Dr Gordon Menzies

Menzies, G.D. 2008, 'Economics as identity' in Harper, I; Gregg, S (eds), Christian Theology and Market Economics, Edward Elgar, UK, pp. 94-109.
View/Download from: UTSePress
View description>>

NA

Menzies, G.D., Terry, C.S. & Trayler, R.M. 2005, 'Waiting for capital: the impact of corruption in Indonesian financial markets' in Gup, B E (eds), Capital Markets, Globalization, and Economic Development, Springer, New York, USA, pp. 175-191.
View/Download from: UTSePress

Lyons, B., Menzies, G.D. & Zizzo, D. 2012, 'Conflicting evidence and decisions by agency professionals: An experimental test in the context of merger regulation', Theory and Decision, vol. 73, no. 3, pp. 465-499.
View/Download from: UTSePress | Publisher's site
View description>>

Many important regulatory decisions are taken by professionals employing limited and conflicting evidence. We conduct an experiment in a merger regulation setting, identifying the role of different standards of proof, volumes of evidence, cost of error and professional or lay decision making. The experiment was conducted on current practitioners from 11 different jurisdictions, in addition to student subjects. Legal standards of proof significantly affect decisions. There are specific differences because of professional judgment, including in how error costs and volume of evidence are taken into account. We narrow the range of explanations for why professional decision making matters.

Menzies, G.D. & Zizzo, D. 2012, 'Monetary policy and inferential expectations of exchange rates', Journal of International Financial Markets, Institutions and Money, vol. 22, no. 2, pp. 359-380.
View/Download from: UTSePress | Publisher's site
View description>>

We present a macroeconomic market experiment to isolate the impact of monetary shocks on the exchange rate, as an alternative to SVAR identification. In a non-stochastic treatment, covered interest rate parity holds and predicted exchange rates are tracked well. In a stochastic treatment, we model expectations using a Neyman-Pearson hypothesis test (inferential expectations) and find evidence of belief conservatism and uncovered interest rate parity failure. The market environment magnifies belief conservatism, which is opposite to the standard claim that markets tend to eliminate individual choice anomalies

Menzies, G.D. & Hay, D. 2012, 'Self and neighbours', Economic Record, vol. 88, no. s1, pp. 137-148.
View/Download from: UTSePress | Publisher's site
View description>>

The paper notes the findings of a panel survey in the USA to motivate a framework to model altruistic behaviour by members of faith communities. We posit an internal tension within agents to be oriented to self or to neighbours. We model this by a mixed motive valuation function which values both classic utility (based on own consumption), and generosity to neighbours. In the short run, the value assigned to generosity by an agent is fixed; in the long run, it is determined by the agent's understanding and practice of 'love for neighbour' (as discussed in McCloskey, 2006), which, according to the Christian world view, is influenced by the agent's spiritual state.

Bird, R.G., Menzies, G.D., Dixon, P. & Rimmer, M. 2011, 'The economic costs of US stock mispricing', Journal of Policy Modeling, vol. 33, no. 4, pp. 552-567.
View/Download from: UTSePress | Publisher's site
View description>>

The USAGE model for the United States is used to quantify economic costs due to stock mispricing, made operational by shocking Tobin+s q. The simulations quantify a potentially large impact even in the most favorable environment, where export demand holds up, and, the dollar is pro-cyclical. A two-year investment boom in two sectors increases consumption by a Net Present Value (NPV) amount of nearly one per cent, due to a positive investment externality onto the US terms of trade. If the investment is wasted, however, the consumption loss is nearly one-half of a per cent. A 5-year `capital strike+ across the whole economy subsequent to the boom + mimicking financial distress from a burst bubble + shaves around 10 per cent off consumption. Given these significant costs associated with +boom+ and +bust+ equity markets, we consider some, policy options that might result in greater stability in these markets.

Henckel, T., Menzies, G.D., Prokhovnik, N. & Zizzo, D. 2011, 'Barro-Gordon revisited: Reputational equilibria with inferential expectations', Economics Letters, vol. 112, no. 2, pp. 144-147.
View/Download from: UTSePress | Publisher's site
View description>>

We incorporate inferential expectations into the Barro+Gordon model (Barro and Gordon, 1983a) of time inconsistency and consider reputational equilibria. The range of sustainable equilibria shrinks as the private sector becomes more belief-conservative.

Menzies, G.D., Bird, R.G., Dixon, P. & Rimmer, M. 2011, 'Asset Price Regulators, Unite: You have the Macroeconomy to Win and the Microeconomic Losses are Small', Economic Record, vol. 87, no. 278, pp. 449-464.
View/Download from: UTSePress | Publisher's site
View description>>

The global financial crisis (GFC) has rekindled debate about the desirability of governmental interference in asset markets + either through the operation of policy levers, or through the chosen institutional setup. In this article, we quantify economic costs because of mispricing of real assets in the USAGE model of the USA. The microeconomic costs of misallocated capital are small. The model suggests that regulators (or central banks) who risk mispricing by influencing asset prices do so without incurring large economic costs.

Menzies, G.D. & Zizzo, D. 2009, 'Inferential expectations', B. E. Journal of Macroeconomics, vol. 9, no. 1, pp. 1-25.
View/Download from: UTSePress
View description>>

We propose that the formation of beliefs be treated as statistical hypothesis tests, and label such beliefs inferential expectations. If a belief is overturned through the build-up of evidence, we assume agents switch to the rational expectation. Thus, if the test size is unity, agents hold rational expectations. We solve a Dornbusch-style model of exchange rates under rational expectations and inferential expectations. Under the latter we prove that the regression tests of Uncovered Interest Parity and the rational expectations version of the term structure display a downward bias. The model also explains delayed overshooting and sharp changes in exchange rates.

Menzies, G.D. 2008, 'Can HIPCs Use Hyper-incentives?', Review of Applied Economics, vol. 4, no. 1-2, pp. 113-124.
View/Download from: UTSePress

Menzies, G.D. & Hay, D. 2008, 'Economics and the marriage wars', Faith and Economics, vol. 51, no. Spring, pp. 1-29.
View/Download from: UTSePress
View description>>

We critique the economic analysis of marriage and divorce descending from Becker (1981): we call this the "economic" approach. Marriage is based on the "productive" gains available from specialization in market production and household production, and on the production of children. ln the more recent development of the theory, the husband and wife bargain over the gains. This analysis contrasts with the "covenant" view of marriage which is based on the Judea-Christian tradition. The ethical focus of the covenant view is self-giving love, which is not dependent on economic efficiency. We suggest that the changing attitudes to marriage and divorce in the West may reflect "motivation crowding out," as the economic approach erodes the values underpinning the covenant view. Marriage, like the monarchy over the last three centuries, remains popular in many quarters. But the mere existence of an institution can mask its wholesale transformation.

Menzies, G.D. 2008, 'Teaching Hypothesis Testing: What is Doubted, What is Tested?', Australasian Journal of Economics Education, vol. 5, no. 1 and 2, pp. 1-9.
View/Download from: UTSePress
View description>>

Null hypotheses in undergraduate econometrics courses are usually framed in terms of parameter values or distributions. But relatively simple techniques can also test for violations of good scientific practice. This is neatly illustrated for students by a reinterpretation of an influential paper by Sir Ronald Fisher, where a rejection region is formed on the left tail of a 2 distribution. This idea is extended to situations where dubious models fit 'too well'. In these cases, a high R2 may be taken as evidence that a non-random subset of regressions is being 'adversely selected' for publication.

Menzies, G.D. & Vines, D. 2008, 'The transfer problem and real exchange rate overshooting in financial crises: The role of the debt servicing multiplier', Review of International Economics, vol. 16, no. 4, pp. 709-727.
View/Download from: UTSePress | Publisher's site
View description>>

We develop a real model of exchange rate overshooting due to a debt servicing multiplier. Borrowers of foreign capital are bound by noncontingent contracts to pay the world rate of return following an adverse shock. This is onerous, since the marginal product of capital is less than the world rate of return and the shock causes some capital to become extra-marginal. If the resultant debt servicing shortfall is met by taxes on workers, this reduces their demand for nontradable goods, which feeds back onto their wage, reducing their demand for nontradable goods, etc. In the short run, when extra-marginal projects are "stuck" in the economy, the real exchange rate can overshoot. This mechanism may help to explain overshooting of exchange rates in the 1997 Asian financial crisis

Menzies, G.D. 2006, 'Debt and aid, war and peace: Policy tradeoffs in conflict-affected countries', Review of Applied Economics, vol. 20, no. 268, pp. 169-179.
View/Download from: UTSePress
View description>>

A creditor can balance debt recovery and humanitarian goals within an optimal contract framework. The approach ties together two strands of literature that assume either creditor self-interest (Krugman 1988) or benevolence (Addison and Murshed 2003). A reservation utility for the debtor serves as a metric for creditor benevolence. The optimal hyper-incentive contract recognizes that the attainment of health, education, peace and the appeasement of foreign creditors may be conflicting goals. Forgiving debt to motivate paying creditors may therefore have the unintended effect of reducing effort devoted to winning a civil war. For a given reservation utility for the debtor, aid directly targeted towards ending a civil war is a substitute for debt forgiveness.

Dvornak, N., Kohler, M. & Menzies, G.D. 2005, 'Australia's medium-run exchange rate: A macroeconomic balance approach', The Economic Record, vol. 81, no. 253, pp. 101-112.
View/Download from: UTSePress | Publisher's site
View description>>

The determinants of Australia's exchange rate based on the internal-external balance approach introduced by Williamson (1983) were analysed. Internal balance implies that the economy is operating at supply potential with no inflationary pressures. Extern

Menzies, G.D. 2005, 'Who's afraid of the Marshall-Lerner condition?', Economic Papers, vol. 24, no. 4, pp. 309-315.
View/Download from: UTSePress

Menzies, G.D. 2004, 'First-best debt relief', Economics Letters, vol. 82, no. 3, pp. 301-306.
View/Download from: UTSePress | Publisher's site

Menzies, G.D. 2004, 'Money to burn, or melt? a cost-benefit analysis of Australian polymer banknotes.', The North American Journal of Economics and Finance, vol. 15, no. 3, pp. 355-368.
View/Download from: UTSePress | Publisher's site

Menzies, G.D. 2000, 'The economics and ethics of international debt relief', UK Association of Christian Economists Journal, vol. 27, no. March, pp. 1-16.

Menzies, G.D. 1999, 'Alice in academia', Economic Papers, vol. 18, no. 2, pp. 95-95.

Menzies, G.D. 1998, 'The influence of supply shocks on Australian inflation', Journal of Social and Management Sciences, vol. 27, no. 2, pp. 151-170.

Gruen, D. & Menzies, G.D. 1995, 'Forward discount bias: Is it near-rationality in the foreign exchange market?', Economic Record, vol. 71, no. 2, pp. 157-166.

Menzies, G.D. 1995, 'Can altruism aid the jobs compact?', Economic Papers, vol. 14, no. 2, pp. 11-16.

Tarditi, A. & Menzies, G.D. 1995, 'Monthly movements in the Australian dollar and real short-term interest differentials: An application of the Kalman filter', Journal of Foreign Exchange and International Finance, vol. 8, no. 4, pp. 396-417.

Menzies, G.D. 1994, 'A comment on recent surveys of Australian exporters', Economic Papers, vol. 13, no. 1, pp. 122-124.

Menzies, G.D. 1994, 'Explaining the timing of Australia's manufactured export boom', The Australian Economic Review, vol. 27, no. 4, pp. 72-87.

Menzies, G.D. & Zizzo, D. 2004, 'Inferential expectations', Australian Conference of Economists 2004 - 33rd Conference of Economists, Sydney, Australia, September 2004 in Proceeding of the Australian Conference of Economists 2004, ed -, The Economics Society of Australia, Sydney, pp. 1-39.
View/Download from: UTSePress