Published by De Gruyter Oldenbourg

Volume 71 Issue 3

Issue of Review of Economics

Contents
Journal Overview

Publicly Available March 2, 2021

Survey

Publicly Available March 2, 2021

High-Frequency Trading and Systemic Risk: A Structured Review of Findings and Policies

Antonio Sánchez Serrano

Page range: 169-195

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Abstract

A wider use of technology has contributed to the rapid growth of trading in stock markets in the last decades, resulting in an increase in the number of participants and a sharp decline in the price of information. High-frequency trading could be seen as a manifestation of this development. A review of the main findings in the academic literature leads to the identification of four main systemic vulnerabilities related to high-frequency trading: (i) adverse selection in orders, with the potential of crowding-out non-HFT market makers in times of stress; (ii) correlation of positions and herd behaviour; (iii) market power that, via technological costs, may impose barriers to entry; and (iv) negative contribution, in some circumstances, to price discovery. The first vulnerability could create systemic risk and several scholars have discussed the introduction of a limit in the speed of trading to address it. This could also contribute to reduce market power of high-frequency traders and over-investment in information technologies. Despite intense research efforts, further data and research is still needed to better understand these vulnerabilities and the adequacy of policies to address them.

Research Articles

March 2, 2021

Out-of-Sample Predictability of Economic Efficiency Measures of U.S. Banks: Evidence of Capital Adequacy Requirements

Kekoura Sakouvogui

Page range: 197-222

Abstract

This paper contributes to the sparse debate on the effect of capital adequacy requirements on banks’ economic efficiency measures. Precisely, we evaluate the out-of-sample predictability of capital adequacy requirements on banks’ economic efficiency measures using Support Vector Regression (SVR) model with Linear, Polynomial and Radial Basis Function kernels and ordinary least squares (OLS) model. This analysis is important because a prediction of economic efficiency measures allows for an untangle view of bank’s progress that is useful for management as it gains a high degree of transparency in the evaluation of future events. Our framework adapts optimization of h-block cross-validation to account for serial correlation of economic variables to produce robust sets of tuning parameters for SVR model. Using a total of 10,380 December quarterly observations of U.S. Commercial and Domestic banks spanning from 2008 through 2019, empirical results show that SVR model provides better benchmarking insights in the evaluation of economic efficiency measures compared to the OLS model. Furthermore, in contrast to previous approaches identifying a single “best” model among competing models, the results of Model Confidence Test suggests that the out-of-sample forecasting confidently identifies superior predictive accuracy of SVR model-based forecasts over OLS model.

March 2, 2021

A Note on Unemployment of Unskilled Labor due to COVID-19 led Restriction on Migration and Trade

Biswajit Mandal, Saswati Chaudhuri, Alaka Shree Prasad

Page range: 223-236

Abstract

To combat COVID-19 the entire world has resorted to global lockdown implying restriction on international labor migration and trade. This paper aims to check the effect of such restrictions on the unemployment of unskilled labor in the source country. In competitive general equilibrium framework with three goods and four factors, restriction on migration raises unemployment for given factor intensity. The results remain same even in a slightly different structure of the economy. In case of trade restriction, however, the rise or fall in unemployment depends on both the structure of the economy and the factor intensity assumption.

About this journal

Welcome! As of 2016 the Review of Economics as well as all other journals of Lucius and Lucius Verlagsgesellschaft are published by De Gruyter Oldenbourg.

Aims and Scope
The Review of Economics (Jahrbuch für Wirtschaftswissenschaften) is a peer-reviewed general interest journal and publishes articles from all fields of economics.
Only articles with a strong policy focus are considered for publication. The Review of Economics will consider papers that are based on (i) a well defined theoretical model (ii) an empirical analysis or (iii) an experimental or (iv) an evidence-based framework.
The Review of Economics is also highly interested in survey articles on important policy issues.
Since the Review of Economics intends to deliver a forum for policy contributions and to influence the public debate we guarantee a quick and efficient referee process (the initial publication decision will be made within a maximum of 90 days). The editors may decide to publish papers without a referee process whenever authors send their submissions together with the referee reports and the decision letter of the previous submission and explain how they reacted to the reports. Accepted articles will be pre-published on the internet page of the journal as soon as they are accepted. Because the Review of Economics is not an e-Journal all articles also appear in a regular print version with some delay.

Partner Journal
Czech Journal of Economics and Finance

The Czech Journal of Economics and Finance (ISSN 0015-1920) is an English-language, double-blind refereed academic journal published in Prague since 1951. It devotes special attention to monetary economics, public finance, financial economics, and international economics, but it is open to high-quality papers from all fields of modern economics. The editors prefer empirically oriented papers, but do not exclude review articles or theoretical contributions provided that they are of high quality and relevant to the journal's aims.

Volume 71 Issue 3

Issue of Review of Economics

Frontmatter

High-Frequency Trading and Systemic Risk: A Structured Review of Findings and Policies

Abstract

Out-of-Sample Predictability of Economic Efficiency Measures of U.S. Banks: Evidence of Capital Adequacy Requirements

Abstract

A Note on Unemployment of Unskilled Labor due to COVID-19 led Restriction on Migration and Trade

Abstract