models of Bayesian learning with psychological bias as alternatives to rational Bayesian learning. We derive conditions under which beliefs may diverge in the learning process despite the fact that all agents observe the same - arbitrarily large - sample, which is drawn from an "objective" i.i.d. process. Furthermore, one of our learning scenarios results in attitude polarization even in the case of common priors.

Key to our approach is the assumption of ambiguous beliefs that are formalized as non-additive probability measures arising in Choquet expected utility theory. As a specific feature of our approach, our models of Bayesian learning with psychological bias reduce to rational Bayesian learning in the absence of ambiguity

Loss leader or low margin leader? Advertising and the degree of product differentiation Witness Simbanegavi, Working Paper 105

This paper attempts to isolate the conditions that give rise to loss leader pricing.

I show that for sufficiently low distance between firms, the advertised good is priced below cost irrespective of whether firms advertise the same or different products. Instead, if products are sufficiently differentiated, loss leader pricing may result only if firms advertise the low reservation value product, otherwise the advertised good is a low margin leader. Thus, whether the advertised good is a loss leader or a low margin leader is primarily a function of the extent of differentiation between competing firms.

The OCED Investment News new edition out

The November issue of the OECD's Investment News is currently available. Here is what you can expect:

• Grim outlook for FDI and shifting global investment patterns pg 1-3

As the financial crisis has evolved into a global economic crisis, the outlook for FDI has likewise darkened. On current trend, inflows will be down 13% and outflows by 6% by the end of the year. These declines would be much less severe than those experienced in 2001, when FDI inflows and outflows dropped by 49% and 43%, respectively. However, it seems likely that FDI flows will fall sharply in the second half of 2008 and continue to decline into 2009, especially considering the speed with which the global economic crisis deepened during Q3 and into Q4 of 2008.

• OECD guidance on sovereign wealth funds presented at World Bank/IMF meetings pg 4

The OECD Investment Committee‟s project on "Freedom of Investment, National Security and „Strategic Industries‟" (FOI) has, since early 2006, provided a forum for intergovernmental dialogue on how governments can reconcile the need to preserve and expand an open international investment environment with their duty to safeguard the essential security interests of their people. With the current crisis, it is all the more important to keep capital inflows moving freely. The Investment Committee is treating the issue of recipient country policies toward Sovereign Wealth Funds (SWFs) and other government-controlled investment entities as an integral part of the FOI project.

• China intensifies efforts to promote responsible business conduct in co-operation with OECD pg 4-5

The Chinese government has been intensifying its efforts to promote Responsible Business Conduct (RBC) in co-operation with the OECD. Most recently this involved a Multi-stakeholder Symposium on Government Approaches to Encouraging Responsible Business Conduct jointly organised by the Chinese government and the OECD Investment Committee in Paris on 26-27 June 2008.

• ILO and OECD join forces to promote responsible business conduct pg 6

Every year around June, the National Contact Points (NCPs) of the OECD Guidelines for Multinational Enterprises meet to review their experiences in implementing and promoting the Guidelines. This year, at the invitation of OECD Ministers and the G8, the annual NCP meeting was held back-to-back with a high-level conference on "Employment and Industrial Relations: Promoting Responsible Business Conduct in a Globalising Economy" jointly organised by the OECD and the International Labour Organisation (ILO).

• Selected investment publications pg 7

- Investment Policy Perspectives

- 2008 Annual Report on the OECD Guidelines for Multinational Enterprises: Employment and Industrial Relations

- 2008 Investment Policy Review of China Encouraging responsible business conduct

- OECD Investment Policy Review of Peru

- OECD Benchmark Definition of Foreign Direct Investment

Calendar of events and news in brief pg 8

- 10-11 DECEMBER 2008, KAMPALA, UGANDA NEPAD-OECD Annual High-level meeting on advancing investment policy reform in Africa

- 17 DECEMBER 2008, PARIS, FRANCE Ninth OECD Roundtable on Freedom of Investment, National Security and „Strategic‟ Industries

- 26-27 FEBRUARY 2009, BANGKOK, THAILAND 2nd OECD-South East Asia Regional Forum: Enhancing Competitiveness through Regional Integration

Auditor-General presents his analysis of financial management in national and provincial government departments

Auditor-General (AG), Terence Nombembe, briefed Parliament on the national and provincial government audit outcomes and trends for the 2007-08 financial year, and focused on the analysis of financial management status in government departments and related entities as well as constitutional institutions.

According to the information available at the time of the analysis, the Auditor-General’s coverage comprised of:

• 34 national departments, all of which had been included in the analysis
• 201 national related entities of which 195 (97%) is included in the analysis
• 9 constitutional institutions all included in the analysis
• 120 provincial departments, all except one included in the analysis and
• 122 provincial entities of which 106 (87%) have been included in this analysis.
• Overall, out of the total of 486 departments, institutions and entities, the analysis covered 463 (95%).

Overall, the audit outcomes for the national and provincial government are as follows:

• 9 (2%) received adverse audit opinions
• the reports of 21 (5%) had disclaimers
• 105 (23%) received qualified audit opinions
• the reports of 216 (47%) departments and entities that received unqualified financial opinions had concerns raised on “other matters”
• while 112 (23%) received an unqualified financial opinion without significant concerns on any other matters (referred to as clean audit opinions.

Read the whole press release here.

IASB and FASB create advisory group

&

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) today announced that they will create a global advisory group comprising regulators, preparers, auditors, investors and other users of financial statements.
The advisory group will help to ensure that reporting issues arising from the global economic crisis are considered in an internationally co-ordinated manner.

At their forthcoming joint meeting on 20 and 21 October, the boards will discuss the initial topics for the advisory group to consider. They will also discuss how they can appoint the group and schedule its first meeting expeditiously. The boards will report on the first meeting and will consider the group’s discussions immediately thereafter.
In developing their approaches on issues resulting from the discussions the boards will follow appropriate due process. In the interest of transparency, the advisory group will meet in public session with Webcasting facilities available to all interested parties.

To read the whole press release Download it now

IASB welcomes moves towards IFRSs in North America

Sir David Tweedie, chairman of the International Accounting Standards Board (IASB), welcomed last week’s actions by authorities in Mexico, Canada and the United States regarding their adoption of International Financial Reporting Standards (IFRSs).

Mexico
On 11 November the Mexican Comisión Nacional Bancaria y de Valores (CNBV), together with the Mexican Accounting Standards Board (CINIF), announced that Mexico would adopt IFRSs for all listed entities from 2012. Early adoption for some entities would be permitted from 2008 subject to requirements that will be established by the CNBV.

Canada
Also on 11 November the Canadian Accounting Standards Oversight Council (AcSOC) reconfirmed its support for plans to require Canada’s publicly accountable enterprises to follow IFRSs as issued by the IASB by 2011.

United States
On 14 November the United States Securities and Exchange Commission (US SEC) published for public comment a proposal, titled Roadmap for the Potential Use of Financial Statements Prepared in accordance with International Financial Reporting Standards by U.S. Issuers.
The publication of the roadmap followed a unanimous vote taken by the five SEC Commissioners in August. The proposed roadmap sets out milestones that, if achieved, could lead to the adoption of IFRSs in the United States in 2014. The roadmap also proposes to permit the early adoption of IFRSs from 2010 for some US entities.

Commenting on the announcements, Sir David Tweedie, chairman of the IASB , said:
The recent summit of G20 leaders reaffirmed the need for global accounting standards. This is a goal that the IASB strongly supports. The actions taken last week in Mexico, Canada and the United States are important steps towards achieving that objective.

IMF releases

Here is the latest IMF releases:

Surveys

IMF Urges World Leaders to Counter Global Slowdown
IMF head Dominique Strauss-Kahn urges leaders of the G-20 industrialized and developing economies to take action to help counter the global economic slowdown as ministers from systemically important countries agreed on the need for a coordinated response.

Helping Ukraine Avoid a Hard Landing
A $16.4 billion loan for Ukraine approved by the IMF's Executive Board will help the government strengthen confidence and restore economic stability after the country became the latest victim of the financial crisis sweeping the global economy.

Bosnia and Herzegovina: On the Road to EU Accession
A new agreement signed by Bosnia and Herzegovina opens the door to membership of the European Union. But after years of solid growth and sound policies the country has to prepare for EU accession during a time of global economic turmoil.

IMF Outlines $7.6 Billion Loan for Pakistan
The IMF says it has reached an initial agreement with Pakistan on the key elements of an economic program supported by an $7.6 billion loan to meet the country's serious balance of payments difficulties.

World Leaders Launch Action Plan to Combat Financial Crisis
Leaders of the world's major economies draw up an action plan to combat the burgeoning financial crisis and pull the global economy back from one of the worst downturns in decades, giving the IMF a central role in crisis response and reform of the financial architecture.

Working Papers

StressTesting Household Debt in Korea
Author/Editor: Karasulu, Meral
Summary: Korean household debt has reached 148 percent of disposable income, high by emerging market standards. Most of this debt remains at variable rates, shifting the interest rate risk from better diversified financial institutions to households and increasing their sensitivity to macroeconomic shocks. This paper examines the sources of, and risks from, household debt by employing stress tests on household level panel data. Results suggest that a 100-300 bps increase in interest rates could increase distressed household debt household debt by 8½?17 percentage points (ppt). A drop in real estate prices by 10?30 percent could add another 4 ppt to distressed debt. Ongoing transition to amortizing mortgages in 2008?09 presents additional challenges as interest payments on debt are likely to increase further.


Sovereign Wealth Funds: Current Institutional and Operational Practices
Author/Editor: Hammer, Cornelia; Kunzel, Peter; Petrova, Iva
Summary: While SWFs as a group share broad common institutional and operational practices, these practices also differ considerably reflecting the diversity of these institutions. These differences derive from the nature of the SWF (i.e., their original intent) as well as its legal personality. Thus, while SWF practices will continue to evolve, the fundamental objectives of different types of SWFs will continue to shape their practices going forward.


Creating Sustainable Fiscal Space for Infrastructure: The Case of Tanzania
Author/Editor: Ter-Minassian, Teresa; Hughes, Richard; Hajdenberg, Alejandro
Summary: A common dilemma facing governments around the world is how to meet the sizeable fiscal costs of providing and maintaining infrastructure networks. Over the past decade, developed and developing countries have looked to fiscal rules, budgetary reforms, tax policy and administration measures, public-private partnerships and other innovative financial instruments to raise additional finance for infrastructure investment. This paper looks at the range of options for raising the financing to meet Tanzania's infrastructure needs. It begins with a brief survey of the evidence on the relationship between infrastructure, public investment, and economic growth, and then goes on to consider the case for additional infrastructure investment in Tanzania. The second part of the paper looks at five broad options for mobilizing additional resources to meet Tanzania's infrastructure needs: (i) direct private investment and PPPs, (ii) expenditure reprioritization and efficiency, (ii!
i) domestic revenue mobilization, (iv) external grants and concessional financing, and (v) sovereign borrowing on domestic or international credit markets. The paper concludes with some general recommendations on what combination of the above approaches might be suitable for Tanzania.

Policy Papers
A New Facility for Market Access Countries--The Short-Term Liquidity Facility
Summary: The ongoing financial market turmoil is remarkable for its severity but also for the speed with which shocks have spread across markets and economies. Disruptions in short-term funding in mature markets, deleveraging and contraction of bank balance sheets, and contagion from a systemic loss of confidence are leading rapidly to sharply reduced financial flows to economies far from the origins of the crisis. Market turbulence in advanced economies has thus led to the emergence of short-term external liquidity needs even in emerging market countries with strong underlying domestic policies.
In these circumstances, the Fund's traditional facilities may not always be the optimal means of addressing short-term balance of payments pressures. Stand-By Arrangements (SBAs) have been used flexibly to support members' economic programs where both policy adjustment and financing were needed to address underlying vulnerabilities, buttress market confidence, and facilitate a member's early return to market financing.
This paper proposes a special facility to complement existing instruments by filling a gap in the Fund's toolkit.

2008 Triennial Surveillance Review - Background Information and Statistical Appendix
Summary: Country surveillance constitutes an essential part of the IMF's mandate to oversee the international monetary system and to monitor the economic and financial policies of its 185 member countries. The IMF's Executive Board conducts regularly scheduled reviews of country surveillance (the Triennial Surveillance Review) to consider ways to improve its effectiveness. The 2008 review is the first such review since the Executive Board approved, in June 2007, a new Decision on Bilateral Surveillance. This Decision affirms that the focus of bilateral surveillance is on those policies of members that can significantly influence present or prospective external stability. The review focused on the implementation of country surveillance in the recent past, as presented in the following set of papers:

The overview paper presents the main findings and priority areas for further work.

The review finds that stakeholders hold the quality of IMF surveillance in high regard, but that improvements should focus on risk assessment, integration of macroeconomic and financial sector surveillance, multilateral perspectives (cross-border spillovers and cross-country analysis), and exchange rate assessments.
The priority areas identified in the review served as key background for the preparation of the IMF's Statement of Surveillance Priorities (SSP

The Thematic Findings (Supplement 1) provides supporting analysis on the implementation of bilateral surveillance in the recent past and, particularly, on the appropriateness of its focus and its analytical value added in particular areas, including the overall "health check", exchange rates, financial sector issues, cross-country analysis and cross-border spillover analysis (including a case study of surveillance in the run up to the subprime crisis), the degree of candor and evenhandedness in surveillance, and the effectiveness of its communication

The Background Information paper (Supplement 2) provides further information, including a description of review methodologies, and results including interview findings, surveys of various audiences, and supporting data on the quality of consultation documents

The External Consultant's Report provides an independent view of IMF surveillance in Europe.

Country Reports
Solomon Islands: 2008 Article IV Consultation-Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion
Solomon Islands: Tax Summary and Statistical Appendix
People's Republic of China-Hong Kong Special Administrative Region: Report on the Observance of Standards and Codes--FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism

Statement by World Bank Group President Robert B. Zoellick on the Summit of G20 Leaders

"This summit of G-20 leaders and the G-20 meeting of finance ministers last weekend have begun to lay a productive foundation of discussion, input, and agreement.

What matters now are the follow up actions. People are looking to leaders for a global, coordinated and fast response.
If September and October were about coordinated and cooperative monetary policies, then November and December will be increasingly about starting fiscal stimulus. China’s recent $580 billion stimulus package was well timed and shows leadership. Further decisive actions will be needed. Such actions must take into account the interests of the poor and most vulnerable in developing countries.

Last month I called for a reform of the G7 and for a modernized multilateralism to better reflect the realities of the 21st century. It is a positive step forward that leaders of developed economies are now meeting together with leaders from the rising economic powers. But the poorest developing countries must not be left out in the cold. We will not solve this crisis, or put in place sustainable long-term solutions by accepting a two-tier world.

I welcome the reaffirmation by the Heads of Government of the importance of the Millennium Development Goals and their commitment to honor their pledges of overseas aid. If we are going to avert a human crisis, we will have to do more. At $100 billion a year, the amount spent on overseas aid is a drop in the ocean compared to the trillions of dollars that are now being spent on financial rescues in the developed world."

Read the whole statement.

Chairs of High-level advisory group announced

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) announced that Hans Hoogervorst, Chairman of theNetherlands Authority for the Financial Markets (AFM), the Dutch securities regulator and Harvey Goldschmid, former Commissioner of the United States Securities and ExchangeCommission (US SEC) have agreed to co-chair the high-level advisory group formed to consider financial reporting issues arising from the global economic crisis.

Mr. Hoogervorst also serves as Vice-Chairman of the Technical Committee of the International Organization of Securities Commissions (IOSCO) and is a former Minister of Finance in the Netherlands.

Mr. Goldschmid is the Dwight Professor of Law at Columbia University, United States. He served as an SEC Commissioner between 2002 and 2005.The advisory group will comprise of investors, regulators, preparers, auditors and other users of financial statements and will help to ensure that financial reporting issues arising from the crisis are considered in an internationally co-ordinated manner. Further details on the composition of the advisory group and scheduling of meetings will be announced shortly.

It is expected that the work of the advisory group will be completed within a four to six month period.

Recommendations from the advisory group will be jointly considered by the two boards. Any decisions to act upon the recommendations will be subject to appropriate and robust due process. In the interest of transparency, the advisory group will meet in public session with Web casting facilities available to all interested parties.

Europe To See Pension Reform Debate

Policymakers to look at issues of pension fund governance and collective risk taking.

As was the case during the equities markets collapse in 2001, the current financial turmoil will reshape the political debate in Europe over public pension reform and the structure of pension provision.

While all privately funded pensions in Europe will suffer unavoidably in the short term from the general malaise in financial markets and the expected low growth in the real economy, the more important implication of the crisis is that debates will intensify among policymakers and practitioners over the broader issues of pension fund governance and collective risk sharing.

For more on the story, please refer to the original Forbes article.

University news from Africa

WEST AFRICA: Universities agree on regional strategy
The University of Bamako, Ouagadougou University and University Cheikh Anta Diop of Dakar, together with the French Conference of University Presidents, have agreed on a coordinated strategy for higher education and research, to promote a regional partnership between African and French universities and contribute to development of West African scientific communities.

MEDITERRANEAN: Unimed elects Tunisia to presidency
The Mediterranean Universities Union (Unimed) has elected Abderraouf Mahbouli, head of the University of Tunis, as its President, reports La Presse of Tunis. It is the first time a country south of the Mediterranean has headed the union, which has 84 member establishments in 20 countries mostly in the Mediterranean basin.

GLOBAL: Nigerian students scoop award in 'world cup'
Clemence Manyukwe
Nigeria's Obafemi Awolowo University clinched second place in an international higher education competition aimed, among other things, at sharpening student skills by testing their understanding of market economics. More than 1,500 students, academics and business people from 41 countries converged in Singapore last month for the Students in Free Enterprise 'world Cup'.


ZIMBABWE: Student 'bonding' to stem brain drain
Clemence Manyukwe
The Zimbabwean government has introduced a student 'bonding' system in a desperate attempt to stem the brain drain as people flee the ruinous policies of President Robert Mugabe. Under the cadetship scheme, students will not receive a qualification on graduating but only after working for the state for a stipulated period.



EGYPT: Disqualifications, apathy mar student elections
Ashraf Khaled
Hassan Abbas, an arts student at Cairo University, did not know there were student union elections until he saw Islamist students staging a protest against their disqualification from candidate lists. In recent weeks the country's 18 public universities have held student polls marked by widespread apathy as well as fiery protests by ineligible students, particularly from the Muslim Brotherhood - said to be the largest opposition group on Egypt's campuses. Political or religious student groups have been banned from student leadership.

NIGERIA: UK seeks partnerships with local universities
Tunde Fatunde
The National Universities Commission recently ordered the immediate closure of the offshore campuses of foreign universities on Nigerian soil, as they are prohibited under law. The move left hundreds of students stranded, and unable to move to 'legal' institutions that are full - and indeed only able to accommodate 30% of qualified school-leavers. Now the British Council is seeking partnerships between UK and Nigerian universities, with a view to creating wider opportunities for youngsters desperately seeking higher education.

CAMEROON: Crowded start for new year
Jane Marshall
The academic year has started with record numbers of new students in Cameroon but several universities have experienced problems including overcrowding, lack of teachers and even cancellation of a new faculty of medicine just before it was due to open. Newspapers reported that some universities were coping better than others.

To all the lecturers who took the time to write an email to Dr Anette van Vuren with comments (good or bad) regarding the Library's service:

Thank you very much!

It was extremely humbling to read the kind words and I highly appreciate it. All the comments from the various librarians will be compiled into an evidence report and submitted to Prof Habib on Monday.

ISI call for papers and posters

The 57th Session of the International Statistics Institute (ISI) be hosted by South Africa at the Durban International Convention Centre (ICC) in August 2009.

This Session is historic, in that it will be the first to be held in sub-Saharan Africa since the inception of ISI sessions over 120 years ago. It presents Africa with an unprecedented opportunity to consolidate an agenda for an African Statistical Renaissance, placing statistics at the centre of informed and evidence-based decision-making .

The ISI Scientific Programme comprises four components:
Invited Paper Meetings (IPMs)

These meetings are largely finalised. The topics accepted are listed in the IPM Programme. For further information, including details and contact addresses of the organisers, please click on IPM.

Special Topic Contributed Paper Meetings (STCPMs) )
Each STCPM will be allocated a slot of two-and-a-quarter hours. The meeting may follow a standard format, but the format is flexible. An organsier may want to include a number of short presentations, or fewer more substantial papers, or may prefer to organise a panel discussion. There are still opportunities to organise an STCPM on a particular topic or aspect of statistics of one’s choice. We welcome innovation and look forward to your contributions! If you would like to discuss your ideas. For further details click on STCPM, and please contact Professor Tim Dunne, Chair, Local Programme Committee, by e-mail at: tim.dunne@uct.ac.za

Contributed Paper Meetings (CPMs)

Please consider submitting a contributed paper to the Durban conference. Contributors have until 13th April 2009 to submit or revise an abstract on any topic within the very broad field of statistical theory, methods, application or education. Contributed paper authors are typically offered 15 minutes for their presentation. We will attempt to group contributed papers together according to their content and this process will be assisted if each contributor can select one or more of the categories offered on the registration form which best suit the paper. Click on CPM to read more. We will aim to include as many of the contributed papers as possible, but when the CPMs slots are filled, contributors will be asked if they would be prepared to present a poster instead.

Posters

An alternative to offering a contributed paper is to submit an abstract for a poster, on a topic of one’s choice. Contributors of accepted submissions will be asked to bring the poster to Durban. Each poster will be allocated display space and a day of exhibition. A time slot will be allocated at which contributors can explain the research/work to interested participants and answer their questions. There will be several prizes for the best posters. We intend that this activity should be both a serious and a fun part of the conference. We particularly welcome contributions from students and other young statisticians. Click on Posters for more details
For Abstract Submissions click here

ERSA Training Workshops in early 2009

Diarise the following ERSA workshop days:

1. Training Workshop on Financial Econometrics


ERSA is pleased to announce a three day training workshop on Financial Econometrics to take place at the University of Stellenbosch from the 20 – 22 January 2009 to be followed by a second workshop from the 7 – 9 April 2009 at the same venue.

These workshops will be led by Prof Stan Hurn, School of Economics and Finance, Queensland University of Technology, Brisbane.

Participants should have grounding in Econometrics. Eviews and Matlab software will be used in the courses.

Topics for the first workshop will include the following:
o Understanding financial data
o Modelling volatility
o Generalized method of moments estimation.

Proposed topics for the second workshop include:
o Review of Maximum likelihood: specification and estimation
o Quasi-maximum likelihood estimation
o Estimation by simulation
o Nonparametric estimation

ERSA will provide financial support to cover travel and accommodation expenses of participants. However, places are limited and access to the course is at the discretion of the course organizers.
Please email Tania Jacobs (tania.jacobs@uct.ac.za) if you would like to attend the January course.

The deadline for applications is Friday 14 November 2008.

The announcement for the April course will be sent out early in January 2009.




2. Training Workshop on Econometric Methods for Panel Data


ERSA is pleased to announce a five day training workshop on Firm Level Panel Datasets to take place at the University of Stellenbosch from the 12 January - 16 January 2009.


This workshop will be led by Dr Steven Bond at Oxford University and Dr Måns Söderbom at School of Economics at Göteborg University.

The broad outline of the course will be on econometric methods for panel data, with particular reference to firm-level panel datasets. Participants should have a grounding in Econometrics.

ERSA will provide financial support to cover travel and accommodation expenses of participants. However, places are limited and access to the course is at the discretion of the course organizers.
Please email Tania Jacobs (tania.jacobs@uct.ac.za) if you would like to attend the course. The deadline for applications is Friday 14 November 2008.

OECD forecasts a protracted economic slowdown in US, Japan and Euro area

Economic activity is expected to fall by 0.9 percent in the US next year, by 0.5 percent in the Euro area and by 0.1 percent in Japan as OECD countries enter a protracted slowdown, according to latest projections.

Presenting OECD’s gross domestic product (GDP), inflation and unemployment forecasts for these three major economies ahead of the G20 summit on the financial crisis on 15 November. Jorgen Elmeskov, Director of Policy Studies in the OECD’s Economics Department, said a high degree of uncertainty surrounds the outlook. Much depends on the depth and duration of the financial crisis, the main driver of the current recession. And he added, “The ongoing adjustment in housing markets still has a long way to go.”

GDP for the OECD countries as a whole is expected to fall 0.3 percent year-on-year in 2009 before recovering slightly to grow by 1.5 percent in 2010. The average unemployment rate in the OECD area, estimated at 5.9 percent this year, is forecast to climb to 6.9 percent next year and reach 7.2 percent in 2010. Inflation should continue to ease as economic slack puts downward pressure on prices and if, as assumed, commodity prices maintain their recent lower levels. “Against this backdrop, additional macroeconomic stimulus is needed,” said Elmeskov.

The advance projections for the US, Euro area and Japan are available on the Economic Outlook homepage.

The full Economic Outlook containing detailed forecasts and analysis for all OECD countries and other major economies will be released on 25 November 2008.

World Bank Report Suggests Strategy For African Growth Based On Mapping Of Economic Geography

History shows that severe crises can cause nations to become inward-looking, sometimes with negative consequences. The World Development Report 2009: Reshaping Economic Geography, released last week, argues that policies that facilitate geographic concentration and economic integration, both within and across countries as well as within the global economy, will promote long-term growth. This is key in Africa, where accelerated growth is critical for poverty reduction in the years ahead.

“Growth does not come to every place at once, with markets favoring some places over others,” said Indermit S. Gill, Director of the report. “To encourage prosperity, governments should facilitate the geographic concentration of production, rather than fight it. But they must also institute policies that make the provision of basic needs—schools, security, streets, and sanitation—more universal.”

The report notes that Sub-Saharan Africa today faces the triple challenges of low density or scarce and scattered populations; long distances between remote areas and centers of economic activity; and deep divisions in national, religious, and ethnic terms. These dimensions of economic geography reduce connectedness between economic agents within the region, as well as with the rest of the world.

“In Sub-Saharan Africa, we can reduce the disadvantages of our poor economic geography through better urbanization, more domestic specialization, and more regional integration,” said Shanta Devarajan, Chief economist of the World Bank’s Africa Region. “Regional cooperation, labor mobility, investments in trade, communication and transport infrastructure, and peace and stability need to remain high on our agenda, even as countries work to contain the spillover effects of the global financial crisis.”

It is commonly assumed that economic activities, within a country or region, must be spread geographically to benefit the poorest and most vulnerable. However, the WDR emphasizes that trying to spread out economic activity can hinder growth and is not effective in fighting poverty. For rapid, shared growth, governments must promote economic integration which, at its core, is about the mobility of people, products, and ideas.

IASB expert panel report available

At its May 2008 meeting, the IASB announced its plans to form an expert advisory panel in response to the recommendations made by the Financial Stability Forum to assist the IASB in:

• reviewing best practices in the area of valuation techniques, and
• formulating any necessary additional guidance on valuation methods for financial instruments and related disclosures when markets are no longer active.

The discussions of the panel members have provided the Board insight into whether there is a need for additional guidance in this area.

The discussions of the panel will provide input for the IASB’s work on financial instruments and fair value measurement. The remit of the panel is how to measure the fair value of financial instruments when markets are no longer active. The panel did not discuss whether fair value is an appropriate measurement basis for a particular financial instrument or class of financial instruments.

The following documents of the panel are now available:

• the final report of the expert advisory panel
• the IASB staff summary setting out the context of the expert advisory panel report

Meeting summaries (by date)

• 10 October 2008
• 19 August 2008
• 7 August 2008
• 31 July 2008
• 17 July 2008
• 7 July 2008
• 13 June 2008

Trustee letter to G20 participants

The Trustees of the IASC Foundation issued a letter earlier this week to participants of the upcoming G20 meeting on 15 November in Washington, D.C.

The letter is quite long, so I am only providing the first section, the whole letter can be read here.

Dear Mr President
On behalf of the Trustees of the IASC Foundation, the oversight body of the International Accounting Standards Board (IASB), I am writing to you as the host of the upcoming meeting of leaders of G20 countries on 15 November in Washington.
We respectfully request that the meeting secretariat circulates this letter to other participants in advance of the meeting.

The purpose of this letter is to inform the leaders of G20 countries of the role that the IASB, the independent body charged with developing a single set of high quality, global accounting standards, is playing in addressing issues emanating from the credit crisis.
The Trustees understand that the issues of accounting standards and the credit crisis and the governance of our organisation may be on the meeting’s agenda.

Accounting standards and the credit crisis

The need for a global response to the credit crisis, a global problem, is evident and has been emphasised by world leaders. International co-operation is already well advanced in the field of accounting standard-setting. International Financial Reporting Standards (IFRSs), set by the IASB, are now used in more than 100 countries.

Most of the world’s developed and emerging economies - including nearly all of the G20 members - have made commitments to IFRSs. The IASB has been actively engaged in promoting common standards over the world and in particular in ensuring convergence among major economies. The success so far achieved should not be compromised by actions that would weaken the independence of the standard-setting process.

The role of fair value accounting in the credit crisis has received much scrutiny. The Trustees support the IASB’s efforts to establish accounting standards aimed at providing transparent and comparable financial information. To respond to the crisis, the IASB has taken urgent action to improve the application of fair value principles, where necessary, and is committed to working with the US Financial Accounting Standards Board (FASB) to ensure globally consistent solutions.
The use of fair values has received support from both banking supervisory and investor communities. Christian Noyer, President of the Banque de France, wrote in the Banque de France’s October 2008 Financial Stability Review, “In parallel, the move to mark-to-market accounting in financial reporting has fostered transparency and a more timely recognition of risk exposures, and has contributed to sharpening market discipline.”

Read the whole letter.

Finance & Construction - biggest contributor to growth in SA

Image: LotusHead

The finance and construction industries have been identified as the most significant contributors to growth in South Africa's services sector - this according to BuaNews, the Government news portal.



Deputy Minister of Trade and Industry, Rob Davies, on Wednesday said in South Africa, service sectors contributed 74 percent of the Gross Domestic Product (GDP), and 72 percent of employment."




Service sectors such as finance and construction have been particularly significant contributors to growth during the upswing which we experienced between 2001 and 2007," said Mr Davies, speaking at the Service Exporter Network Annual Meeting and Conference. He highlighted the importance of sectors such as the services sector to the growth of South Africa's economy.

Services and trade within the services sector is becoming increasing important to both developed and developing countries, Mr Davies said, adding that the sector had become inclusive of telecommunications, transportation, finance, insurance, distribution, information services and entertainment services.

The services sectors currently account for two thirds of global output, one third of global employment and nearly 20 percent of global trade, the deputy minister said.Between 2000 and 2007, global services sectors grew at an annual rate of 10.1 percent which was 1 percent more than the growth in trading goods.

The Accelerated and Shared Growth Initiative of South Africa (AsgiSA) identified two important services sectors, namely Business Process Outsourcing and off-shoring (BPO&) and tourism.

Read More

IMF releases

Here are the latest IMF releases:

Policy Papers

Mongolia-Assessment Letter for the Asian Development Bankr:
Summary: Assessment Letters or Statements may be prepared for member countries with Fund-supported programs; receiving Fund emergency assistance; with staff-monitored programs; or surveillance-only cases. They are typically produced for use by the country with multilateral or bilateral donors or creditors, in particular the World Bank and other International Financial Institutions.

Surveys

IMF Urges Stimulus as Global Growth Marked Down Sharply
The IMF urges countries to stimulate their economies in the face of a bigger-than-expected slowdown in the global economy triggered by recent financial turmoil. In its latest forecast for world economic growth, the IMF sharply revises its growth projections downward.

IMF Agrees $15.7 Billion Loan to Bolster Hungary's Finances
The IMF's Executive Board approves a $15.7 billion loan for Hungary as part of a program designed to ease financial market stress in the East European country while supporting longer-run economic goals of reforming government finances and the banking sector.

Working Papers

Fiscal Policy and Economic Cycles in Oil-Exporting Countries
Author/Editor: Husain, Aasim M.; Tazhibayeva, Kamilya; Ter-Martirosyan, Anna
Summary: This paper empirically assesses the impact of oil price shocks on the underlying non-oil economic cycle in oil-exporting countries. Panel VAR analysis and the associated impulse responses indicate that in countries where the oil sector is large in relation to the economy, oil price changes affect the economic cycle only through their impact on fiscal policy. Once fiscal policy changes are removed, oil price shocks do not have a significant independent effect on the economic cycle.

Country Reports

The Kingdom of Swaziland: 2008 Article IV Consultation-Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director

Grenada: First Review Under the Poverty Reduction and Growth Facility Arrangement, Request for Waiver of Performance Criterion, Financing Assurance Review, Request for Rephasing and Extension of the Arrangement, and Request for Augmentation-Staff Report; Staff Supplement; and Press Release on the Executive Board Discussion