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Abstract:
In this paper we evaluate a set of colombian exchange rate forecasts during the 1995-2005 period, using a Purchasing Power of Parity Exchange Rate Model (PPPER). Our first finding is that the computed forecasts seem to validate the use of this model under certain conditions given that, theoretically, it does a good work in predicting the long-term behaviour of the nominal exchange rate. Our second finding included a comparison analysis of out-of-sample forecasts (saving the 2001-2005 historical data) between the PPP-based forecast models, and the Vector Autorregresive (VAR) ones. The VAR method has a better forecasting performance, according to the RMSE, MAE and U-Theil measures. However, MAPE results measured on the first and second month-ahead forecasts, indicate that the VAR model has the worst performance amongst PPP-based models.

Foreign exchange, time-series model, financial forecasting

Abstract:
In Colombia, a Real Exchange Rate Index is computed by the Central Bank since 1984. The computing methodology used in this country has been the Laspeyres Geometric Average with periodic changes in the base-year. However, in other countries, there are at least three other methodologies that have been around since 1996: the Laysperes Chain, Paasche Chain, and Fischer Chain methodologies. This last methodology constitutes a significant improvement over the more traditional text-book methodologies (such as the Geometric Average), but it doesn't necessarily give better results than the offical Real Exchange Rate Index computed by the Central Bank of Colombia.

Foreign Exchange

Abstract:
This study examines the relations among large shareholders, board interlocks, outside directors and firm value in an Latin American emerging market, in whichthere is no restriction on cross-share ownership structures and voting power is leveraged through business group affiliation.We base our working hypothesis about the effect of board interlocks and directors’ independent behavior on firm performance on a model of collusive behavior between the largest shareholder/CEO and the remaining top blockholders with seats on the board. In this context, outsider board members, and insider directors with multiple appointments within the business group, might exert full control on management investment decisions and therefore induce blockholder control contestability behavior. The empirical analysis relies on data from a sample of 75 equity-issuing corporations in Colombia during 1998-2004. Forty-seven of these are holding firms belonging to the two largest local conglomerates in the country. Measurement results show that the fraction of outside directors is lower than those reported both for mature capital markets and for the largest economies in the region (e.g., Brazil and Mexico). Regarding board interlocks, the study finds that one quarter of boards in the sample has at least one member who is the CEO of another firm. Econometric results show that board interlocks, women’s participation, multiple blockholders’ contestability and affiliation with a business group have a positive effect on firm value, while CEOs who sit on their own firms’ boards have a negative effect on firm value; they also increase potential tunneling and rent diversion, and this can be exacerbated by the separation between ownership and control rights of the largest stakeholder.

Board independence, corporate governance, firm value, control contestability, colombian corporations

Abstract:
In this paper we evaluate a set of Colombian exchange rate forecasts during 1995-2005, using a Purchasing Power of Parity Exchange Rate Model (PPPER). Our first finding is that the computed forecasts seem to validate the use of this model under certain conditions given that, theoretically, it does a good work in predicting the long-term behavior of the nominal exchange rate. Our second finding included a comparative analysis of out-of-sample forecasts (saving the 2001-2005 historical data) between the PPP-based forecast models, and the Vector Autoregresive (VAR) ones. The VAR method has a better forecasting performance, according to the RMSE, MAE and U-Theil measures.

Foreign exchange, time-series model, financial forecasting

Abstract:
Law 964 of 2005 modifies the existent regulation on the management and investment of resources associated with the Colombian stock exchange. This paper makes notice on some possible effects derived from this law that might affect corporations in Colombia. Several previous reforms of the market are studied, preceded by a description of the configuration of property among Colombian corporations on the basis of recent methodological approaches (including La Porta, López-de-Silanes, Shleifer, and Vishny's research agenda). We conclude that given the particularities of the Colombian market, the new Stock Exchange Law may favor the growth of foreign investment funds with a Colombian portfolio, but it could also alter the incentive schemes by which corporations operate in Colombia.

Corporate Finance and Governance, Regulation, Stock Exchange, Colombia

Abstract:
Recent literature on economic development and poverty has stressed the issue of property rights, informal institutions and their relationship with capital markets. This paper intends to model some aspects of economist Hernando De Soto's work on informality, particularly how does the establishment of a property system allows people to choose from a larger set of trading partners?, and why is the individual cost-benefit decision of getting a legal property title considered a network issue?. A game theory approach was followed to model this problem: payoffs are correlated with the distribution of total population between official and unofficial sectors, and issues of positive feedback and externalities arise. Conclusions include some policy analysis for the case of housing in Colombia.

Social Choice, Formal Sector, Colombia

Abstract:
There are many ways to employ Parenthetical Referencing in a paper, thus making it sometimes inconsistent or ineffective as a referencing system. In this work we list and explain a set of 21 guidelines for a consistent and effective use of Parenthetical Referencing (also known as Harvard Style Referencing). We followed very closely APA's Manual of Style, but added important modifications taken from selected online guides (the main three guides being Anglia Ruskin University, University of Leeds and the University of South Australia). We explain in detail how to reference blogs, websites, youtube videos, wikipedia pages, as well as other kinds of online media. Our main intention is to provide useful and up-to-date examples of Parenthetical Referencing being applied to some of the most familiar works in the colombian economic literature. This note is aimed towards helping undergraduate economics' students and junior researchers by serving them as a handful guide for writing their research work.

Teaching of economics, writing of economic research