Exchange Rates and Interest Rates in Pakistan Analysis

Exchange Rates and Interest Rates in Pakistan Analysis Abstract This paper endeavors the relationship and the positive effect between exchange rates and interest rates in Pakistan by utilizing the foreign exchange market and current scenario of increasing interest rates because of increasing exchange rates to represent the economic position of Pakistan. The data by the researcher is all on daily basis for the above variables from the period of September 2001 to May 2008 for exchange rates, while for interest rates (6 month KIBOR) from the period of September 2001 to May 2008. The researcher implement regression model to test the effect of exchange rates progression on interest rates. So in this result, there is the issue of auto correlation exists and it shows the serial correlation between these variables. The issue should be resolved by taking time and KIBOR lag values as the dumm dependent variables. The study concludes on this way that there is the negative relationship between exchange rates and interest rates (KIBOR) in Pakistan and there i s the impact of time and KIBOR on KIBOR.. It identifies that when exchange rates increases, there is decreasing in interest rates (KIBOR). This results and relationship is consistent as predicted by Meese and Rogoff (1988). INTRODUCTION Every country has its own financial markets and it is the back bone of a countrys economy. The financial markets is divided in parts like foreign exchange market, stock market, money market, bond market etc. In this study, the researcher is focuses on the foreign exchange market, which is commonly known as Forex. It is the largest and most prolific part of financial market and defining the balancing of countrys economy, because every particular day, there are approximately one trillion amount of foreign exchange takes place in the countries around the world. The actual mechanism of the foreign exchange, that it is work as the main driving force for an any countys economy in the world. Therefore, any country in the world should challenge their currency in the global economic markets. In the exchange markets for all the countries, home country currencies trade with other foreign country currencies. The foreign exchange market system is needed for every developed and under developed cou ntry; this system known as currency in exchange determination. For the determination of the value of a currencys exchange rate, there are two main types of system is used, one is floating exchange rates system and the other is fixed exchange rates system. The intervention of government officials authorities in the foreign exchange market is to influence the exchange rate fluctuation as a worldwide phenomenon. The authorities intervene maintaining the objective to orderly market conditions that ultimately help to achieve the overall macroeconomic goals. However, the exchange rate has playing an important role in terms of the flexibility in macroeconomic framework to deal with changes in the external terms of trade, but the monetary policy also aims the national objectives of economic diversification and to support export competitiveness. The ineffective monetary policy under fixed exchange rates as compared to flexible exchange rates, but fiscal policy under both fixed and flexible exchange rates remains weaker of achieving the level of output. (R.A. Mundell, 1968). The level of currency risk changes, it has no negligible impact on the rates of change of exchange rates and on relatives rates of interest between currencies. (Clas Whilborg, 1982). The risk premium of the currency is the important factor relative to floating exchange rate system, but movements in the exchange rate are dominated by the non speculative activity and it has the adverse effect on world economy. (John bilson, 1985). The true statement that in many cases the sign of the estimated exchange rate-interest rate differential relationship is consistent with the possible predominance of financial market disturbance (R. Meese K. Rogoff, 1988). The consequences changes in the nominal interest rate reflect changes in the tightness of monetary policy. T he higher the interest rate in the country attracts the capital inflow, which causes the domestic currency appreciates, so this gets the relationship could be negative between the exchange rate and nominal interest rate differentials. (J.A. Frankel, 1979). The assets are dominated and exchange risks interest reflects the interest rate parity when different currencies affect political risk and thats why assets are issued in different currencies. Thus the interest differentials to the political risk of future capital control must be distinguished due to the effective tax that controls the place in interest earnings. (M.P. Dooley P. Isard, 1980). The concept of political risk is that the probability authority of the state will be interposed between investors in one country and investment opportunities in other countries that is the probability that controls the imposed on capital flows. (R.Z. Aliber, 1973). If price levels and exchange rate are significantly volatile and cannot be cos tly hedged, are adversely affected in the real value of the domestic currency. There is some evidence that exchange rate fluctuations are a priced factor in cross sections of stock return converted into a common currency. (W. Bailey P. Chung, 1995). In the perfect mobility the exchange rate movements and an adjustment of goods market is relative to asset market and consistent expectations. The extends that output responds to a monetary expansion in the short run, this acts as an effect on exchange depreciation which lead to an increase in interest rates. (Rudiger Dornbusch, 1976). The foreign exchange gain or loss is made in the course of covering; consider being capital assets, so this gain or loss treated on capital account. This shows the highly sensitive interest dynamics with exchange rates. (M.D. Levi, 1977). The variability of industrial production output will be higher in the regime of fixed exchange rates instead of regime of flexible exchange rates. (Flood Hodrick, 1986) . The effect of consumption goods purchases by the government is not the private utility, but per capita real government expenditure are the composite of individual consumption of goods. So notice that the demand of money its depends on consumption of goods rather than income and that is the important distinction of closed economies.(Obstfeld Rogoff, 1995). The fixed and floating exchange rates depend on higher welfare yield and on the nature of sticky prices, so the risk would be shared and there are some opportunities to aware. The evidence, which should give opportunities about price setting and risk sharing are not refined and not to make the definite conclusions for the optimal regime of the exchange rate of that country. There are three types of ways which gives stickiness in prices, the prices which would set by the firms in their own currencies, the firms would set the prices for consumers currencies, or firms would set the prices in the currencies of producers. (Charles En gel, 2001). When the exchange rates changes, it may cause to appear the changes in relative prices and make to generate additional uncertainty for equilibrium in markets. However, there is also defining that the changes in terms of trade would play the larger role of changes in the exchange rates which affect the variability of exchange rates. (A.C. Stockman, 1980). This study explores to investigate the determinants of exchange rates in developing country such as Pakistan. The framework of this study is concern to be conceptual and theoretical and is to set up the ground of unidirectional causality from exchange rates to economy. In principal, it determines the exchange rates relationship with interest rates so it will spurs the determinants in Pakistan with related to the economy. This view implies that the choice of an exchange rates regime be a relatively simple, if countries were faced to intervene regularly in the foreign exchange market to stabilize, therefore the monetary authorities intervene with the objective of maintaining orderly market conditions, which ultimately help to achieve the overall macroeconomic goals. The discretionary nature of the existing monetary policy in Pakistan is inflation, and it is targeting to hit on the Pakistani economy by focusing attention on the monetary policy. So the government of Pakistan is to make t heir monetary policy more transparent for achieving their explicit goal, and decreasing the inflation. Therefore, it is increasing the publics understanding of the central banks strategy to deliver the target, so the State Bank of Pakistan will help to provide an anchor for inflation expectations in the economy. The State Bank of Pakistan (SBP) has accorded a high priority to achieving a low rate of inflation, and the monetary policy also aims to support the objectives of the national country of Pakistan to meet their diversified economy and competitiveness in the export from other countries of the world. This study will also helpful to the SBP to developed their awareness of the relationship of exchange rates with KIBOR, so SBP may observed the controversy of their ups and downs fluctuations so it may controlled significantly. The bank treasury department should get the help because, they have continuously meet the exchange rates and make transactions of the countrys currency with others country currencies, so it should make them identify that if exchange rates increases or decreases it should not make effect on interest rates but their should be some inverse effect in nature. This effect should create controversy in the country economy so the central bank should make some authorized decisi on to controlled the exchange rates and interest rates The thesis is structures as follows. Chapter II provides literature review. Chapter III defines the outline of variables, their sample size, data sources and its formatting and the model. Chapter IV explains our findings and results. Finally Chapter V reports conclusion Chapter II Literature Review: This study relates to examine the relationship and effect between exchange rates with interest rates. Numbers of studies have done by the researchers, Robert A. Mundell, (1961), Bela Balassa (1964), Robert Z. Aliber, (1973), Rudiger Dornbusch, (1976), Richard A. Meese Kenneth Rogoff (1982), H.M.S Gerlach (1988), to investigate the determinants of exchange rates have applied in the world exchange rates market and help for different countries in their market development and economic growth. Researchers attempted to exemplify whether, how and to what extent the determinants of exchange rates market can contribute to the process of economic growth. Purchasing Power Parity Theory: The purchasing power parity theory doctrine means different things to different people. It has two versions of this theory that can be called the absolute and the relative interpretation. The first version of purchasing power theory calculated as a ratio of consumer goods prices for any country would tend to the equilibrium rates of exchange. In the second version of relative interpretation the rate of exchange rate would be determined between two countries and quoted with general levels of prices of two countries. It amend the international trade theory which would be the part of PPP, in which introducing the non-traded goods (services), but the advantage is greater in regards of traded goods than non-traded goods, because of the assumptions of marginal rates of transformation. The relationship between purchasing power parity and exchange rates provides the international comparison of national incomes and living standards (Bela Balassa, 1964). (Lawrence H. Officer, 1976) is the rese archer which gave another review of this purchasing power parity theory. It has define two applications in economics, the first application use of the conversion factor to transfer the data in one national way to another. The use of PPP is mainly the body of (index number theory) and applications of GDP that have improved over the years and path breaking studies in the area continue to appear. The second application of PPP has not the widespread acceptance, which has remained the unsophisticated applications. A.C. Stockman, (1980), develops the model of determination of exchange rates and prices of goods. The changes in prices of goods due to supply and demand would affect the changes in exchange rates with deviations of purchasing power parity. The changes in exchange rates have failed to resemble the changes in prices of goods, because exchange rates more volatile than prices levels and inflation rates. The research proposes the equilibrium of exchange rates behavior and different international goods that would have been traded. This relationship cannot be exploited by the government, because the greater the changes in terms of trade the larger the changes in exchange rates variability. The deviations from PPP persist that variation of exchange rates more than ratios of price indexes. The results found the two interpretation of the relationship between exchange rates and terms of trade. In the first, the causes that affect the changes in exchange rates would also affect the change in te rms of trade because prices of goods do not adjust to clear the markets. This interpretation would also found in the research of Dornbusch (1976), and Isard (1977), they formally differentiates the system with respect to exchange rates and allow prices to change but not the changing in asset stocks. The another interpretation presented the elasticity approach of the foreign exchange market and the relation between the trade and exchange rates. Real supply and demand shocks affect prices and the derived demand of exchange rates. The affect of such a shift has the advantage to raise the value of currency in terms of foreign currencies relative PPP. These changes in demand for foreign exchange would result the supply and demand shocks and that should affect the equilibrium of exchange rates. In second interpretation the expected rate of change of exchange rates revealed on the forward foreign exchange market. This should be related the anticipated change in the terms of trade and the i nflation differentials. A persuasive argument about the level of exchange rates is only associated with not causes of the relative prices changes. Clas Wihlborg, (1982), examined the relation of interest rates, exchange rate and currency risks in this research. It identifies the test which empirically impact of currency on interest rates and exchange rates. In this research there are three different ways in which the importance of currency risks for interest rate and exchange rate determination. First different risk characteristics of assets denominated in different currencies. Second changes in the level of risks that affect the elastic ties of substitutes among different assets and the monetary policy. Third changes in the level of risks on alternative assets which have a direct impact on rates of return. This research used the three specifications of the dependent variable to test the theory, firstly the rates of return is adjusted for the expected rate of changes in the exchange rates, second difference between nominal rates of interest and third rate of change of deviation from the exchange rate. The results presented here that substantiate the changes in the level of currency risk have a non-negligible impact on the rates of change of exchange rates and on relatives rates of interest between currencies. The risks explain the small share of variation in these variables. Another results indicate that the nominal interest rate seem to adjust in fiscal policies and savings behavior but not affect real rates of interest. But changes in relative risks level would affect relative rates on interest these changes still be important for the substitutability between assets of different currency denominations. Richard Meese Kenneth Rogoff, (1983), analysis the out of sample forecasting accuracy on various models. It estimated the horizons of the dollar with different country currencies, like Dutch mark, Japanese yen, and Britain pound that traded to weight the dollar exchange rates. Its also studied the flexible exchange rates with the monetary models of sticky price, so the model of sticky price, which incorporates the current account. The first model is structural models in which it requires to generate the forecasts of exchange rates and explanatory variables. It contains the explanatory power, but its predicted badly because the explanatory variables are difficult to predict. The second is the univariate times series model in which identify a variety of prefiltering techniques involve differencing, de-seasonalizing and removing time trends. The relative performance of these techniques is of interest in itself. The third model use is the random walk model; it should also link with this univariate time series model. It uses as the predictor of the current spot rate with the entire future spot rate, and it requires no estimation. In this research the performance of estimated univariate time series models or candidate structural model is so worse. From a methodological stand point the view that the out of sample model fit is an important criterion when evaluating exchange rate, but the estimation of out of sample is failure with time series models, that are well approximated the major country exchange rates. John Bilson, (1985), gives the empirical findings about macro economic and flexible exchange rate of the U.S dollar related to PPP theory. From the perspective of this research in which sluggish price adjustment in the commodity markets resulted in increased variability in exchange rates. For the demonstration of result it is important because the instability of floating exchange rate could be due to the inherent differences between commodity and foreign exchange markets. The determination of the expected future rate is impossible, because it is more difficult to reject the forward parity condition. The major part of the forward parity is the variation in the premium is due to the forecast. The object of this research is to determine that if the forward parity failed is the cause of instability in the same way that the failure of purchasing power parity. The findings develop that currency risk premium is the important factor relative to floating rate system, and movement in the excha nge rate are dominated by the non speculative activity and it has the adverse effect on world economy. Roger D. Huang, (1987), evaluate that the expected change in the exchange rate of two countries equals the expected differentials in their inflation rats over the same holding period. It makes the empirical evidence link with PPP theory and obtained that the changes in expected nominal exchange rate is appear to deviate inflation rate systematically. It relates the PPP based on the constraint that, in efficient market the net return to speculators engaging in speculation on goods in the foreign country. The purpose of this research is to know the equality restriction between expected nominal exchange rate and expected inflation rate differentials. The investigation should have the result that the evidence is inconsistent with the current floating exchange rates over the major industrialized countries. Since the test perform meaningful in conjunction with market efficiency and simply indicate the failure expectations. John Doukas Abdul Rahman, (1987), conducted the unit root test for the presence of evidence from the foreign exchange futures market, and gets the representation of foreign exchange currency future prices. The research describes the procedure from the foreign exchange future markets on five different currencies with varying maturity. It was found that presence in the series may cause the OLS estimates and its true value leading to errors, for small sample sizes the model has smaller forecast error. The process generate the log of currencies future rates by random walk, and it is consistent with other model of asset price determination that they imply the mean and dispersion of returns that don not change over short time period. But in general if follow the random walk; it is line with (Meese Singletons) findings from the spot and forward exchange market. H.J. Edison, (1987), addresses that whether PPP is valid in the long run movements in exchange rates, though it is failed in the short run. However number of studies was conduct for the behavior of exchange rates, Alder Lehmann (1983), Frankel (1986), developed more statistical techniques to examine the validity of exchange rates in the long run. Both of these have provided the evidence that PPP does not hold the exchange rates behavior in the long run. This research also incorporates the error correction mechanism and discusses the empirical results which generally show the result of failure of exchange rate support by PPP in the long run. In general, the result indicates the force which exists in the economy for driving the exchange rates towards the PPP equilibrium. The main conclusion from this research is the PPP relationship does not represents the exchange rates n the long run holding, so that the PPP permanent deviations cannot ruled out. This shows the reinforcement of PPP theory that was tested the fixed rate counterpart and the equalization of prices across countries, and it supports an interpretation of the PPP doctrine. This proportionality between the exchange rates and price level emerges in the long run. Richard Meese Kenneth Rogoff, (1988), examined the relationship between real exchange rates and real interest rate differentials from different countries. It based on the joint hypothesis that the prices of the domestic currency are sticky and the disturbances of monetary policy are predominant, which would found the little evidence of a stable relationship between interest rates and exchange rates. It is true that in many cases the sign of the estimated exchange rate and interest rate differential relationship is consistent with the possible predominance of financial market disturbances, but the relationship is not stable enough to be statistically significant. In Quasi reduced form real exchange rate models, examined the real versions of alternative rational expectations monetary models of exchange rate determination. In the nominal rate models, the exchange rate depends on fundamentals such as relative national money supplies, real incomes, short-term interest rates, expected inf lation differentials, and cumulated trade balances. The rationale view for this approach is that the nominal exchange rates poor performance is primarily attributable to money demand disturbances, so it can define the close relationship between there real interest differentials and real exchange rates, because, in the class of monetary models considered here, unanticipated money demand disturbances affect both variables proportionately. Feinberg Seth Kaplan, (1992), evaluate and interacts the real exchange rates index expectations is developed and used to explore the role of determination on domestic producer prices. The fact that time path of the exchange rate will directly affect the input costs, and the price of substitutes strongly. To examine the links between both actual and anticipated movements in the dollar and relative domestic producer prices, it chooses to analyze price responses to real exchange rate changes. The effect is dependent on the nature of substitutability between imports and domestic goods. The major finding is that the period of appreciation and depreciation over the past 10 years to inhibit the pass through in to domestic prices. In depreciation the market share to enjoy the continued good times kept prices other than expected. Warren Bailey Peter Chung, (1995), considers the study that the impact of fluctuations on exchange rates and political risk is on the risks premium and is reflected the individual equity returns. It suggests the factors which is common for emerging market equity, currency and debt markets, and make empirical implications to evaluate corporate and portfolio management. If price levels and exchange rate are significantly volatile and cannot be costly hedged, are adversely affected in the real value of the domestic currency. Some evidence that exchange rate fluctuations are a priced factor in cross sections of stock return converted into a common currency. The purpose of this research is to explore the impact of fluctuations on exchange rates and political risk which is consider on stock process of individual companies from the same country. The extent of measurement is that, which exposure factors explain cross sections of returns on individual securities and industry portfolios. The result suggests that the exchange rates and political risks could be significant in equity markets. The result also suggests that the risk premium can be time varying and not be detected by assuming constantly. This research shows the results that it did not find the evidence of the equity market premiums for the currency and political risk. It complements the importance to attach the exchange rates and political risk in the international finance. J.R. Lothian M.P. Taylor, (1996), examines the real exchange rate behavior, and explains the variations in sample of stationary univariate equations in real exchange rates. It investigates the additional insight in the exchange rates behavior that can be gained by considering the floating rate from the perspective of the data. These issues can be best understood on the subject of real exchange rates stability between the currencies of the major industrialized countries. Some of the pre-float studies support the fairly stable exchange rates in the long run. Subsequently, Dornbusch (1976), Frenkel (1981), gave largely as the result of studies published, and reject the hypothesis of random walk behavior of real exchange rates. The PPP shows the empirical movements in real exchange rates were highly persistent and effective; although the PPP is reject the hypothesis of non-stationary behavior of real exchange rates in the long run. The result of this research shows that the longest span of two countries exchange rates are significantly mean reverting. The first model result indicates the 80 percent of the variation in the exchange rates of the history data of two countries. By using of another model, the results explaining the performance of remarkably well in the floating, so that they produce better forecasts of the actual exchange rates. In line with recent studies, it fined that this process of mean reverting is quit slow, with estimated adjustment of data. In the long run the PPP equilibrium is remaining a useful empirical approximation. The deviations of the PPP that observe are consistent with the existence of slowly mean reverting influences, which may be real or monetary regimes. Theory of Optimum Currency Areas: The theory of optimum currency areas, which is usually presented the other name called flexible exchange rate system, but it is proponents as a device of depreciation that take the place of unemployment when the balance of payment is deficit and appreciation when it replace inflation when it is surplus. The problem can be exposed and more revealing by defining a currency area within when exchange rates are fixed. To this three answer can be given; first certain parts of the world are going processes of economic integration, so new experience can be made and at what constitutes the optimum currency area can give the meaning of these experiments. Second those countries that have flexible exchange rates are likely to face problems with the theory of optimum currency areas, so it does not coincide the optimum currency areas with the national currency. Third the idea that illustrates the functions of currencies which have been treated in economic literature, and sometimes neglected in the problems of economic policy. In the currency area, different currency countries including national country currencies interact pace of employment in deficit, because there is the willingness to inflation by the surplus countries. The argument for flexible exchange rate system is based on national currencies, and is valid about mobility of factor, so if it is high in the country and low in the foreign countries, the flexible exchange rates system on home country currencies might work effectively. The concept of optimum currency area has practically applicable only in those areas, where the state has the political organization in the country. The factor mobility is most considered is more relative rather than absolute concept, with both industrial and geographical. It likely to change the alterations with time over time in conditions, where the conditions of political and economic stability. Money is the convenience that restricts the optimum number of currencies, so in terms of this argument the optimum currency area which is composed in number of countries. (Robert A. Mundell, 1961). In another review the author defines the stabilization of capital mobility policy under the exchange rates which is fixed and flexible in the currencies markets; it concerns the theoretical and practical approach of the increased mobility of capital. The assumption is that the interest rate differentials from the level of abroad cannot maintain by the country, if there is the degree of mobility. The securities system are perfect substitutes, because different currencies are involved can be taken in the perfect mobilization, and there exchange rates expected to persist indefinitely, but the forward and spot exchange rate are identical. It identify the monetary and fiscal policy, in which monetary policy assumed the open market purchase of securities while fiscal policy is to form of increase in government spending and financed by an increased in public debt. Its effect the floatin g exchange rate result when monetary policy does not intervene in the exchange market, but it intervene the fixed exchange rates, when the buying and selling of international reserves at the rate of fixed price. The results of this research analyze that, the fixed exchange rates is become a device for the monetary policy and for the levels of reserve, whereas the flexible exchange rates becomes a device for the fiscal policy and for the balance of trade, but policies are unaffected to the level of output and employment. The fixed exchange rates in the perfect mobility will lead to the breakdown as the absence of gold sterilization. The gold sterilization is frustrated the capital outflows and offsetting monetary changes through the exchange rates equalization. The conclude remarks is that, the fixed exchange rates as compared to flexible exchange rates is ineffective under monetary policy, but in fiscal policy both the exchange rates either fixed or flexible are remains weaker for a chieving the level of output. The flexible exchange rates under fiscal policy to play some role in employment policy that can be expected, while monetary policy can have influence on output under fixed exchange rates. In this possibility existing, it wills lesser extent in the future. (R.A. Mundell, 1968). J.H. Makin, (1978), analysis the way to deal the risks involved in foreign exchange currency positions but exchange rates are uncertain. It incorporates the exchange rate changes with the changes in the determination of overall hedging strategy. The purpose is to survey the literature rather to examine the logic on hedge no hedge strategy and to suggest the viewing problem of exchange risk. It identifies the exchange risk diversification in two groups. First diversification investigates the exchange risk with the investor point of view selecting the locations of firms in different countries which denominated in different currencies. The second considers exchange risk with the firm manager point of view to decrease the impact of exchange rate fluctuations. The study concentrates the exchange risk and not overall corporate risk, so the analysis of co Exchange Rates and Interest Rates in Pakistan Analysis Exchange Rates and Interest Rates in Pakistan Analysis Abstract This paper endeavors the relationship and the positive effect between exchange rates and interest rates in Pakistan by utilizing the foreign exchange market and current scenario of increasing interest rates because of increasing exchange rates to represent the economic position of Pakistan. The data by the researcher is all on daily basis for the above variables from the period of September 2001 to May 2008 for exchange rates, while for interest rates (6 month KIBOR) from the period of September 2001 to May 2008. The researcher implement regression model to test the effect of exchange rates progression on interest rates. So in this result, there is the issue of auto correlation exists and it shows the serial correlation between these variables. The issue should be resolved by taking time and KIBOR lag values as the dumm dependent variables. The study concludes on this way that there is the negative relationship between exchange rates and interest rates (KIBOR) in Pakistan and there i s the impact of time and KIBOR on KIBOR.. It identifies that when exchange rates increases, there is decreasing in interest rates (KIBOR). This results and relationship is consistent as predicted by Meese and Rogoff (1988). INTRODUCTION Every country has its own financial markets and it is the back bone of a countrys economy. The financial markets is divided in parts like foreign exchange market, stock market, money market, bond market etc. In this study, the researcher is focuses on the foreign exchange market, which is commonly known as Forex. It is the largest and most prolific part of financial market and defining the balancing of countrys economy, because every particular day, there are approximately one trillion amount of foreign exchange takes place in the countries around the world. The actual mechanism of the foreign exchange, that it is work as the main driving force for an any countys economy in the world. Therefore, any country in the world should challenge their currency in the global economic markets. In the exchange markets for all the countries, home country currencies trade with other foreign country currencies. The foreign exchange market system is needed for every developed and under developed cou ntry; this system known as currency in exchange determination. For the determination of the value of a currencys exchange rate, there are two main types of system is used, one is floating exchange rates system and the other is fixed exchange rates system. The intervention of government officials authorities in the foreign exchange market is to influence the exchange rate fluctuation as a worldwide phenomenon. The authorities intervene maintaining the objective to orderly market conditions that ultimately help to achieve the overall macroeconomic goals. However, the exchange rate has playing an important role in terms of the flexibility in macroeconomic framework to deal with changes in the external terms of trade, but the monetary policy also aims the national objectives of economic diversification and to support export competitiveness. The ineffective monetary policy under fixed exchange rates as compared to flexible exchange rates, but fiscal policy under both fixed and flexible exchange rates remains weaker of achieving the level of output. (R.A. Mundell, 1968). The level of currency risk changes, it has no negligible impact on the rates of change of exchange rates and on relatives rates of interest between currencies. (Clas Whilborg, 1982). The risk premium of the currency is the important factor relative to floating exchange rate system, but movements in the exchange rate are dominated by the non speculative activity and it has the adverse effect on world economy. (John bilson, 1985). The true statement that in many cases the sign of the estimated exchange rate-interest rate differential relationship is consistent with the possible predominance of financial market disturbance (R. Meese K. Rogoff, 1988). The consequences changes in the nominal interest rate reflect changes in the tightness of monetary policy. T he higher the interest rate in the country attracts the capital inflow, which causes the domestic currency appreciates, so this gets the relationship could be negative between the exchange rate and nominal interest rate differentials. (J.A. Frankel, 1979). The assets are dominated and exchange risks interest reflects the interest rate parity when different currencies affect political risk and thats why assets are issued in different currencies. Thus the interest differentials to the political risk of future capital control must be distinguished due to the effective tax that controls the place in interest earnings. (M.P. Dooley P. Isard, 1980). The concept of political risk is that the probability authority of the state will be interposed between investors in one country and investment opportunities in other countries that is the probability that controls the imposed on capital flows. (R.Z. Aliber, 1973). If price levels and exchange rate are significantly volatile and cannot be cos tly hedged, are adversely affected in the real value of the domestic currency. There is some evidence that exchange rate fluctuations are a priced factor in cross sections of stock return converted into a common currency. (W. Bailey P. Chung, 1995). In the perfect mobility the exchange rate movements and an adjustment of goods market is relative to asset market and consistent expectations. The extends that output responds to a monetary expansion in the short run, this acts as an effect on exchange depreciation which lead to an increase in interest rates. (Rudiger Dornbusch, 1976). The foreign exchange gain or loss is made in the course of covering; consider being capital assets, so this gain or loss treated on capital account. This shows the highly sensitive interest dynamics with exchange rates. (M.D. Levi, 1977). The variability of industrial production output will be higher in the regime of fixed exchange rates instead of regime of flexible exchange rates. (Flood Hodrick, 1986) . The effect of consumption goods purchases by the government is not the private utility, but per capita real government expenditure are the composite of individual consumption of goods. So notice that the demand of money its depends on consumption of goods rather than income and that is the important distinction of closed economies.(Obstfeld Rogoff, 1995). The fixed and floating exchange rates depend on higher welfare yield and on the nature of sticky prices, so the risk would be shared and there are some opportunities to aware. The evidence, which should give opportunities about price setting and risk sharing are not refined and not to make the definite conclusions for the optimal regime of the exchange rate of that country. There are three types of ways which gives stickiness in prices, the prices which would set by the firms in their own currencies, the firms would set the prices for consumers currencies, or firms would set the prices in the currencies of producers. (Charles En gel, 2001). When the exchange rates changes, it may cause to appear the changes in relative prices and make to generate additional uncertainty for equilibrium in markets. However, there is also defining that the changes in terms of trade would play the larger role of changes in the exchange rates which affect the variability of exchange rates. (A.C. Stockman, 1980). This study explores to investigate the determinants of exchange rates in developing country such as Pakistan. The framework of this study is concern to be conceptual and theoretical and is to set up the ground of unidirectional causality from exchange rates to economy. In principal, it determines the exchange rates relationship with interest rates so it will spurs the determinants in Pakistan with related to the economy. This view implies that the choice of an exchange rates regime be a relatively simple, if countries were faced to intervene regularly in the foreign exchange market to stabilize, therefore the monetary authorities intervene with the objective of maintaining orderly market conditions, which ultimately help to achieve the overall macroeconomic goals. The discretionary nature of the existing monetary policy in Pakistan is inflation, and it is targeting to hit on the Pakistani economy by focusing attention on the monetary policy. So the government of Pakistan is to make t heir monetary policy more transparent for achieving their explicit goal, and decreasing the inflation. Therefore, it is increasing the publics understanding of the central banks strategy to deliver the target, so the State Bank of Pakistan will help to provide an anchor for inflation expectations in the economy. The State Bank of Pakistan (SBP) has accorded a high priority to achieving a low rate of inflation, and the monetary policy also aims to support the objectives of the national country of Pakistan to meet their diversified economy and competitiveness in the export from other countries of the world. This study will also helpful to the SBP to developed their awareness of the relationship of exchange rates with KIBOR, so SBP may observed the controversy of their ups and downs fluctuations so it may controlled significantly. The bank treasury department should get the help because, they have continuously meet the exchange rates and make transactions of the countrys currency with others country currencies, so it should make them identify that if exchange rates increases or decreases it should not make effect on interest rates but their should be some inverse effect in nature. This effect should create controversy in the country economy so the central bank should make some authorized decisi on to controlled the exchange rates and interest rates The thesis is structures as follows. Chapter II provides literature review. Chapter III defines the outline of variables, their sample size, data sources and its formatting and the model. Chapter IV explains our findings and results. Finally Chapter V reports conclusion Chapter II Literature Review: This study relates to examine the relationship and effect between exchange rates with interest rates. Numbers of studies have done by the researchers, Robert A. Mundell, (1961), Bela Balassa (1964), Robert Z. Aliber, (1973), Rudiger Dornbusch, (1976), Richard A. Meese Kenneth Rogoff (1982), H.M.S Gerlach (1988), to investigate the determinants of exchange rates have applied in the world exchange rates market and help for different countries in their market development and economic growth. Researchers attempted to exemplify whether, how and to what extent the determinants of exchange rates market can contribute to the process of economic growth. Purchasing Power Parity Theory: The purchasing power parity theory doctrine means different things to different people. It has two versions of this theory that can be called the absolute and the relative interpretation. The first version of purchasing power theory calculated as a ratio of consumer goods prices for any country would tend to the equilibrium rates of exchange. In the second version of relative interpretation the rate of exchange rate would be determined between two countries and quoted with general levels of prices of two countries. It amend the international trade theory which would be the part of PPP, in which introducing the non-traded goods (services), but the advantage is greater in regards of traded goods than non-traded goods, because of the assumptions of marginal rates of transformation. The relationship between purchasing power parity and exchange rates provides the international comparison of national incomes and living standards (Bela Balassa, 1964). (Lawrence H. Officer, 1976) is the rese archer which gave another review of this purchasing power parity theory. It has define two applications in economics, the first application use of the conversion factor to transfer the data in one national way to another. The use of PPP is mainly the body of (index number theory) and applications of GDP that have improved over the years and path breaking studies in the area continue to appear. The second application of PPP has not the widespread acceptance, which has remained the unsophisticated applications. A.C. Stockman, (1980), develops the model of determination of exchange rates and prices of goods. The changes in prices of goods due to supply and demand would affect the changes in exchange rates with deviations of purchasing power parity. The changes in exchange rates have failed to resemble the changes in prices of goods, because exchange rates more volatile than prices levels and inflation rates. The research proposes the equilibrium of exchange rates behavior and different international goods that would have been traded. This relationship cannot be exploited by the government, because the greater the changes in terms of trade the larger the changes in exchange rates variability. The deviations from PPP persist that variation of exchange rates more than ratios of price indexes. The results found the two interpretation of the relationship between exchange rates and terms of trade. In the first, the causes that affect the changes in exchange rates would also affect the change in te rms of trade because prices of goods do not adjust to clear the markets. This interpretation would also found in the research of Dornbusch (1976), and Isard (1977), they formally differentiates the system with respect to exchange rates and allow prices to change but not the changing in asset stocks. The another interpretation presented the elasticity approach of the foreign exchange market and the relation between the trade and exchange rates. Real supply and demand shocks affect prices and the derived demand of exchange rates. The affect of such a shift has the advantage to raise the value of currency in terms of foreign currencies relative PPP. These changes in demand for foreign exchange would result the supply and demand shocks and that should affect the equilibrium of exchange rates. In second interpretation the expected rate of change of exchange rates revealed on the forward foreign exchange market. This should be related the anticipated change in the terms of trade and the i nflation differentials. A persuasive argument about the level of exchange rates is only associated with not causes of the relative prices changes. Clas Wihlborg, (1982), examined the relation of interest rates, exchange rate and currency risks in this research. It identifies the test which empirically impact of currency on interest rates and exchange rates. In this research there are three different ways in which the importance of currency risks for interest rate and exchange rate determination. First different risk characteristics of assets denominated in different currencies. Second changes in the level of risks that affect the elastic ties of substitutes among different assets and the monetary policy. Third changes in the level of risks on alternative assets which have a direct impact on rates of return. This research used the three specifications of the dependent variable to test the theory, firstly the rates of return is adjusted for the expected rate of changes in the exchange rates, second difference between nominal rates of interest and third rate of change of deviation from the exchange rate. The results presented here that substantiate the changes in the level of currency risk have a non-negligible impact on the rates of change of exchange rates and on relatives rates of interest between currencies. The risks explain the small share of variation in these variables. Another results indicate that the nominal interest rate seem to adjust in fiscal policies and savings behavior but not affect real rates of interest. But changes in relative risks level would affect relative rates on interest these changes still be important for the substitutability between assets of different currency denominations. Richard Meese Kenneth Rogoff, (1983), analysis the out of sample forecasting accuracy on various models. It estimated the horizons of the dollar with different country currencies, like Dutch mark, Japanese yen, and Britain pound that traded to weight the dollar exchange rates. Its also studied the flexible exchange rates with the monetary models of sticky price, so the model of sticky price, which incorporates the current account. The first model is structural models in which it requires to generate the forecasts of exchange rates and explanatory variables. It contains the explanatory power, but its predicted badly because the explanatory variables are difficult to predict. The second is the univariate times series model in which identify a variety of prefiltering techniques involve differencing, de-seasonalizing and removing time trends. The relative performance of these techniques is of interest in itself. The third model use is the random walk model; it should also link with this univariate time series model. It uses as the predictor of the current spot rate with the entire future spot rate, and it requires no estimation. In this research the performance of estimated univariate time series models or candidate structural model is so worse. From a methodological stand point the view that the out of sample model fit is an important criterion when evaluating exchange rate, but the estimation of out of sample is failure with time series models, that are well approximated the major country exchange rates. John Bilson, (1985), gives the empirical findings about macro economic and flexible exchange rate of the U.S dollar related to PPP theory. From the perspective of this research in which sluggish price adjustment in the commodity markets resulted in increased variability in exchange rates. For the demonstration of result it is important because the instability of floating exchange rate could be due to the inherent differences between commodity and foreign exchange markets. The determination of the expected future rate is impossible, because it is more difficult to reject the forward parity condition. The major part of the forward parity is the variation in the premium is due to the forecast. The object of this research is to determine that if the forward parity failed is the cause of instability in the same way that the failure of purchasing power parity. The findings develop that currency risk premium is the important factor relative to floating rate system, and movement in the excha nge rate are dominated by the non speculative activity and it has the adverse effect on world economy. Roger D. Huang, (1987), evaluate that the expected change in the exchange rate of two countries equals the expected differentials in their inflation rats over the same holding period. It makes the empirical evidence link with PPP theory and obtained that the changes in expected nominal exchange rate is appear to deviate inflation rate systematically. It relates the PPP based on the constraint that, in efficient market the net return to speculators engaging in speculation on goods in the foreign country. The purpose of this research is to know the equality restriction between expected nominal exchange rate and expected inflation rate differentials. The investigation should have the result that the evidence is inconsistent with the current floating exchange rates over the major industrialized countries. Since the test perform meaningful in conjunction with market efficiency and simply indicate the failure expectations. John Doukas Abdul Rahman, (1987), conducted the unit root test for the presence of evidence from the foreign exchange futures market, and gets the representation of foreign exchange currency future prices. The research describes the procedure from the foreign exchange future markets on five different currencies with varying maturity. It was found that presence in the series may cause the OLS estimates and its true value leading to errors, for small sample sizes the model has smaller forecast error. The process generate the log of currencies future rates by random walk, and it is consistent with other model of asset price determination that they imply the mean and dispersion of returns that don not change over short time period. But in general if follow the random walk; it is line with (Meese Singletons) findings from the spot and forward exchange market. H.J. Edison, (1987), addresses that whether PPP is valid in the long run movements in exchange rates, though it is failed in the short run. However number of studies was conduct for the behavior of exchange rates, Alder Lehmann (1983), Frankel (1986), developed more statistical techniques to examine the validity of exchange rates in the long run. Both of these have provided the evidence that PPP does not hold the exchange rates behavior in the long run. This research also incorporates the error correction mechanism and discusses the empirical results which generally show the result of failure of exchange rate support by PPP in the long run. In general, the result indicates the force which exists in the economy for driving the exchange rates towards the PPP equilibrium. The main conclusion from this research is the PPP relationship does not represents the exchange rates n the long run holding, so that the PPP permanent deviations cannot ruled out. This shows the reinforcement of PPP theory that was tested the fixed rate counterpart and the equalization of prices across countries, and it supports an interpretation of the PPP doctrine. This proportionality between the exchange rates and price level emerges in the long run. Richard Meese Kenneth Rogoff, (1988), examined the relationship between real exchange rates and real interest rate differentials from different countries. It based on the joint hypothesis that the prices of the domestic currency are sticky and the disturbances of monetary policy are predominant, which would found the little evidence of a stable relationship between interest rates and exchange rates. It is true that in many cases the sign of the estimated exchange rate and interest rate differential relationship is consistent with the possible predominance of financial market disturbances, but the relationship is not stable enough to be statistically significant. In Quasi reduced form real exchange rate models, examined the real versions of alternative rational expectations monetary models of exchange rate determination. In the nominal rate models, the exchange rate depends on fundamentals such as relative national money supplies, real incomes, short-term interest rates, expected inf lation differentials, and cumulated trade balances. The rationale view for this approach is that the nominal exchange rates poor performance is primarily attributable to money demand disturbances, so it can define the close relationship between there real interest differentials and real exchange rates, because, in the class of monetary models considered here, unanticipated money demand disturbances affect both variables proportionately. Feinberg Seth Kaplan, (1992), evaluate and interacts the real exchange rates index expectations is developed and used to explore the role of determination on domestic producer prices. The fact that time path of the exchange rate will directly affect the input costs, and the price of substitutes strongly. To examine the links between both actual and anticipated movements in the dollar and relative domestic producer prices, it chooses to analyze price responses to real exchange rate changes. The effect is dependent on the nature of substitutability between imports and domestic goods. The major finding is that the period of appreciation and depreciation over the past 10 years to inhibit the pass through in to domestic prices. In depreciation the market share to enjoy the continued good times kept prices other than expected. Warren Bailey Peter Chung, (1995), considers the study that the impact of fluctuations on exchange rates and political risk is on the risks premium and is reflected the individual equity returns. It suggests the factors which is common for emerging market equity, currency and debt markets, and make empirical implications to evaluate corporate and portfolio management. If price levels and exchange rate are significantly volatile and cannot be costly hedged, are adversely affected in the real value of the domestic currency. Some evidence that exchange rate fluctuations are a priced factor in cross sections of stock return converted into a common currency. The purpose of this research is to explore the impact of fluctuations on exchange rates and political risk which is consider on stock process of individual companies from the same country. The extent of measurement is that, which exposure factors explain cross sections of returns on individual securities and industry portfolios. The result suggests that the exchange rates and political risks could be significant in equity markets. The result also suggests that the risk premium can be time varying and not be detected by assuming constantly. This research shows the results that it did not find the evidence of the equity market premiums for the currency and political risk. It complements the importance to attach the exchange rates and political risk in the international finance. J.R. Lothian M.P. Taylor, (1996), examines the real exchange rate behavior, and explains the variations in sample of stationary univariate equations in real exchange rates. It investigates the additional insight in the exchange rates behavior that can be gained by considering the floating rate from the perspective of the data. These issues can be best understood on the subject of real exchange rates stability between the currencies of the major industrialized countries. Some of the pre-float studies support the fairly stable exchange rates in the long run. Subsequently, Dornbusch (1976), Frenkel (1981), gave largely as the result of studies published, and reject the hypothesis of random walk behavior of real exchange rates. The PPP shows the empirical movements in real exchange rates were highly persistent and effective; although the PPP is reject the hypothesis of non-stationary behavior of real exchange rates in the long run. The result of this research shows that the longest span of two countries exchange rates are significantly mean reverting. The first model result indicates the 80 percent of the variation in the exchange rates of the history data of two countries. By using of another model, the results explaining the performance of remarkably well in the floating, so that they produce better forecasts of the actual exchange rates. In line with recent studies, it fined that this process of mean reverting is quit slow, with estimated adjustment of data. In the long run the PPP equilibrium is remaining a useful empirical approximation. The deviations of the PPP that observe are consistent with the existence of slowly mean reverting influences, which may be real or monetary regimes. Theory of Optimum Currency Areas: The theory of optimum currency areas, which is usually presented the other name called flexible exchange rate system, but it is proponents as a device of depreciation that take the place of unemployment when the balance of payment is deficit and appreciation when it replace inflation when it is surplus. The problem can be exposed and more revealing by defining a currency area within when exchange rates are fixed. To this three answer can be given; first certain parts of the world are going processes of economic integration, so new experience can be made and at what constitutes the optimum currency area can give the meaning of these experiments. Second those countries that have flexible exchange rates are likely to face problems with the theory of optimum currency areas, so it does not coincide the optimum currency areas with the national currency. Third the idea that illustrates the functions of currencies which have been treated in economic literature, and sometimes neglected in the problems of economic policy. In the currency area, different currency countries including national country currencies interact pace of employment in deficit, because there is the willingness to inflation by the surplus countries. The argument for flexible exchange rate system is based on national currencies, and is valid about mobility of factor, so if it is high in the country and low in the foreign countries, the flexible exchange rates system on home country currencies might work effectively. The concept of optimum currency area has practically applicable only in those areas, where the state has the political organization in the country. The factor mobility is most considered is more relative rather than absolute concept, with both industrial and geographical. It likely to change the alterations with time over time in conditions, where the conditions of political and economic stability. Money is the convenience that restricts the optimum number of currencies, so in terms of this argument the optimum currency area which is composed in number of countries. (Robert A. Mundell, 1961). In another review the author defines the stabilization of capital mobility policy under the exchange rates which is fixed and flexible in the currencies markets; it concerns the theoretical and practical approach of the increased mobility of capital. The assumption is that the interest rate differentials from the level of abroad cannot maintain by the country, if there is the degree of mobility. The securities system are perfect substitutes, because different currencies are involved can be taken in the perfect mobilization, and there exchange rates expected to persist indefinitely, but the forward and spot exchange rate are identical. It identify the monetary and fiscal policy, in which monetary policy assumed the open market purchase of securities while fiscal policy is to form of increase in government spending and financed by an increased in public debt. Its effect the floatin g exchange rate result when monetary policy does not intervene in the exchange market, but it intervene the fixed exchange rates, when the buying and selling of international reserves at the rate of fixed price. The results of this research analyze that, the fixed exchange rates is become a device for the monetary policy and for the levels of reserve, whereas the flexible exchange rates becomes a device for the fiscal policy and for the balance of trade, but policies are unaffected to the level of output and employment. The fixed exchange rates in the perfect mobility will lead to the breakdown as the absence of gold sterilization. The gold sterilization is frustrated the capital outflows and offsetting monetary changes through the exchange rates equalization. The conclude remarks is that, the fixed exchange rates as compared to flexible exchange rates is ineffective under monetary policy, but in fiscal policy both the exchange rates either fixed or flexible are remains weaker for a chieving the level of output. The flexible exchange rates under fiscal policy to play some role in employment policy that can be expected, while monetary policy can have influence on output under fixed exchange rates. In this possibility existing, it wills lesser extent in the future. (R.A. Mundell, 1968). J.H. Makin, (1978), analysis the way to deal the risks involved in foreign exchange currency positions but exchange rates are uncertain. It incorporates the exchange rate changes with the changes in the determination of overall hedging strategy. The purpose is to survey the literature rather to examine the logic on hedge no hedge strategy and to suggest the viewing problem of exchange risk. It identifies the exchange risk diversification in two groups. First diversification investigates the exchange risk with the investor point of view selecting the locations of firms in different countries which denominated in different currencies. The second considers exchange risk with the firm manager point of view to decrease the impact of exchange rate fluctuations. The study concentrates the exchange risk and not overall corporate risk, so the analysis of co

Trade Union Increasing Of Their Membership Commerce Essay

Trade Union Increasing Of Their Membership Commerce Essay It is believed that employee relation is a relevant management activity if the organisation deals with trade unions. As Gennard and Judge (2005) explained in their book, trade unions are organised group of employees who consist wholly or mainly of workers of one or more description and whose principal purposes include the regulation of relations between workers and employers. The primary purpose of trade unions is to protect and enhance the living standards of their members. (Gennard and Judge, 2005) To achieve this objective, there are two main methods industrial and political. Industrial methods include the negotiation of agreements with employers and all that belongs to collective bargaining, grievance procedure, industrial action, use of third-party intervention, joint consultation. Political methods cover all types of union participation in the political process, including pressure group activities in relation to the UK government and the EU decision making bodies. Trade unions which traced from the eighteenth century have developed into a number of forms, influenced by differing political adjectives and activities of trade unions vary, but may include: provision of benefits to members, collective bargaining, industrial action and political activity. Although trade unions bring about lots of benefits to their members, there is a decline in trade union membership. This paper will discuss the question how trade unions can increase their membership. The questions will be answered from four aspects. It will be organise as follow: first it will talk about the partnership, second is the policy specifically to attract younger members, third is organising model, and last is the investment in exploring new information-based technology and communication systems. Also a conclusion will be writing at the last of this paper. Partnership Blair declared partnerships to be an essential part of developing a modern workplace that can produce goods and services of quality. It is part of the answer to the quest for economic success (Brown et al, 2001) Heery (2002) mentioned that social partnership is an imprecise term and in Britain carries a number of meanings and refers to a range of union activities. At European level, it can refer to union involvement in European Social Dialogue and the negotiation of framework agreements. At state level, it can refer to attempts to position the TUC as an authoritative partner in economic and social management. At economy level, it can refer to attempts to revive multi-employer collective bargaining. At company level, it can refer to the negotiation of distinctive partnership agreements between unions and management, which are intended to promote a new and more co-operative set of relations within the firm. Partnership agreements may reflect an exclusive principle of representation; they provide an element of security for union members in relatively good jobs through a policy of deliberate insecurity for others who are less likely to be unionised. Partnership above the level of the company may be oriented towards the broad regulation of the labour market, partnership agreements focus very much on the immediate employment-centred interests of union members. (Heery, 2002) These partnership agreements seek to address interests which have often been neglected by unions in the past. They have common feature like worker entitlement to training and development. Indeed, the Return to Learn partnership concluded by unison with public and voluntary sector employers are confined solely to issue of personal development (Munro and Rainbird, 2000). Partnership agreements seek to cultivate shared interests with employers and take the form of productivity coalition (Windolf, 1989), in which security, d evelopment and involvement ideally are exchanged for worker commitment and flexibility. Partnership brings many benefits such as training and development, and also makes the worker more flexible that employers and employees working under the voluntary rather than law. Partnership is built on principles and practices of shared commitment between the organisation and the people who work there.   Partnership has brought benefits including greater disclosure of information, greater influence, inter-union co-operation and more local decision-making. It provides the opportunity for worker get training and develop their personal skills, increase workers involvement. In a word, there is a big potential of a move towards greater partnership with employers as a way of increasing trade union membership. Attract younger members Throughout Western Europe, trade union membership is declining. The average age of trade unionists is rising, and difference between trade unionists and young workers in perception, culture and identity are widening. If trade unions are tending to reverse the membership decline sustained since 1979, more young workers must be recruited. Sustained membership growth in trade union is facing two major challenges. The first challenge is to adapt their strategies and structures to the rapid growth and diversity of service-sector employment. The second challenge is demographic. Union membership in western industrial nations is ageing and tends to be concentrated in declining or slow-growth sector. As a result, it is vital that unions invent effective ways to recruit the next generation of workers. (Weil, 1994) A review of unionisation among young people in Western European showed that rates of unionisation among young people are lower than among their older counterparts and that the rate of unionisation for young people is declining more steeply than among older workers (Serrano Pascual and Waddington, 2000). It is argued that young workers attitudes towards trade unions are influenced by aspects as follow. First, family networks influence the unionisation of young workers. Young trade unionists were more likely to have parents who were, or had been, trade unionists. Second is the influence of some workplace characteristics and job histories on union membership. Young workers who often change employment rather than accumulate a stock of grievances in a single post are less likely to unionise (Waddington and Kerr, 2002). There are some actions can be introduced by trade unions to stem the sharp decline in unionisation among young people. First, reduce subscription rates for young trade unionists. In order to encourage higher rates of participation in union affairs and to foster contributions from young members on the development of union policy, many unions have set up youth or student sections. Second, launch campaigns on university campuses in an attempt to attract into membership students employed in McJobs, which is low pay, insecurity, unsocial hours and an absence of holiday or sick pay. Third, establish a presence at music festivals and similar events central to the culture of young people, to engage with potential young members. Fourth, establish the Organising Academy to train young people to recruit, amongst others, young workers, with the specific brief to extend union organisation into private-sector services. Organising model The trade union density is described as a product of five forces: macro-economic context, workforce composition, state policy, management strategy, and the recruitment activity of trade unions themselves (Metcalf, 1991). It is also argued that the fall in trade union membership was caused by inadequate investment or deficiencies in union recruitment activity much union recruitment has been unsystematic and reactive (Heery, 2000) (Kelly and Heery, 1994). While there is evidence of UK unions making an increased effort to recruit and organise new members, which has been informed by the organising model since the mid 1990s. (Heery, 2002) The concept of an organising model or organising approach is imprecise and embraces a number of principles and practise (Bronfenbrenner, 1998). Organising model tends to be used in two overlapping senses: First, it can refer to a model of union good practice which contributes to membership growth by re-building or extending organization at workplace level. Second, it represents an attempt to rediscover the social movement origins of labour, essentially by redefining the union as a mobilizing structure which seeks to simulate activism among its members and generate campaigns for workplace and wider social justice (Heery et al, 2000). Organising model includes some practices such as: reliance on targeted and planned organizing campaigns; the use of mapping techniques to research the target workforce and identify those likely to join; reliance on face-on-face recruitment, often in peoples homes and using like-to-like recruiters (Heery et al, 2000). Organising means the empowerment of workers, workers can resolve their own problems without recourse to external representation. The increasing investment by unions in organising leads to a recovery of union membership. Investment in technology and communication systems The union has invested little time or money in exploring new information-based technology and communication systems. The low cost of information, communication, and interaction on the web offers trade unions opportunities to improve services and attract members. The internet is the twenty-first centurys mode of mass communication, the logistic growth curve for internet usage making the internet one of the most rapidly adopted innovations ever. The use of web for workers and union members are very universal. It is believed that if unionists were not making extensive use of the internet, any study of the role of internet in the future of unions would be speculative or at least be limited to its impact. On the contrary, if unionists make wide use of the internet, then it has greater potential for the future of unions broadly. The internet offers unions some areas of opportunity: first, to present the union case various issues to the online population through provision of information; second, to communicate directly with union members or potential members through targeted electronic messages; third, to engage in interactive discourse with members or others by responding to queries and by online discussion forums. The uses of web by union members offer the opportunities for unions to use the new technology to improve their services to members and possibly attract new members, especially those young people. Because of younger union members are more likely to access the internet than older union members. The internet is also an inexpensive medium for communication. E-mails can be sent free to all members of the organization as well as one person to another. It makes union members easier to share information. Overall, by invest in technology and communication system such as internet and E-mail, unions can improve services to members and attract new members. Conclusion In conclude, the purpose of this paper is to discussed the question how trade unions can increase their membership. It answered the question from four sides were partnership, attract young members, organising model, and investment in technology and communication system. By looking at partnership, it is obvious that partnership has brought benefits including greater disclosure of information, greater influence, inter-union co-operation and more local decision-making. It is an effective way to recruit the next generation of workers for increase the membership of trade unions. Organising model had a success inform in unions making an increased effort to recruit and organise new members. It contributes to membership growth by re-building or extending organization. The last method to increase the membership of trade union is to investment in technology and communication system such as internet and e-mail in order to achieve the object of attract new members.

The Occult in A Tale of the Ragged Mountains Essay -- Ragged

The Occult in A Tale of the Ragged Mountains In his collection of criticism on Poe's stories, Thompson discusses the use of the occult in "A Tale of the Ragged Mountains." He begins the article by explaining that this story might be the product of Poe's "fascination with, but detached attitudes toward, the pseudoscientific occultism of his age." He gives us some technical terms for the techniques that Poe uses in this story: "metempsychosis" is the transmigration of souls, and is the word that surfaces frequently throughout this discussion of "Ragged Mountains." First Thompson discusses the idea that Poe set up the tale in a very specific way; as he puts it, "Poe himself wove a web for the purpose of unraveling." He believes that Poe set up a series of clues to guide the reader through the story. So, first the reader gets a "scientific" explanation of the events that seem supernatural, which is then followed by a "psychological" explanation (which is the opposite of the scientific facts). The final clue is the reader discoverin g that this tale is very similar ...

Shakespeare the Psychologist? :: Biography Biographies Essays

Shakespeare the Psychologist? I have found that most of the characters in William Shakespeare's plays seem to be "mad", or mentally disturbed in some way. Shakespeare's characters display psychological disorders such as schizophrenia, senility, psychosexual disorders, and many more. Was this an early form of psychology or was he just relating to his own personal experiences. In my paper, I will discuss some basic concepts of psychology, and how I believe Shakespeare explored the world of psychology through the individuals in his works. I will also diagnose some of his famous characters from the plays “Hamlet” and “King Lear.” Psychological Concepts have been around since practically the beginning of time. Even Aristotle asked questions that would be classified as psychological in today's era (Wade and Tarvis, pg. 5). So Shakespeare was not the first person to use psychology but he may have been the first person to use a form of it in plays for an audience to see. Psychology is defined as the discipline concerned with behavior and mental processes and how they are affected by an organism's physical state, mental state and external state (Wade and Tarvis, pg. 4). It is evident in the plays that I have read that some of the characters in the plays have psychological disorders such as schizophrenia, split-personality disorder, Oedipus Complex, senility, and delusions. Schizophrenia is defined as a psychotic disorder marked by positive symptoms such as delusions, hallucinations, and incoherent speech; and negative symptoms such as emotional flatness and loss of motivation (Wade and Tarvis pg. 485). A person suffering from schizophrenia may have imaginary events happen to them or have imaginary people in their lives. For example, a man suffering from schizophrenia may believe he has a best friend named Joseph, when in fact there is no best friend at all. This disorder can be treated with medication but never cured. Another disorder showed in Shakespeare’s works is the split-personality disorder. The Split-personality Disorder is defined as a disorder marked by the appearance within one person of tow or more distinct personalities, each with its own name and traits (Wade and Tarvis pg. 479). The Oedipus Complex is another psychological disorder presented in Shakespeare’s work and is defined as a conflict in which a child desires

Stonewall Jackson Essays -- essays research papers

Stonewall Jackson, born January 21, 1824 was one of the most famous confederate generals and one of the best officers to serve for General Robert E. Lee. But Jackson wasn’t just born a general, he earned it. Since his parents died when he was very young, life was very rough for him. He was raised by his uncle, Cummins Jackson, a miller who lived near what is now known as Weston, West Virginia. Later on, he was appointed to the U.S. Military Academy. He had to work several times harder than the other cadets to learn the lessons in school because of poor education when he was young. But his grades slowly increased until he graduated. He was said to have been in the upper third of his class. His military career had just begun. As soon as he received his commission as lieutenant of artillery...

Should Animals Be Used for Scientific Research or Testing?

Should animals be used for scientific research or testing? Agli Panci Instructor: Eva Prifti Course: Composition I Time: Thursday, 15:00-18:00 From the early time humans survival was depended on animals, either as food or for transporting. Today we are using animals for a new kind of survival, we are using them for testing and experimenting medicines that we need for different diseases. All along this time, this experiments has helped a lot for discovering of new kind of diseases and medicine to cure them. I think that stopping of this experiments will bring limitation in scientific progress. However there are o lots of organization that try to protect animal rights but anyway for the moment is the only what that we have to test and experiment new way curing new or existing deceases. Although that many organization of animal rights think that animals should not used in medical research data shows that there are a lots of medications that we use today are invented due to animal research, because there are some animals who have similar body functions with humans. Reducing the human suffering as much as we can must be our firs priority, and then our second priority must be reducing of animal suffering or death. Is not the same as using humans and animals in medical research for discovering new diseases that my affect both animals and human beings, in this case we must use animals for research so we avoid human suffering as much as we can and after that our priority should be animals. For death bringers deceases like HIV or different tumors we need to do experimenting and tests with animals because it is the mos efficient way to find new ways to cure without having human suffering. Regarding to the second part that says that we must do our best to have the minimum of animal suffering has to a lot with ethics of the scientists that are doing this experiments. Regarding a survey conducted in the American Medical Association show that 99% of all active physicians in the U. S think that animal testing is the only way yo medical advancements. With today technology we can keep animal suffering in the absolute minimum. We can use anesthetics to minimize the suffering. Also to reduce animal suffering can be done by keeping them comfortable and in clean and healthy environment conditions. In other words is clearly possible to use animals in research without being cruel to them. New technologies of scanning that exist today like magnetic resonance, which make possible for doctors to learn about a certain disease from animals without making them suffer. According to studies there are thousands of death bringers diseases that are discovered from 1600's to 1990's due to animal experimentation. According to Animal Use and Abuse Statistics, more than 25 million vertebrate animals are used annually, and the number of invertebrates may extend to billions in United States. Above the scientific ethics of the scientist is the technology that is available to him, so our part is to do our best to avoid not needed hurting or testing. So we must take our benefits from this experiments but also to protect this animals from death. According to the US based, Foundation for Biomedical Research: â€Å"Animal research has played a vital role in virtually every major medical advance of the last century – for both human and veterinary health. From antibiotics to blood transfusions, from dialysis to organ transplantation, from vaccinations to chemotherapy, bypass surgery and joint replacement, practically every present-day protocol for the prevention, treatment, cure and control of disease, pain and suffering is based on knowledge attained through research with lab animals. Humans genes are 99% like chimpanzees, and many other basic functions like eating, seeing, smelling are in humans like in animals. As a result of this similarity , the feedback of these animals are a very good guide to possible reactions of human patients. It is very possible that humans and animals can get o lot of the same diseases, because of this we can make the research in animals and test new medicines in them firs and after this we can produce for humans. As we know from the theory of evolution animals feel pain and pleasure,because we share with them our emotions. So the people using animals for experimenting or different purposes should treat them with respect. Also the purposes for witch they are used should be legitimate. The groups defending animals have tried to distort the truth about what animals are used for. They refuse the fact that these researchers are important and declaim that animals shouldn’t be used for any reason. They argue that medical community doesn’t support the fact that animals are used in research and it is obvious that it isn’t the truth. Besides the modern technology used in animal testing not all the experiments finish successfully and millions of animals die each year. Another point is that there are a lots of medicines that are tested in animals but they have side-effects in humans. So this kind of experiments bring suffering and deaths in both sides, in animals and in humans. Because different species reaction differently on different medicines. Animal rights organization have tried to dis inform public about the different fact in animal research. They do not accept the fact that use of animal in research has given a very useful contribution in curing different diseases. Today about 95% of U. S medical schools do not use animals to experiment new medicines or for testing purposes. They are trained using the human stimulation that the today technologies can offer and doing didactic work. While there are trying to find other ways to animal testing and experimenting, what the best scientist can do for now is try to reduce the number of animals being tested. They are using modern technologies and new types of scanning to see the animal organism so they don’t actually need to apply surgery. Though it is hard to completely stop the animal resting, what we can to is prevent unnecessary tests by stopping certain products that don't require animal experimenting. In order that the pathogenesis of different diseases could be studied,doctors need animal experimentation as the only way at te current level of knowledge ,and it undertakes drug trials,vaccines to alleviate suffering for human and animals. To conclude, humans must try can to reduce the number of animals being harmed in these experiments aimed at benefiting society. References Cook, K. (2006, March 29). Facts about Animal Research . Message posted to http://www. pro-test. org. uk/2006/03/facts-about-animal-research. html PETA. Animal Testing Is Bad Science: Point/Counterpoint. Retrived from http://www. peta. org Research Animal Resources. Ethics and Alternatieves. Retrived from http://www. ahc. umn. edu University of Georgia. Animals Used in Experiments. Retrived from http://www. uga. edu

‘Materialism’ and Alienation

A considerable number of scholars agree that the domination of capital, which prevails not only on the socio-economic order but also on the production of ideas and ideologies, is responsible for the fragmentation of cultures ensuing from the destruction of human relationships and interaction. The latter arises from the permeation of capitalism into the value systems, and, as suggested by Buber, ultimately creating the ‘I-It’ relationship, in which individuals identify increasingly with material goods, or derive their sense of fulfillment from consuming goods and the symbols attached to these, rather than the ‘I-thou’ relationship or the cultivation of meaningful relationships with their fellow individuals. As individuals seek their sense of being from consumption, they are alienated more and more from society, which scholars such as Kasser (2003) suggests would lead into the loss of meaning in one’s life and the frustration that goes with it. This frustration is reinforced by societal standards that put premium over the accumulation of material wealth over non-material fulfillment. The Pursuit of Money, Depression, and Alienation This is illustrated in the life story of C.P. Ellis, a man driven to join the Klu Klux Klan by his frustration over their family’s impoverishment and his own insecurity over being a low-income, white American, and his transformation into a contented labor union organizer despite. Born into a poor family, Ellis’ depression over his and his family’s financial status started from being perceived by others as ‘poor and impoverished’ in his childhood, as reflected by the way he felt people treated him and his father: â€Å"somebody looking at him and making fun of him and making fun of me.† His father’s unhappiness mirror the same unhappiness that characterized Ellis’ life as he struggled to make ends meet for his own family later on, to â€Å"work, never a day without work, worked all the overtime I could get.† Ellis’ predicament, according to Kasser (2003), is typical of â€Å"people who strongly value the pursuit of wealth and possessions.† Kasser notes that these people â€Å"report lower psychological well-being than those who are less concerned with such aims.† Not surprisingly, Ellis’ earlier experiences wherein his concern and frustration over ‘financial freedom’ is marked by the absence of a social life and of meaningful interactions with people as his life is taken over by the need to his above his socio-economic status. This makes him unable to see people beyond the labels and the propaganda, and also illustrate the attraction of the Ku Klux Klan to white, low-income individuals. Thus, Ellis’ motivation for joining the Ku Klux Klan, is his resentment and bitterness to his inability to move up the rungs of the economic and social ladder. Racist Organizations and the Reinforcement of Social Isolation The Ku Klux Klan, as a group that presents itself as the â€Å"savior of the white race,† also contains within itself the racist symbols of being superior, a superiority complex that is based on the skin color of being white. The Ku Klux Klan therefore presents an opportunity to feel power in another way, by vowing to â€Å"uphold the purity of the white race, fight communism, and protect white womanhood.† .For C.P. Ellis, the moment of ‘empowerment’ is his being ‘exalted Cyclops’ of the Klan but it is merely an extension of his yearning for a higher social status:   Ã¢â‚¬Å"Here’s a guy who’s worked all his life and struggled all his life to be something, and here’s the moment to be something.† However, the Klu Klux Klan does not give its members a sense of fulfillment that is based on being able to cultivate a meaningful relationship between its members, but reinforces the isolation of another marginalized sector of society—the black people. Moreover, the Klan’s power is based not on the empowerment of the sector it represents; On the contrary, it blurs its members’ ability to recognize the real problems of social inequality by curiously turning to the blacks as a channel for the dissipation of its anger. While Ellis is interested in the Klan for its sense of belonging, he was more drawn to the aspect of being in control—something that, while he clearly could not achieve by being poor, he could at least exercise on people deemed to be inferior by society. Ellis, however, was not intent on deriving meaning from the sort associated with â€Å"spirituality and religion†¦ home life, relationships, and family†¦having fun and excitement†¦and contributing to the community† (Kasser 2003). He was merely looking for a scapegoat to focus his resentment on, from which he thought he could attain the â€Å"large number of possible goals people might have, such as desires to feel safe and secure, to help the world be a better place, to have a great sex life, and to have good relationships with other.† (Kasser 2003) In this phase of his life, Ellis therefore retains the ‘I-it’ relationship in his life suggested by Buber through his remaining fixation with material wealth and the social status that comes with it. Transformation, Empowerment, and Redemption Ironically, C.P. Ellis’ genuine empowerment would come not from material success but from disillusionment with the false power of the Klu Klux Klan and subsequent transformation into a man who recognized that people were more than their skin color. This would come from his reluctant involvement with the efforts to minimize racial discrimination in which he was forced to work with Ann Atwater—a black civil rights advocate—to pursue a better school system for their children. Ellis’ transformation would not be easy, however, and it would only come with the realization that those who had economic and political power were using the rift between the blacks and the whites to further their own agendas: â€Å"As long as they kept low-income whites and low income blacks fighting, they’re gonna maintain control.† This realization would preclude his transformation as he knew more about the relationship between economic status and political power, and as he realized the importance of solidarity with his fellow poor: â€Å"The whole world was opening up , and I was learning new truths that I had never learned before. I was beginning to look at a black person, shake hands with him, and see him as a human being.† The attainment of wealth would grow less and less for C. P. Ellis as he discovered that although material things were important to people, individuals should not let it rule their lives. Consequently, Ellis’ concern on   the goals of the labor union with which he would be involved in later, would give him more happiness and fulfillment, his sense of self mirroring â€Å"the state attained by people motivated by growth, meaning, and aesthetics, rather than by insecurity and the attempt to fit in with what other people expect† (Kasser, 2003). Ellis’ life and general direction is now a stark contrast to the sense of â€Å"low well-being, high distress, and difficulty adjusting to life† (Kasser, 2003) that he experienced earlier in his life when his sense of self was anchored on material possessions. C.P. Ellis’ life and experience therefore reflects the dangers of material wealth as a central figure in one’s life. It provides a concrete example of one man’s transcendence over the alienation that people in a highly consumerist and materialist society experiences, and illustrates the importance of establishing an â€Å"I-Thou† basis of our identity and sense of self rather than anchoring our lives to the pursuit of financial gains. More importantly, it shows how having control on one’s life will not be achieved solely by having financial control, but by being able to appease our conscience, and striving for the higher ideals of humanity.