Thesis advisor: Jaromir Nosal / This dissertation comprises three self-contained essays that investigate the determination and transmission of exchange rate fluctuations, as well as the impact of import quality on consumers’ gains from globalization. In the first chapter, “Decomposing the (In)Sensitivity of CPI to Exchange Rate", I examine the role of domestic frictions – distribution costs, variable markups and nominal rigidities – in explaining the low sensitivity of domestic prices to exchange rate fluctuations. I begin by modeling what the sensitivity of CPI to exchange rates is expected to be, given the presence of insensitivity in border prices and domestic frictions. Distribution costs, such as transportation and wholesaling costs, introduce a wedge between the retail price, on one side, and the border price of imports and the domestic producers’ costs, on the other. Similarly, domestic firms do not fully adjust their price to changes in their own cost because of changes in the desired markup or because prices are sticky. These frictions introduce wedges between the change in domestic producers’ costs and border prices following an exchange rate shock, and the response of domestic consumption retail prices. Using firm and transaction data from Chile, I document that domestic frictions account for 60% of the overall insensitivity of domestic CPI. Moreover, the presence of domestic frictions also impacts the sensitivity of domestic CPI: contrary to previous literature, most of the sensitivity arises from the direct consumption of imported final goods, rather than through the costs associated to imported inputs in the production of domestic goods. This is because domestic frictions dampen the response of domestically produced goods more significantly. In addition, I quantify a rich heterogeneity in the sensitivity across products, which stems from the interaction of domestic frictions and import exposure. These heterogeneities are relevant for the overall (in)sensitivity, as sectors with higher import exposure face also larger frictions. Overall, my results showcase the importance of domestic frictions and their heterogeneity in studying the response of domestic prices to exchange rate fluctuations, with implications for monetary policy in open economy and redistribution dynamics. In the second chapter, “Strategic Behavior and Exchange Rate Dynamics", joint work with L. Pollio, I examine the impact of heterogeneous investors with different degrees of price impact on exchange rate behavior. The huge trading volume in the currency markets, about $6 trillions per day, is highly concentrated among the market-making desks of few large financial institutions. However, models of exchange rate determination assume that investors take the equilibrium price as given, ignoring the presence of a few large investors who recognize the price impact of their decisions and can exert pressure on market prices. We incorporate heterogeneity in price impact, following of Kyle (1989), into a two-country, dynamic monetary model of exchange rate determination. Our theory of exchange rate determination with heterogeneity in price impact reveals that market structure is a key determinant of exchange rate dynamics. Strategic investors recognize their price impact, which leads them to trade less on any information and reduce the information loading factor of the exchange rate (price informativeness). The presence of strategic investors explains the weak explanatory power of macroeconomics variables in predicting exchange rates (exchange rate disconnect puzzle) and the excess volatility of the exchange rate relative to fundamentals (excess volatility puzzle). We also provide empirical evidence that supports our theoretical predictions by using trading volume concentration data from the NY Fed FXC Reports for 18 currencies from 2005 to 2019. We extend our theoretical framework to include another dimension of heterogeneity among investors, information heterogeneity, that provides similar qualitative predictions in terms of exchange rate dynamics. We demonstrate that both dimensions of heterogeneity are quantitatively relevant in explaining the disconnect of exchange rates and their excess volatility. In the third chapter, “The Quality of US Imports and the Consumption Gains from Globalization", joint work with D. Lashkari, I examine the role of quality improvement in shaping the gains from trade. The existing empirical literature indicates that globalization has offered consumers around the world access to a wider variety of products at cheaper prices. However, since the available data typically lacks detailed information on product characteristics, we may underestimate the value of imports for consumers if the quality of goods within each product rises over time. To overcome this limitation, we propose a novel methodology to estimate demand elasticity and infer unobserved quality using only data on prices and market shares. Our approach builds on the standard framework that models product quality as residual demand. This framework requires estimating price elasticities and the standard approach assumes CES demand and imposes uncorrelated supply and demand shocks. However, the latter assumption is untenable if we associate demand shocks with quality and generates an upward bias in the estimates of price elasticities. Our strategy circumvents this problem by restricting the dynamics of product quality to a Markov process. We apply our new methodology to the US customs data (1989-2006), and find that quality improvements contribute the most to the gains from trade in the US. Quality improvements have lowered the price of US imports relative to the CPI by 17%, with Chinese products contributing the most. In comparison, import prices have fallen by around 11% relative to the CPI and increasing variety has contributed an additional 4%. These findings demonstrate that accounting for quality is essential to better understand and measure the effects of international trade. / Thesis (PhD) — Boston College, 2023. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

<p>Diss. (sammanfattning) Stockholm : Handelshögsk.</p>

Denna studie syftar till att undersöka om växelkursen har en påverkan på svensk varuexport och om effekten skiljer sig med avseende på varugrupp. För att uppnå syftet används en ARDL-Approach som skattas med hjälp av tidsseriedata från 32 viktiga handelspartners och 10 viktiga varugrupper under perioden januari 1995 till december 2019. Två effekter är i fokus: effekten av en real appreciering/depreciering och effekten av en volatil växelkurs. För den totala varuexporten visas signifikanta resultat för att en depreciering av den svenska kronan med 1 % i genomsnitt ökar varuexporten med 0,192 % på kort sikt och med 0,416 % på lång sikt. Effekten av en volatilitetsökning på 1 % skattas till -0,366 % på kort sikt och till -0,794 % på lång sikt, dock utan statistisk signifikans. På varugruppsnivå tyder resultaten på att olika varor påverkas olika av förändringar i växelkursen. / The aim of this study is to examine whether the exchange rate has an impact on Swedish export of goods and if this effect differs between different categories of goods. To reach the aim, we use an ARDL-Approach with time-series data from 32 important trade partners and 10 different categories of goods during the period January 1995 to December 2019. Two effects are in focus: The effect of real appreciation/depreciation and the effect of exchange rate volatility. In total export of goods, this study finds significant results that a 1 % depreciation of the Swedish crown on average increases exports of goods with 0,192 % in the short-term and with 0,416 % in the long-term. The effect of an increase in exchange rate volatility by 1 % is estimated to decrease the exports of goods with -0,366 % in the short run and -0,794 % in the long run, but without statistical significance. The results imply that different categories of goods are being affected differently by changes in the exchange rate.

The present licentiate thesis analyses developments in Swedish marine insurance during the interwar period, including both direct marine insurance and marine reinsurance. This is done in order to provide insights on how companies of a highly internationalised and vulnerable line of insurance were affected by and responded to new risks during a period of far-reaching international financial and economic crises. Finally, the consequences of new risks and strategies are assessed. This thesis argues that during the interwar period Swedish maritime trade and Swedish marine insurance greatly depended on each other for marine insurance cover and marine insurance premium incomes. The business results in Swedish marine insurance partly depended on the development of Swedish trade. These business results were also vulnerable to currency risks. Swedish marine insurers faced no similar trade or currency risks during the two decades preceding World War I, and accordingly the returns on Swedish marine insurance were lower during the interwar period than during the last two pre-war decades. These factors probably bore their most severe consequences during the early 1920s when Swedish marine insurance on average induced losses to insurers. The remaining years of the period constituted a long-run recovery, and the Great Depression of the early 1930s caused no difficulties of the same order. This thesis also indicates that interwar Swedish marine insurers responded to new risks by increasing the level of cession to reinsurers. Another response was to increase the level of differentiation among insurance lines. This thesis describes the consequences of new risks and strategies in interwar Swedish marine insurance, focusing on the development of the Swedish marine insurance market structure and on the business results of Swedish marine insurers. Though this market shrunk and grew excessively, the relative importance of stock and mutual insurers showed only minor fluctuations. The importance of specialised marine reinsurance companies, however, fluctuated greatly. Also, cooperation between interwar marine insurers and the formation of insurance groups set new trends of concentration for the future. Finally, even though Swedish marine insurance during some years induced losses the Swedish marine insurers never experienced true losses on their total businesses.

This thesis consists of four essays on topics relating to the fields of international portfolio choice, trading behavior, and asset pricing. "Direct Foreign Ownership, Institutional Investors, and Firm Characteristics" analyzes portfolios of Swedish stocks held by foreign investors. The analysis reveals that foreigners tilt their portfolios to firms with certain attributes. It is also shown that the seemingly specific preferences of foreign investors are driven by the fact that they are large institutional investors, and are not linked to their national origin. "Foreigners' Trades in Risky Assets: An assessment of  Investment Behavior and Performance" analyzes foreigners' trading activities. It is shown that foreigners trade more than domestic investors. Further, they trade as non-informed trend followers in that they buy stocks that have recently done well. Nonetheless, after the liberalization of Sweden's stock market, foreigners' purchases have led to a permanent price increase and to a reduction in the cost of equity capital. "Exchange Rate Exposure, Risk Premia, and Firm Characteristics" shows that about fifty percent of Swedish listed firms are affected by exchange rate fluctuations. The sign and magnitude of exchange rate exposure are characterized across industries as well as firm attributes. The empirical analysis suggests that exposure can be eliminated through diversification, and that exchange rate risk is not priced. "Conditioning Information in Tactical Asset Allocation" examines whether investors can exploit the predictability in time-varying expected returns on Swedish stocks and bonds. It is shown that dynamic allocation strategies, based on conditioning information, significantly outperform several benchmark portfolios. This superior performance is not only statistically significant, it is economically large. / Diss. Stockholm : Handelshögsk.

Les fluctuations économiques représentent les mouvements de la croissance économique. Celle-ci peut connaître des phases d'accélération (expansion) ou de ralentissement (récession), voire même de dépression si la baisse de production est persistente. Les fluctuations économiques sont liées aux écarts entre croissance effective et croissance potentielle. Elles peuvent s'expliquer par des chocs d'offre et demande, ainsi que par le cycle du crédit. Dans le premier cas, les conditions de la production se trouvent modifiées. C'est le cas lorsque le prix des facteurs de production (salaires, prix des matières premières) ou que des facteurs externes influençant le prix des produits (taux de change) évolue. Ainsi, une hausse du prix des facteurs de production provoque un choc négatif et ralentit la croissance. Ce ralentissement peut être également dû à un choc de demande négatif provoqué par une hausse du prix des produits causée par une appréciation de la devise, engendrant une diminution des exportations. Le deuxième cas concerne les variables financières et les actifs financiers. Ainsi, en période d'expansion, les agents économiques s'endettent et ont des comportements spéculatifs en réaction à des chocs d'offre ou demande anticipés. La valeur des titres et actifs financiers augmente, provoquant une bulle qui finit par éclater et provoquer un effondrement de la valeur des biens. Dès lors, l'activité économique ne peut plus être financée. C'est ce qui génère une récession, parfois profonde, comme lors de la récente crise financière. Cette thèse inclut trois essais sur les fluctuations macroéconomiques et les cycles économiques, plus précisément sur les thèmes décrit ci-dessus. Le premier chapitre s'intéresse aux anticipations sur la politique monétaire et sur la réaction des agents écononomiques face à ces anticipations. Une emphase particulière est mise sur la consommation de biens durables et l'endettement relié à ce type de consommation. Le deuxième chapitre aborde la question de l'influence des variations du taux de change sur la demande de travail dans le secteur manufacturier canadien. Finalement, le troisième chapitre s'intéresse aux retombées économiques, parfois négatives, du marché immobilier sur la consommation des ménages et aux répercussions sur le prix des actifs immobiliers et sur l'endettement des ménages d'anticipations infondées sur la demande dans le marché immobilier. Le premier chapitre, intitulé ``Monetary Policy News Shocks and Durable Consumption'', fournit une étude sur le lien entre les dépenses en biens durables et les chocs monétaires anticipés. Nous proposons et mettons en oeuvre une nouvelle approche pour identifier les chocs anticipés (nouvelles) de politique monétaire, en les identifiant de manière récursive à partir des résidus d’une règle de Taylor estimée à l’aide de données de sondage multi-horizon. Nous utilisons ensuite les chocs anticipés inférer dans un modèle autorégressif vectoriel structurel (ARVS). L’anticipation d’une politique de resserrement monétaire mène à une augmentation de la production, de la consommation de biens non-durables et durables, ainsi qu’à une augmentation du prix réel des biens durables. Bien que les chocs anticipés expliquent une part significative des variations de la production et de la consommation, leur impact est moindre que celui des chocs non-anticipés sur les fluctuations économiques. Finalement, nous menons une analyse théorique avec un modèle d’équilibre général dynamique stochastique (EGDS) avec biens durables et rigidités nominales. Les résultats indiquent que le modèle avec les prix des biens durables rigides peut reproduire la corrélation positive entre les fonctions de réponse de la consommation de biens non-durables et durables à un choc anticipé de politique monétaire trouvées à l’aide du ARVS. Le second chapitre s'intitule ``Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries''. Dans ce chapitre, nous évaluons la sensibilité de l'emploi et des heures travaillées dans les industries manufacturières canadiennes aux variations du taux de change. L’analyse est basée sur un modèle dynamique de demande de travail et utilise l’approche en deux étapes pour l'estimation des relations de cointégration en données de panel. Nos données sont prises d’un panel de 20 industries manufacturières, provenant de la base de données KLEMS de Statistique Canada, et couvrent une longue période qui inclut deux cycles complets d’appréciation-dépréciation de la valeur du dollar canadien. Les effets nets de l'appréciation du dollar canadien se sont avérés statistiquement et économiquement significatifs et négatifs pour l'emploi et les heures travaillées, et ses effets sont plus prononcés dans les industries davantage exposées au commerce international. Finalement, le dernier chapitre s'intitule ``Housing Market Dynamics and Macroprudential Policy'', dans lequel nous étudions la relation statistique suggérant un lien collatéral entre le marché immobilier and le reste de l'économique et si ce lien est davantage entraîné par des facteurs de demandes ou d'offres. Nous suivons également la littérature sur les chocs anticipés et examinons un cyle d'expansion-récession peut survenir de façon endogène la suite d'anticipations non-réalisées d'une hausse de la demande de logements. À cette fin, nous construisons un modèle néo-Keynésien au sein duquel le pouvoir d’emprunt du partie des consommateurs est limité par la valeur de leur patrimoine immobilier. Nous estimons le modèle en utilisant une méthode Bayésienne avec des données canadiennes. Nous évaluons la capacité du modèle à capter les caractéristiques principales de la consommation et du prix des maisons. Finalement, nous effectuons une analyse pour déterminer dans quelle mesure l'introduction d'un ratio prêt-à-la-valeur contracyclique peut réduire l'endettement des ménages et les fluctuations du prix des maisons comparativement à une règle de politique monétaire répondant à l'inflation du prix des maisons. Nous trouvons une relation statistique suggérant un important lien collatéral entre le marché immobilier et le reste de l'économie, et ce lien s'explique principalement par des facteurs de demande. Nous constatons également que l'introduction de chocs anticipés peut générer un cycle d'expansion-récession du marché immobilier, la récession faisant suite aux attentes non-réalisées par rapport à la demande de logements. Enfin, notre étude suggère également qu'un ratio contracyclique de prêt-à-la-valeur est une politique utile pour réduire les retombées du marché du logement sur la consommation par l'intermédiaire de la valeur garantie. / Economic fluctuations represent the movements of economic growth. It may experience acceleration phases (expansion) or deceleration (recession), and even depression if the decline in production is persistent. Economic fluctuations are related to differences between actual growth and potential growth. They can be explained by supply and demand shocks, as well as by the credit cycle. In the first case, the conditions of production are modified. This is the case when the price of production factors (wages, raw materials prices) or external factors influencing the price of products (exchange rate) evolve. Thus, an increase in the price of production factors causes a negative shock and slows growth. This slowdown may also be due to a negative demand shock caused by an increase in product prices caused by a currency appreciation, causing a decrease in exports. The second case concerns the financial variables and financial assets. Thus, in a period of expansion, economic agents borrow more and have speculative behaviors in response to anticipated supply and demand shocks. The value of securities and financial assets increases, causing a bubble that eventually burst, causing a collapse in the value of assets. Therefore, economic activity cannot be funded. This is what generates a recession, sometimes profound, as in the recent financial crisis. This thesis includes three essays on macroeconomic fluctuations and economic cycles, specifically on the topics described above. The first chapter deals with expectations about monetary policy and on the reaction of econonomic agents on these expectations. A particular emphasis is placed on the consumption of durable goods and indebtedness related to this type of consumption. The second chapter discusses the influence of fluctuations in foreign exchange rates on labour demand in the Canadian manufacturing sector. Finally, the third chapter focuses on spillover, sometimes negative, of the real estate market on household consumption and the impact on property prices and household debt of demand expectations in the property market. The first chapter, entitled ``Monetary Policy News Shocks and Durable Consumption'', provides insight on the link between durable goods spending and monetary policy news shocks. We propose and implement a new approach to identifying news shocks about future monetary policy. News shocks are identified recursively from the residuals of a monetary policy rule estimated using U.S. multi-horizon survey data. We then use those inferred news shocks in a structural VAR (SVAR). An expected monetary policy tightening leads to an increase in output, non-durable and durable goods consumption, and real price of durable goods. Although news shocks account for a significant fraction of output and consumption fluctuations, they contribute less than surprise shocks to economic fluctuations. We then carry out theoretical analysis using a dynamic stochastic general equilibrium (DSGE) model with durable goods and nominal rigidities. Results indicate that a model with sticky durable goods price can reproduce the positive correlation between the response functions of durable and non-durable goods consumption to policy news shocks that was found from the SVAR. The second chapter is entitled ``Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries''. In this chapter, we estimate the impact of exchange rate fluctuations on hours worked and jobs in Canadian manufacturing industries. The analysis is based on a dynamic model of labour demand and the econometric strategy employs a panel two-step approach for cointegrating regressions. Our data is drawn from a panel of 20 manufacturing industries, from Statistics Canada's KLEMS database, and covers a long sample period that includes two full exchange rate appreciation and depreciation cycles. We find that exchange rate fluctuations have economically and statistically significant effects on the labour decisions of Canadian manufacturing employers, and that these effects are stronger for trade-oriented industries. Finally, the last chapter, entitled ``Housing Market Dynamics and Macroprudential Policy'', studies the statistical evidence suggesting a collateral link between the housing market and the rest of the economy and if the link is more demand- or supply-driven. We also followed the \textit{news shocks} literature and look if a housing-market boom-bust can arise endogenously following unrealized expectations of a rise in housing demand. To this end, we construct a New Keynesian model in which a fraction of households borrow against the value of their houses. We estimate the model with Canadian data using Bayesian methods. We assessed the model's ability to capture key features of consumption and house price data. Finally, we performed an analysis to determine how well the introduction of a countercyclical loan-to-value (LTV) ratio can reduced household indebtedness and housing price fluctuations compare to a monetary policy rule augmented with house price inflation. We find statistical evidence suggesting an important collateral link between the housing market and the rest of the economy, and this link is mainly driven by demand factors. We also find that the introduction of news shocks can generate a housing market boom-bust cycle, the bust following unrealized expectations on housing demand. Finally, our study also suggests that a countercyclical loan-to-value ratio is a useful policy to reduce the spillover from housing market to consumption via the collateral value.

The aim of this thesis is to enhance our understanding of Swedish marine insurers' choices of business strategies under the potentially difficult business circumstances of the interwar period 1918-1939. Little previous research exists on marine insurance during the interwar period. This is remarkable in the Swedish context since the Swedish economy has traditionally depended on its exports. The focus on Sweden is justified since the Swedish insurance market saw regulatory stability during the interwar period. It was also characterised by the coexistence of stock and mutual insurers, allowing this thesis to contribute with insights on potentially problematic insurance cartelisaton. This thesis employs a mixed methods design, including qualitative methods and regression analysis. To interpret results, this thesis employs insurance risk theory, cartel theory, theories on reinsurance and risk diversification, and agency theory. By employing this combination of theories, it is possible to explain choices and outcomes of adopted strategies both with reference to particularities of marine insurance and with reference to particularities of the two different organisational forms. The results show that the insurers conceived several new characteristics of their business environment as challenges and implemented both cartel strategies and company-specific strategies of risk diversification. Among the challenges were rapid inflation, rapidly decreasing prices and business volumes in shipping and trade, the introduction of motor ships, and the existence of naval mines on many trade routes. Also, exchange-rate fluctuations were considered to cause losses on established marine insurance contracts and rendered business results uncertain. Swedish insurers adopted cartel strategies from 1918 through The Swedish Association of Marine Underwriters (Sjöassuradörernas Förening) since they had anticipated a post-war crisis. Market division agreements were adopted for the most attractive market segments, but eventually price agreements became the primary cartel strategy, supported by prohibitions of competition. The work on price agreements sometimes increased the market efficiency since it reduced uncertainty, for instance in insurance of cargo with motor ships. Few price agreements were however adopted for the insurance of shipping since that market segment was dominated by mutual insurers, highlighting the difficulties of cartelisation in insurance markets inhabited by both stock and mutual insurers. The cartel further adopted reinsurance agreements to create barriers to entry in the Swedish marine insurance market. It however experienced prominent difficulties to implement the cartel strategies. One prominent difficulty of implementation was cheating. Also international competition created difficulties. The cartel companies therefore engaged in international cartelisation through The International Union of Marine Insurance (Internationaler Tranport-Versicherungs-Verband) from the late 1920s. This international cartel sought to reduce international competition by agreements not to compete in foreign markets. It also sought to manage the exchange-rate fluctuations of the early 1920s and the early 1930s by agreements among marine insurers, but it failed to obtain sufficient support. In spite of cartelisation, the returns on marine insurance were pushed down by the recognized challenges during the early 1920s, inflicting losses. The business however recovered and remained profitable throughout the 1930s, showing that the great depression was not as great as the deflation crisis in marine insurance. Exchange-rate fluctuations affected the international competitive strength of both stock and mutual insurers and additionally influenced the stock insurers' returns on established marine insurance contracts. The insurers were however compensated for the poor marine business results of the early 1920s by greater reliance than previously on reinsurers and by diversification among insurance lines, which rendered profits less negative than the returns on marine insurance. The business ceded to reinsurers on average inflicted losses during each of the first seven years of the 1920s. These losses were indirectly caused by World War I since that war had caused the establishment of new reinsurers in different countries, not the least in Scandinavia, and in turn caused over capacity during the 1920s. New contractual formulations evolved internationally to the benefit of ceding insurers, indicating information asymmetries. Exits became frequent among reinsurers. In effect, into the 1930s, ceding insurers internationally found it difficult to obtain obligatory reinsurance treaties. During the early 1920s, the Swedish stock marine insurers also increasingly diversified their insurance businesses among insurance lines. This process had been catalysed by World War I, was accelerated during the 1920s, and continued into the 1930s. / Syftet med denna avhandling är att förståeliggöra svenska marinförsäkringsbolags val av affärsstrategier under mellankrigstiden 1918-1939, en period som kännetecknades av potentiellt svåra affärsförhållanden. Försäkringsverksamhet är känslig för ekonomiska kriser, men har uppmärksammats mindre än bankverksamhet när det gäller mellankrigstiden. Inte minst marinförsäkring är känslig för ekonomiska kriser eftersom de försäkrade verksamheterna, sjöfart och handel, endast förekommer i den mån som transporterade varor efterfrågas. Tidigare forskning har endast i liten omfattning fokuserat på marinförsäkring, vilket ur ett svenskt perspektiv kan tyckas anmärkningsvärt med tanke på att den svenska ekonomin har i hög grad varit beroende av sjöburen handel. En studie av svensk marinförsäkring är motiverad ur ett internationellt perspektiv eftersom den svenska försäkringslagstiftningen förblev i stort sett oförändrad under perioden, vilket gör det rimligt att tolka marinförsäkringsbolags val av affärsstrategier som svar på ekonomiska omständigheter. Under mellankrigstiden var katellstrategier ett vanligt svar på svåra affärsförhållanden i olika verksamheter, men kartellisering var potentiellt problematisk i marinförsäkring eftersom den verksamheten är internationell och eftersom marinförsäkring är en heterogen produkt. Dessutom befolkades den svenska försäkringsmarknaden av både aktiebolag och ömsesidiga bolag, vilket är ett ytterligare potentiellt hinder för kartellisering. Studier av kartellisering under potentiallt svåra förutsättningar kan bidra med insikter om under vilka förutsättningar karteller uppstår, vilket ytterligare motiverar studien. Denna avhandling analyserar även två företagsspecifika riskdiversifieringsstrategier, som potentiellt kan kompensera för låg avkastning på mottagen försäkring, nämligen återförsäkring och diversifiering mellan försäkringsgrenar. Återförsäkring har av tidigare forskning framhållits som ett underutforskat område. Avhandlingen tillämpar både kvalitativa och kvantitativa undersökningsmetoder. För att uttolka de empiriska resultaten tillämpas riskteori för försäkring, kartellteori, återförsäkringsteori, riskdiversifieringsteori, samt incitamentsteori på företagsnivå (agency theory). Denna kombination av teorier gör det möjligt att förklara strategival med utgångspunkt både i marinförsäkringens karaktäristika och i de båda olika organisationsformers karaktäristika. Resultaten visar att försäkringsbolagen noterade ett antal nya affärsförhållanden som utmaningar och att dessa bolag implementerade både kartellstrategier och företagsspecifika riskdiversifieringsstrategier. Bland de noterade utmaningarna märks snabb inflation, snabbt fallande priser och affärsvolymer i sjöfart och handel, införandet av motorfartyg, samt sjöminor på många fartygsrutter. Försäkringsbolagen behärskade endast lite erfarenhet av risker associerade med motorfartyg och sjöminor, vilket gjorde riskbedömningar osäkra. Även växelkursfluktuationer uppfattades som utmaningar eftersom de orsakade förluster på etablerade marinförsäkringskontrakt och skapade problem att förutsäga affärsresultaten. Från 1918 antog svenska marinförsäkringsbolag kartellstrategier genom branschorganisationen Sjöassuradörernas Förening, detta eftersom de förväntade sig en efterkrigskris. Marknadsuppdelningsavtal infördes i attraktiva marknadssegment, men med tiden blev prisöverenskommelser den främsta kartellstrategin, understödd av avtal som förbjöd konkurrens. Arbetet med prisöverenskommelser ökade marknadseffektiviteten i vissa marknadssegment, detta genom att reducera osäkerheten i riskbedömningarna. Ett tydligt exempel på ett sådant marknadssegment är försäkring av varor transporterade med motorfartyg. Kartellen etablerade däremot få prisöverenskommelser för försäkring av sjöfart eftersom detta marknadssegment dominerades av ömsesidiga försäkringsbolag. Denna kontrast mellan varuförsäkring och sjöfartsförsäkring belyser svårigheterna med att kartellisera en försäkringsmarknad som befolkas både av aktiebolag och av ömsesidiga bolag. Kartellen antog också återförsäkringsavtal i syfte att skapa etableringshinder på den svenska försäkringsmarknaden. Den upplevde emellertid svårigheter att implementera överenskommelserna, såsom brott mot prisöverenskommelserna och mot konkurrensförbuden. Ytterligare svårigheter skapades av internationell konkurrens. Från slutet av 1920-talet deltog därför kartellbolagen i den internationella marinförsäkringskartellen Internationaler Tranport-Versicherungs-Verband (senare benämnd The International Union of Marine Insurance). Medlemsbolagen i denna internationella kartell skapade överenskommelser med innebörden att utländska försäkringstagare inte skulle erbjudas försäkring. Dessa överenskommelser syftade till att reducera den internationella konkurrensen. Denna kartell försökte också reducera effekterna för marinförsäkringsbolag av växelkursfluktuationer genom överenskommelser om hur växelkurser skulle beräknas i marinförsäkringsfrågor. Sådana försök gjordes både under de första åren av 1920-talet och under de första åren av 1930-talet. Det avsedda resultatet kunde emellertid inte nås, detta eftersom uppslutningen förblev otillräcklig. Trots kartelliseringen reducerades avkastningen på marinförsäkring till förlustnivåer under det tidiga 1920-talet. Avkastningen förbättrades sedan stegvis och förblev positiv under 1930-talet. I marinförsäkring var alltså den stora depression inte lika stor som deflationskrisen. Växelkursfluktuationer påverkade både aktiebolags och ömsesidiga bolags internationella konkurrenskraft. Dessutom påverkade växelkurserna aktiebolagens avkastning på etablerade marinförsäkringskontrakt. Försäkringsbolagen kompenserades för 1920-talets förlustresultat i marinförsäkring genom ökad cedering av risk till återförsäkringsbolag och genom diversifiering av de mottagna riskerna mellan olika försäkringsgrenar. Under 1920-talet var bolagens vinster därför mindre negativa än resultaten i marinförsäkring. Den affär som cederades till återförsäkringsbolag var i genomsnitt förlustbringande under vart och ett av 1920-talets första sju år. Dessa förluster orsakades indirekt av första världskriget, eftersom det kriget stimulerade etablering av nya återförsäkringsbolag, detta i olika länder och inte minst i Skandinavien. I förlängningen skapade första världskriget därmed överkapacitet på återförsäkringsmarknaden. Nya kontraktsformuleringar introducerades internationellt till de cederande bolagens fördel. Detta förhållande indikerar informationsasymmetrier i relationen mellan cederande och mottagande försäkringsbolag. Många återförsäkringsbolag lämnade marknaden. Resultatet blev att cederande bolag under början av 1930-talet i olika länder fick svårigheter att sluta obligatoriska återförsäkringsavtal. Under början av 1920-talet diversifierade aktiebolagen också sin verksamhet mellan olika försäkringsgrenar. Denna process katalyserades av första världskriget, accelererade under början av 1920-talet och fortsatte in på 1930-talet.