PROGRESS IN ECONOMICS RESEARCH, VOLUME 14 -- PROGRESS IN ECONOMICS RESEARCH, VOLUME 14 -- CONTENTS -- PREFACE -- Chapter 1VALUATING CASH FLOWS IN AN INFLATIONARYENVIRONMENT: THE CASE OF WORLD BANK1 -- Abstract -- Introduction -- Section One: Approaches to Valuation in an InflationaryEnvironment -- Section Two: A Review -- Section Three: Implicit Assumptions for Identical NPVs -- 1. No Taxes -- 2. All Cash Excess Is Distributed to the Equity and Debt Holders -- 3. The Price Increases that Actually Occur (Current or Nominal) will beEqual to the Inflation Rate or the Relative or Real Increases are Zero,Included in the Current or Nominal Discount Rate -- 4. Income and Payments for Goods and Services are in Cash and there areNo Credit Transactions -- 5. No Salvage Value -- 6. There Is no Price-Demand Elasticity Effect -- 7. The Discount Rate at Current or Nominal Prices Has to Be Exactly Equal to(1+ ir)(1+ if)-1 and at constant and real prices the discount rate has to beequal to ir, the real rate of return. -- 8. The Cost of Debt Kd, has to be Deflated -- Section Four: Tax Savings (TS) and Its Relevance in Valuation -- Section Five: The World Bank Case -- Description of the Model -- Common Practice -- Valuation with Constant Prices Methodology -- Using Constant Leverage in the WACC Calculation when It Is not Constant -- Calculation of the Cost of Capital -- Inconsistency in the Values -- Overestimation of the "Correct" Value -- Section Six -- A "Proper" Solution -- Tariffs Recalculated -- Value Using Nominal Prices -- A Summary -- Section Seven: Concluding Remarks -- Appendix 1 -- Appendix 2 -- Appendix 3 -- Appendix 4 -- Appendix 5 -- Appendix 6 -- Appendix 7 -- Appendix 8 -- Appendix 9 -- Appendix 10 -- References -- Chapter 2DOES THE ADOPTION OF INFLATION TARGETINGAFFECT MARKET VOLATILITY?THE CASE OF ISRAEL -- Abstract -- 1. Introduction.

2. Market Volatility as a Financial Soundness Indicator -- 2.1. Relevant Analytical Aspects Related to Financial Soundness Indicators -- 2.2. Proposed Market Volatility Indicator -- 2.3. Comparison with Alternative Indicators -- Duration Indicators -- Risk Appetite Indicators -- 3. Market Volatility in Israel, 1992-2000 -- 3.1. Exchange Rate, Interest Rates, and Stock Prices:Evolution and Volatility Patterns -- 3.2. A Market Volatility Indicator for Israel -- 4. A Multivariate-GARCH Model for Israel -- 4.1. Multivariate GARCH Modeling of Market Volatility for Israel -- Data -- Tests -- Results -- Out-of-Sample Data -- 4.2. Incorporation of MVI into the Multivariate GARCH Model -- 5. Conclusions -- References -- Chapter 3WHEN POINT ESTIMATES MISS THE POINT:STOCHASTIC MODELING OF WTO RESTRICTIONS* -- Abstract -- The Stochastic Model -- The Stochastic Process -- Results and Discussion -- Concluding Remarks -- References -- Chapter4NONLINEARTOOLSFORANALYZINGANDFORECASTINGFINANCIALTIMESERIES:ANAPPLICATIONTOUSINTERESTRATES -- Abstract -- 1.Introduction -- 2.Methodology -- 2.1.ReconstructionofDynamicsbytheMethodofTimeDelays -- 2.2.DeterminingtheDimensionofaTimeSeries -- 2.3.RecurrencePlotAnalysis -- 2.3.1.WhiteNoise -- 2.3.2.RandomWalkwithDrift -- 2.3.3.ChaoticTimeSeries -- 2.3.4.StructuralBreak -- 2.4.LocalPredictionMethods -- 2.4.1.NearestNeighborPredictor -- 2.4.2.LocallyConstantPredictor -- 2.4.3.LocallyLinearPredictor -- 2.5.AssessingStatisticalSignificancewithSurrogateData -- 3.ApplicationtoUSInterestRates -- 3.1.Data -- 3.2.PreliminaryResults -- 3.2.1.SummaryStatistics -- 3.2.2.TestforIndependence -- 3.3.VisualRecurrenceAnalysis -- 3.4.DimensionAnalysis -- 3.5.Prediction -- 3.5.1.Predictors -- 3.5.2.MeasuringForecastAccuracy -- 3.5.3.SurrogateDataAnalysis -- 3.5.4.Results -- 4.Conclusion -- References.

Chapter 5THE CHOICE OF EXCHANGE RATE REGIMESIN TRANSITION ECONOMIES:EVOLUTION AND DETERMINATION -- Abstract -- 1. Introduction -- 2. Exchange Rate Regimes in Transition Economies:Classification and Evolution -- 2.1. Classification of Exchange Rate Regimes -- 2.2. Evolution of Exchange Rate Regimes: Is There "Hollowing-Out"of the Middle? -- Transition Matrix -- Tests for the "Hollowing-Out" Hypothesis -- Steady-State Distributions -- 3. Determination of Exchange Rate Regimes in TransitionEconomies -- 3.1. The Model -- 3.2. Data and Variables -- 3.3. Empirical Results -- Results of the Static Model -- Results of the Dynamic Model -- 4. Conclusions -- Appendix -- Explanatory Variables -- References -- Chapter 6EXPORTING, CROSS-BORDER INVESTMENTAND EMPLOYMENT DYNAMICS:AN EMPIRICAL INVESTIGATION -- Abstract -- I. Introduction -- II. Multinationality, Exporting and Business Performance:Some Theoretical Issues -- III. Multinationality Exporting and Employment:A Selective Review of the Empirical Literature -- IV. Database Construction and Some Sample Characteristics -- V. Non-parametric Analysis -- VI. Modelling Employment Growth Differentials -- VII. In Search of a Causal Relationship between Exporting,Cross-Border Investment and Employment Growth -- VIII. Conclusion -- References -- Chapter 7THE HICKSIAN NATIONAL INCOME OF CAMBODIA,1988-2004 -- 1. Introduction -- 2. Cambodia's Economic Development: Historical Backgroundand Recent Developments -- 2.1. Pre-1953 Independence -- 2.2. Post-1953 Independence to the 1993 Elections -- 2.3. Post-1993 Elections -- 3. Theoretical and Empirical Overview of Green GDP -- 3.1. Theoretical Developments -- 3.2. The Green GDP Methodology Used in the Cambodian Study -- 3.3. Empirical Overview of Green GDP Studies -- 4. Valuation methods Used to Calculate Cambodia's HicksianNational Income.

4.1. Human-Made Capital Depreciation (HCD) -- 4.2. Defensive and Rehabilitative Expenditures (DRE) -- 4.3. Natural Capital Depletion (NCD) -- Valuing the Cost of Deforestation -- Valuing the Cost of Overfishing -- Valuing the Cost of Soil Erosion -- Valuing the Cost of Air Pollution -- 5. Results of the SNDP Study -- 5.1. Cambodia's Real GDP and Hicksian National Income -- 5.2. Component Items of Cambodia's Hicksian National Income -- 6. Resource Depletion Issues -- 6.1. Forestry Issues -- 6.2. Fisheries Issues -- 7. Concluding Remarks -- References -- Chapter 8STAR-GARCH MODELS FOR STOCK MARKETINTERACTIONS IN THE PACIFIC BASIN REGION,JAPAN AND US -- Abstract -- 1. Introduction -- 2. Star Models -- 2.1. Representation of STAR Models -- 2.2. Hypothesis Testing in STAR Models -- 2.3. Estimation and Diagnostic Tests in STAR Models -- 2.4. Evaluating the Forecasting Performance of STAR Models -- 3. GARCH Models -- 4. Outliers in STAR and GARCH Models -- 4.1. Effects of Outliers on STAR Models -- 4.2. Effects of Outliers on GARCH Models -- 5. Empirical Analysis -- 5.1. Data -- 5.2. Results -- 6. Conclusion -- Acknowledgments -- References -- Chapter 9REACTION OF THE BRAZILIAN STOCK MARKETTO POSITIVE AND NEGATIVE SHOCKS -- Abstract -- 1. Introduction -- 2. The Brazilian Stock Market -- 3. Theoretical Background -- 4. Empirical Evidence -- 5. Data and Methodology -- 6. Empirical Results -- 6.1. Impact of Events on Return Volatilities -- 6.2. Cumulative Abnormal Returns -- Conclusion -- Appendix -- References -- Chapter 10THE LESSONS TO BE LEARNT FROM THE GREATPOST-COMMUNIST CHANGE -- Lesson One -- Lesson Two -- Lesson Three -- Lesson Four -- Lesson Five -- Lesson Six -- Lesson Seven -- References -- INDEX.