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Expectations of Sterling returning to Gold have been disregarded in empirical work on the US dollar – Sterling exchange rate in the early 1920s. We incorporate such considerations in a PPP model of the exchange rate, letting the probability of a return to gold follow a logistic function. We draw several conclusions: (i) the PPP model works well from spring 1919 to spring 1925; (ii) wholesale prices outperform consumer prices; (iii) allowing for a return to gold leads to a higher speed of adjustment of the exchange rate to PPP; (iv) interest rate differentials and the relative monetary base are crucial determinants of the expected return to gold; (v) the probability of a return to Gold peaked at about 72% in late 1924 and but fell to about 60% in early 1925; and (vi) our preferred model does not support the Keynes’ view that Sterling was overvalued after the return to gold.
Despite the increasing interest in leaders’ health-promoting behavior, the employees’ role in the effectiveness of such behavior and the mechanisms underlying how such leadership behavior affects their well-being have largely been ignored. Drawing on implicit leadership theories, we advance the health-oriented leadership literature by examining employees’ ideals, that is, their expectations regarding such leader behavior, as a moderating factor. We propose that higher expectations increase the association between actual health-oriented leader behavior and employee-rated leader-member relationships (LMX) and health-oriented behaviors by employees, which, in turn, positively relate to their well-being (here: exhaustion and work engagement). We tested our theoretical model in three studies, using a cross-sectional design (Study 1, N = 307), a two-wave time-lagged design (Study 2, N = 144) and an experimental design (Study 3, N = 173). We found that the effect of actual health-oriented leader behavior on LMX is contingent on employees’ ideal health-oriented leader behavior. Yet, for employees’ self-care behavior, the proposed moderation was only significant in Study 1. High expectations strengthened the relationship between actual health-oriented leader behavior with LMX and self-care behavior, which, in turn, were associated with less exhaustion and more work engagement (only LMX), supporting most of our mediation hypotheses. Our results highlight the pivotal role of employees’ expectations regarding leaders’ health support and help in building practical interventions with regard to leaders’ health promotion.
We study the effects of releases from the U.S. Strategic Petroleum Reserve (SPR) within the context of fully specified models of the global oil market that explicitly allow for storage demand as well as unanticipated changes in the SPR. We show that historically SPR policy interventions, defined as sequences of exogenous SPR shocks during selected periods, have helped stabilize the price of oil. Their effect on the price of oil, however, has been modest. For example, the cumulative effect of the SPR releases after the invasion of Kuwait in 1990 was a reduction of $2/barrel in the real price of oil after 7 months. Whereas emergency drawdowns tend to lower the real price of oil, we find that exchanges tend to raise the real price of oil in the long run. We also provide a detailed analysis of the benefits of the 2018 White House proposal to sell off half of the SPR within the next decade. We show that the expected fiscal benefits of this plan are somewhat higher than the revenue of $16.6 billion dollars projected by the White House.
The conventional wisdom that inflation expectations respond to the level of the price of oil (or the price of gasoline) is based on testing the null hypothesis of a zero slope coefficient in a static single-equation regression model fit to aggregate data. Given that the regressor in this model is not stationary, the null distribution of the t-test statistic is nonstandard, invalidating the use of the normal approximation. Once the critical values are adjusted, these regressions provide no support for the conventional wisdom. Using a new structural vector regression model, however, we demonstrate that gasoline price shocks may indeed drive one-year household inflation expectations. The model shows that there have been several such episodes since 1990. In particular, the rise in household inflation expectations between 2009 and 2013 is almost entirely explained by a large increase in gasoline prices. However, on average, gasoline price shocks account for only 39% of the variation in household inflation expectations since 1981.