The aim of the thesis is to contribute to the debate over the past experience of the ERM and the prospect of the creation of EMU, both by throwing new light on issues where no agreement has been reached in the literature and by investigating important areas so far overlooked Methodologically, we will consider existing theories and test for their empirical implications by applying time series econometric techniques; and for the ERM crisis of 1992 we develop our own theoretical model and provide preliminary empirical results on its implications In the first chapter we consider the process of disinflation which Europe and the US experienced in the 1980s and adopt the Hamilton filter for the analysis of inflation differentials for the ERM countries against Germany The results are supportive of the view that the ERM membership helped inflation-prone countries to reduce inflation in the first phase of their commitment to stable exchange rates, but they also show that a sizeable positive differential persisted for Italy In the second chapter we test for the validity of the empirical implication for expected realignments of the model of target zones, proposed by Bertola and Svensson, and show that these are not corroborated by our results. In the third chapter we propose a theoretical model of the ERM crisis of 1992, which focuses on how the attitude of the Bundesbank towards the defence of the weak currencies in the system feeds into market expectations of the sustainability of the System and of future exchange rates The empirical implication of our theoretical model, as for expected devaluations, is considered in details and tested in chapter four, the results seem to be consistent with the model. In chapter five we investigate whether the EU as a whole has the characteristics necessary for a successful currency union and in particular focus on how employment shocks spread in Europe, the results seem to support the call for a two-speed Europe.

This thesis presents a comprehensive set of techniques for solving, simulating, analysing and controlling large scale, nonlinear, econometric models that contain rational expectations of future dated variables. These expectations are generally treated as model consistent, whereby the expectation is set to the deterministic projection of the model. Solutions to such models are distinguished from those of conventional models by the fact that they are not recursive in time. The outcome for the current period depends on the expected outcome for future periods as well as past periods. This property means that all of the basic numerical procedures need to be altered. We consider the following topics: solution algorithms for the two—point boundary value problem; terminal conditions, uniqueness and stability; experimental design and stochastic simulation; model forms, solution modes and historical tracking; control methods including optimal control. We find that suitable procedures allow us to undertake all of the experiments usually conducted with conventional models. Each topic is illustrated by application to three large scale models of the United Kingdom economy which contain rational expectations terms. Only one of these models is constructed following the new-classical paradigm and hence their comparative properties revealed by our experiments are of some interest.

This thesis considers the problem of non-existence of competitive equilibria in exchange economies. When equilibria fail to exist, prices fail to allocate commodities across individuals in such a way that markets clear. This is the most fundamental of all market failures.

By lots of economists and central banks, price stickiness is believed to be the main factor which brings about the non-neutrality of money. Based on the belief, most of the New Keynesian models are developed to feature price stickiness in order to make the real effect of money. Among those, the Calvo pricing has been the most popular framework in featuring the sticky price. This thesis investigates whether the non-neutrality of money is always guaranteed by the Calvo-type price stickiness or not. In particular, the focus lies on the effect of volatility of firms’' optimal prices on the relationship between price stickiness and the non-neutrality of money. Chapter 1 presents the theoretical possibility of the non-relationship between the two phenomenons in such case that repricing firms’' optimal prices are very volatile, and the following two chapters propose more micro-founded endogenous frameworks to deliver the results which support the argument in Chapter 1. It is shown in Chapter 1 that high volatility of reset prices has the same effect as that of lowering the degree of price stickiness and increasing the future discount factor in the standard Calvo framework. Due to the effect, it can be illustrated that the aggregate price level can be flexible even when some firms’ maintain the previous price level if the other repricing firms' prices respond very elastically to monetary shocks. Chapter 2 proposes a model in which repricing firms’ behave as in collusion and exploit the information on aggregate price dynamics by taking the aggregate price as a function of their own price at the process of optimization. It is shown that the colluding firms set much higher prices for monopoly gains against positive monetary shocks, and therefore, the aggregate price level can be very responsive even with price stickiness of the rms. Lastly, Chapter 3 presents the case where firms have no information on other firms' pricing behaviours and have expectations on average reset price with bounded rationality. The model of this chapter demonstrates that the realized level of average reset price of the firms can be much higher than that of the standard model when their expectations are heterogeneous. All the results of the chapters imply that the monetary policy might not be able to have the real effect even with price stickiness if firms’ reset prices show very volatile movements. Therefore, economists and central banks should research more on the volatility of firms' reset prices when analysing monetary policy and also try to find other factors which might have direct relationship with the rigidity of aggregate price, rather than price stickiness which focuses just on individual prices, when developing a monetary model.

This thesis is a collection of studies about the link between individual and group characteristics and economic outcomes. The firstt chapter investigates the link between declared trusting attitudes and trust choices in an infinitely repeated trust game after controlling for subjective beliefs. It is found that intrinsic trust influences the probability of trusting in a trust game. Moreover, intrinsic trust seems to operate through the fact that more trusting individuals are more likely to forgive or offer the bene t of doubt to others and show trust even after a disappointing outcome. The effect of intrinsic trust appears to be independent of the formation of beliefs. The second chapter studies personality trait variation and its implications on society's welfare. Personality is taken to be a type of skill that can be better understood if considered as a distribution rather than a single point. The ABM simulation results reported show that population personality compositions are adaptive on the task (job) distribution. Further simulation results depict the importance for appropriate education to cater for the jobs in the economy. Finally, simulations indicate that precise job match screening is beneficial not only for society's welfare but also for subjective well-being. The third chapter is concerned with how intelligence affects the social outcomes of groups. A systematic study of the link is provided in an experiment where two groups of subjects with different levels of intelligence, but otherwise similar, play a repeated prisoner's dilemma. Initial cooperation rates are similar, but increase in the groups with higher intelligence to reach almost full cooperation, while they decline in the groups with lower intelligence. Cooperation of higher intelligence subjects is payoff sensitive and not automatic: in a treatment with lower continuation probability there is no difference between different intelligence groups.

In this thesis, I investigate effective predictors for corporate defaults and measurement of economic recessions. I use corporate default probabilities in US industrial firms from April 1980 to December 2014 and effective predictors extracted from 92 macroeconomic and financial variables and I propose a framework to determine whether there is a dynamic in effective predictors for US corporate defaults. I apply LASSO, an advanced variable selection technique, and I find that there are no macro factors that can consistently explain default risk over time, suggesting that default risk has been dynamic during the 35-year period. These dynamics persist even during non-recession periods. Interestingly, the strong predictive powers of macro factors over shorter periods are related to monetary policy indicators and tools, which provides empirical support for prior theoretical theories that emphasize the unique role of monetary policies in corporate defaults. Another interesting finding is that institutional market funding, as the liquidity source provided by non-bank groups, has gradually impacted on corporate defaults since the 2001 recession. In the financial crisis occuring in 2007 this money market funds (MMFs) have strongest impact on corproate defaults. This implies that MMFs paly a crucial role of destabilizing credit markets in recent years, which is consistent with current studies of whether MMFs can result in financial stability. I study US economic recessions by introducing a cutting-edged technique from the Natural Sciences in order to capture the critical transitions in the macroeconomic system, using hundreds of macroeconomic and financial variables covering the period January 1980 to December 2014. Based on this method, I construct macro indicators to measure the interactions among these variables in order to capture the critical transitions in the macroeconomic system. Then I employ a standard logit model to study whether these proposed indicators offer a prediction one-month ahead of US economic recessions from September 1980 to December 2014. I find that the interactions among macroeconomic and financial variables measured by covariance among these variables can provide one-month ahead prediction for US economic recessions. In particular, the best predictive macro indicators are constructed by employing procyclical factors and factors from six economic groups based on results from both in-sample and out-of-sample analysis. Regarding the standard ideal indicator defined by Shiskin and Moore (1967), the indicator constructed by procyclical factors is preferable over that constructed by the factors from six economic groups since the former is smoother. I also find that the threshold based on 25% for classifying the recessions can generate better estimation results than using 50%, consistent with prior studies. In forecasting economic recessions in the US, the indicator generated by using broad macro factors is able to provide predictive power. The implication of these results is to provide a new quantitative approach for central bankers and policy makers to predict economic recessions one month ahead.

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This research develops and evaluates queueing models that can be used to model characteristics of basic call centres, i.e. multi-server systems with time-dependent arrival rates, general service time distribution and state-dependent abandonments on arrival (balking). The discrete-time modelling approach which has previously been used for modelling the time-dependent behaviour of multi-server queues is extended to incorporate state-dependent balking. Pure birth state-dependent arrival processes are studied for different arrival rates and are extended for the case of a recurrent arrival rate. Two approximations are introduced to model time-dependent systems with state-dependent balking. These approximations are proved to bound the actual solution for M(t,n)/D/s systems. A simulation model for systems with state-dependent balking is developed. Empirical tests versus this model show that the two approximations provide bounds of controllable accuracy. The performance of systems with balking is studied. Results show insensitivity to the service time distribution. The pointwise stationary approximation (PSA) generally performs well for these systems. A simple formula to estimate the mean number in the system is derived for busy systems with balking. Insights potentially useful to call centre management are reported.

This is a thesis about the standardisation of food through ‘sustainability’ labels, like those signifying organic or Fairtrade status. It examines how the voluntary product standards that underpin such labels are enacted through the everyday practices of producing, certifying and marketing farmed produce. This qualitative study of the enactment of organic standards in the UK suggests that such standards coordinate practices, forming an infrastructure which is normally invisible but which can be mobilised by producers to differentiate organic from conventional products. I describe the ways in which organic standards are enacted by farmers, certification bodies, policy makers and market actors. I suggest that standards provide process injunctions for farmers, requiring them to configure their farms in particular ways, adopt a preventative mode of farming, and a distinctive method of calculating value. I argue that organic standards are continually rewritten in the certification process, and that the multi-sited reproduction of different versions of organic standards results in markets characterised by a fragmented common space and partially maintained boundaries. Finally, I suggest that policy interventions formalise and frame organic farming as a public benefit. I argue that a multiplicity of ‘organics’ coexists with global notions of a singular ‘organic’, implying that the diffusion of ‘organic’ as a coherent concept is perfectly possible, even if the enactment of ‘organics’ in local practices is diverse. I suggest that all site-specific enactments of organic standards are abstracted into various formal spaces where they are made commensurable, and argue that the uniformity of organic ‘stuff’ is a result of the way local enactments are conjoined. These abstractions remove specifics of production and certification, and allow organic ‘stuff’ to circulate between actors. I conclude that the way in which voluntary product standards shape agricultural systems has political, organisational and ethical consequences for how ‘sustainable’ products are constituted.

This thesis is divided into two parts, each consisting of two self-contained chapters. The first part provides new findings in the economics of personality, and well-being. Chapter 1 studies the implications of ‘personality mismatch’. Mismatch in labour economics has generally been treated as a ‘black box’. Therefore, the well-being impact on a poorly matched worker is not well understood. I find that workers whose personalities are more poorly matched to the requirements of their job have substantially lower levels of life satisfaction, and a lower wage. Chapter 2 is the first study that attempts to uncover the determinants of well-being prioritisation. There is no consistent evidence of variation in priorities over the life cycle. Life satisfaction is the most valued aspect of well-being throughout life, yet people overestimate the relative value placed by others on happiness. Well-being prioritisation is strongly influenced by well-being levels and by individual fixed effects such as personality, health level, and smoking frequency. The second part of this thesis explores two novel ideas previously unconsidered. It represents a first attempt at providing some insight to these issues. Chapter 3 develops a model describing how consumers might adjust for a potential bias in extreme online review scores. A randomised experiment finds that individuals do not seem to be making such adjustments. Hence, there are negative implications for consumer welfare from false or biased extreme reviews. Finally, Chapter 4 is an ambitious investigation into how personality characteristics of workers within an economy may influence the composition of its industrial output. Big Five personality factors are predictive of future industry change, but further work needs to be done to verify this. This work highlights the relevance of personality data in the analysis of long-standing economic issues.