Economics and Finance

1003 Submissions

[8] viXra:1003.0251 [pdf] submitted on 8 Mar 2010

Introduction to Poly-Emporium Theory in Economics

Authors: V. Christianto, Florentin Smarandache
Comments: 11 pages

We propose the poly-emporium theory. A search done in Google on May 3rd, 2008, for the term "poly-emporium" returned no entry, so we introduce it for the first time.
Category: Economics and Finance

[7] viXra:1003.0237 [pdf] submitted on 8 Mar 2010

A Note on Exchange Rate Management and Gravity Equation: Developing Country's Viewpoint

Authors: V. Christianto, Florentin Smarandache
Comments: 6 pages

In the last few decades, the flexible exchange rate has become the predominating policy implemented by most countries in the World, except only a few countries who can keep their exchange rates fixed. The predominating position can be attributed mainly to Milton Friedman's strong support. What is less known, nonetheless, is a hidden premise that the flexible exchange rate policy will help fiscal policy in the sense that only governments who do not manage the fiscal policy properly will get 'punished' by exchange rate decreases. But as the US-Japan experience showed [1], this widely-held assumption is often not realistic. The same experience has been observed in other countries too, i.e. that financial liberalization including flexible exchange rate often became precursor of financial instability [2]. While in the past year, in Indonesia for particular, the exchange rate remains stable, it does not mean that it would be free from troubles in the future. Therefore it is worthwhile to explore some other choices for better exchange rate policy. In the present paper will discuss, albeit in somewhat 'crude' manner, some long-term approaches which have been discussed in the literature, and also not-so conventional approaches which may be suitable for short term purposes. The basic proposition in the present paper is that we argue in favor of returning to fixed (or pegging) exchange rate, but of course it is not realistic to promote this policy for the short-term future. Therefore we explore some unconventional alternatives for short-term. It is our hope that the proposition would be useful to explore further by the economics policy makers.
Category: Economics and Finance

[6] viXra:1003.0201 [pdf] submitted on 6 Mar 2010

Cultural Advantages in China: Tale of Six Cities

Authors: Fu Yuhua, Florentin Smarandache, V. Christianto
Comments: 96 pages

Nowadays, plenty of factories from Europe and other developed countries have been relocated to this country, considering its tremendous economic scale and rapid growth rate during the past three decades. But most of what happens inside the China nowadays is deeply hidden from the outside world ("the foreigners" as China people would call). This fact is partly because most reports on China were written by the so-called fly-high experts who are busy completing their reports despite a busy schedule. Very few books or reports were written by people inside, or at least "foreigners" who spent a few years in China. Therefore in this book, we took a different approach, by inviting local scientists and other writers to describe what happens surround them.
Category: Economics and Finance

[5] viXra:1003.0200 [pdf] submitted on 6 Mar 2010

Cultural Advantage for Cities an Alternative for Developing Countries

Authors: V. Christianto, Florentin Smarandache
Comments: 63 pages

After more than a decade Michael Porter's book Competitive Advantage of Nations stays ahead of the other books, in particular as alternative framework from the comparative advantage idea inspired by Adam Smith. This small book is merely an alternative proposition, a postscript perhaps, to Porter's book, with basic idea that one cannot rely merely on industrial processes alone to keep stay ahead of market changes. Hence, for cities in developing countries the municipal shall find out their city's best resources, and develop their city starting from there, instead of striving blindly in the conventional industrial path.
Category: Economics and Finance

[4] viXra:1003.0184 [pdf] submitted on 6 Mar 2010

Cultural Advantage as an Alternative Framework: An Introduction

Authors: Florentin Smarandache, V. Christianto
Comments: 11 pages

Despite the economics jargon on 'rational choice', nowadays the entire world has nothing else to choose except to succumb under the spell of magic words of modern economics, i.e. 'neoliberalism', 'financial liberalization', 'free market' (laissez-faire), and 'globalization'. All of these can be shown to be part of a preconception, i.e. far beyond the 'neutral' idea of natural sciences. In Fritjof Capra's book 'Turning Point' (Bantam Books, 1982) these phenomena are summarized as follows: economics thinking have started by assuming that in economics sciences one can achieve the same generality and universality that physicists enjoy in doing Natural Sciences. In other words, economists try to become through their work 'hard science' rather than recognizing that in economics the subject of their study is human/people which is far from being predictable, either as individual or as society. In our humble opinion, economics is a mixture of both, hard and soft sciences. In order to show this, we introduce a new study, called Poly-Emporium Theory, where we show that phenomena from hard science and soft science co-exist and interact in economics. Poly-Emporium Theory is the study of interactions among many (big and small) firms in the market, and it is different from oligopoly since poly-emporium takes into consideration the small firms too (not only the big firms that dominate the market as in oligopoly). The above logic of thinking is the starting point to submit a new idea, under the heading of 'Cultural Advantage.' The first book in the series has title: Cultural Advantage for Cities: An alternative for Developing Countries. This presentation summarizes its basic ideas, with a hope that these ideas may be found interesting to develop further. For clarity the readers are referred to the book.
Category: Economics and Finance

[3] viXra:1003.0133 [pdf] submitted on 6 Mar 2010

Utility of Choice: An Information Theoretic Approach to Investment Decision-making

Authors: M. Khoshnevisan, Florentin Smarandache, Sukanto Bhattacharya
Comments: 18 pages

In this paper we have devised an alternative methodological approach for quantifying utility in terms of expected information content of the decisionmaker's choice set. We have proposed an extension to the concept of utility by incorporating extrinsic utility; which we have defined as the utility derived from the element of choice afforded to the decision-maker by the availability of an object within his or her object set. We have subsequently applied this extended utility concept to the case of investor utility derived from a structured, financial product - an custom-made investment portfolio incorporating an endogenous capital-guarantee through inclusion of cash as a risk-free asset, based on the Black-Scholes derivative-pricing formulation. We have also provided instances of potential application of information and coding theory in the realms of financial decision-making with such structured portfolios, in terms of transmission of product information.
Category: Economics and Finance

[2] viXra:1003.0131 [pdf] submitted on 6 Mar 2010

Computational Exploration of Investor Utilities Underlying a Portfolio Insurance Strategy

Authors: M. Khoshnevisan, Florentin Smarandache, Sukanto Bhattacharya
Comments: 24 pages

In this paper we take a look at a simple portfolio insurance strategy using a protective put and computationally derive the investor's governing utility structures underlying such a strategy under alternative market scenarios. Investor utility is deemed to increase with an increase in the excess equity generated by the portfolio insurance strategy over a simple investment strategy without any insurance. Three alternative market scenarios (probability spaces) have been explored - "Down", "Neutral" and "Up", categorized according to whether the price of the underlying security is most likely to go down, stay unchanged or go up. The methodology used is computational, primarily based on simulation and numerical extrapolation. The Arrow-Pratt measure of risk aversion has been used to determine how the investors react towards risk under the different scenarios.
Category: Economics and Finance

[1] viXra:1003.0129 [pdf] submitted on 6 Mar 2010

Fuzziness and Funds Allocation in Portfolio Optimization

Authors: Jack Allen, Sukanto Bhattacharya, Florentin Smarandache
Comments: 21 pages

Each individual investor is different, with different financial goals, different levels of risk tolerance and different personal preferences. From the point of view of investment management, these characteristics are often defined as objectives and constraints. Objectives can be the type of return being sought, while constraints include factors such as time horizon, how liquid the investor is, any personal tax situation and how risk is handled. It's really a balancing act between risk and return with each investor having unique requirements, as well as a unique financial outlook - essentially a constrained utility maximization objective. To analyze how well a customer fits into a particular investor class, one investment house has even designed a structured questionnaire with about two-dozen questions that each has to be answered with values from 1 to 5. The questions range from personal background (age, marital state, number of children, job type, education type, etc.) to what the customer expects from an investment (capital protection, tax shelter, liquid assets, etc.). A fuzzy logic system has been designed for the evaluation of the answers to the above questions. We have investigated the notion of fuzziness with respect to funds allocation.
Category: Economics and Finance