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32821. U.S. Investors' Emerging Market Equity Portfolios: A Security-Level Analysis

Author:
Francis E. Warnock and Hali J. Edison
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We analyze a unique data set and uncover a remarkable result that casts a new light on the home bias phenomenon. The data are comprehensive, security-level holdings of emerging market equities by U.S. investors. We document, as expected, that at a point in time U.S. portfolios are tilted towards firms that are large, have fewer restrictions on foreign ownership, or are cross-listed on a U.S. exchange. The size of the cross-listing effect is striking. In contrast to the well-documented underweighting of foreign stocks, emerging market equities that are cross-listed on a U.S. exchange are incorporated into U.S. portfolios at full international CAPM weights. Our results suggest that information asymmetries play an important role in equity home bias and that the benefits of international risk sharing are limited to select firms.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

32822. Cross-Border Listings, Capital Controls, and Equity Flows to Emerging Markets

Author:
Francis E. Warnock and Hali J. Edison
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We analyze capital flows to emerging markets in a framework that incorporates two quantitative measures of financial integration, the intensity of capital controls and the extent of cross-border listings, while controlling for traditional global (push) and country-specific (pull) factors. Two important results emerge. First, the cross-listing of an emerging market firm on a U.S. exchange is an important but short-lived capital flows event, suggesting that the cross-listed stock is in effect a new security that U.S. investors quickly bring into their portfolios. Second, the effect of financial liberalization on capital flows is more nuanced than is suggested by event studies: A reduction in capital controls results in increased inflows only when the controls were binding. Among the standard push and pull factors, global factors are important—slack U.S. economic activity is associated with increased flows to emerging markets—and U.S. investors appear to chase expected, but not past, returns.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

32823. Special Operations Forces Posture Statement

Publication Date:
07-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Special operations are operations conducted in hostile, denied, or politically sensitive environments to acheive military, diplomatic, informational, and/or economic objectives employing military capabilities for which there is no broad conventional force requirement. These operations often require covert, clandestine, or discreet capabilities. Special operations are applicable across the range of military operations. They can be conducted independently or in conjunction with operations of conventional forces or other government agencies and may include operations by, with, or through indigenous or surrogate forces.Special operations differ from conventional military actions in the following ways: Greater degree of physical and political risk Unique operational techniques, mode of employment, and independence from friendly support Detailed operational intelligence and indigenous assets.
Topic:
Defense Policy, Terrorism, and War
Political Geography:
United States

32824. Report of the Defense Science Board Task Force on Discriminate Use of Force

Publication Date:
07-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In the terms of reference, the Under Secretary of Defense for Acquisition, Technology, and Logistics directed the task force “to conduct a comprehensive study of the ends and means of precision compellence, or the nuanced use of force, in concert with coalition partners, to achieve political, economic and moral change in countries affecting US interests.” Real-world events have since underscored the need for such a study; indeed, the U.S. military applied key elements of a measured, nuanced approach in both the Afghanistan and Iraq campaigns. We are pleased to note this evolution in operations and a parallel evolution in the thinking of the combatant commands and Services. Because of this evolution, it is no longer as necessary as it once was to sell the fundamental objectives of what we term here the discriminate use of force (DUF).
Topic:
International Relations, Defense Policy, and Science and Technology
Political Geography:
United States

32825. Report on Allied Contributions to the Common Defense 2003

Publication Date:
09-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The Responsibility Sharing Report presents the Department of Defense's annual assessment of the relative contributions toward the common defense and mutual security by our NATO allies, our Pacific allies (Australia, Japan and the Republic of Korea), and the Gulf Cooperation Council (GCC) nations. The cornerstone of effective alliance relationships is the fair and equitable sharing of the full range of mutual security responsibilities, and the appropriate balancing of costs and benefits.
Topic:
Security, Defense Policy, and NATO
Political Geography:
Japan, Australia/Pacific, and Korea

32826. JSF International Industrial Participation: A Study of Country Approaches and Financial Impacts on Foreign Suppliers

Publication Date:
06-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The Joint Strike Fighter (JSF) program was conceived as an international acquisition program in order to attract financial investment and technological innovation from partner countries, as well as to partner early with governments whose military Services were likely users of this state-of-the-art coalition forces platform.
Topic:
Defense Policy, Economics, Industrial Policy, and Science and Technology

32827. Training for Future Conflicts

Publication Date:
06-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This is the second 21st century Defense Science Board report on military training. The report itself has a training goal: instruct and convince the acquisition and personnel communities to recognize instinctively that (1) military proficiency is as dependent on the warriors who operate weapon systems as it is on the weapon system technology, and (2) a superb way to waste personnel or system acquisition money is to ignore training, or to tacitly allow training to pay the bills for acquisition or personnel system flaws in those more measurable arenas.
Topic:
Defense Policy, Development, and Science and Technology
Political Geography:
United States

32828. Base Structure Report Fiscal Year 2003

Publication Date:
06-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Since 1999, the Department of Defense has used its real property inventory as the basis for the annual publication of the Base Structure Report. This report contains a comprehensive listing of installations and sites used by the Department, summarizes the current facilities inventory, and provides other basic information concerning the locations.
Topic:
Security, Defense Policy, and Economics
Political Geography:
United States

32829. IT Investment and Hicks' Composite-Good Theorem: The U.S. Experience

Author:
Jaime Marquez and Shing-Yi B. Wang
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We study whether aggregation residuals in U.S. private investment in information technology (IT) exhibit a predictable pattern that is consistent with Hicks' composite-good theorem and that may be used for forecasting. To determine whether one can extract such a pattern, we apply the general-to-specific strategy developed by Krolzig and Hendry (2001). This strategy combines ordinary least squares with a computer-automated algorithm that selects a specification based on coefficients' statistical significance, residual properties, and parameter constancy. Then, we derive the testable implications from Hicks' theorem and evaluate them with econometric formulations; we find qualified support for these implications. Having obtained these formulations, we evaluate their ex-post predictive accuracy and compare it to that of an autoregressive model. The key finding is that ignoring movement in relative prices results in a loss of information for predicting aggregation residuals.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
United States

32830. Afghanistan: Seeds of Hope

Author:
David Johnson
Publication Date:
05-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In 2000, an overwhelming 97 percent of Afghan girls did not attend school, and today only about 20 percent are literate. Tens of thousands of Afghan girls are now attending school for the first time in years.
Topic:
International Relations, Democratization, and Development
Political Geography:
Afghanistan and Middle East