Continuous time dynamic modelling of interest rates in emerging markets
The modelling of short-term interest rates in emerging markets is an important research area, especially in view of the growth of new financial markets and of the financial securities traded in these countries. Over the last decade, a number of researchers have looked at different models of short-term interest rates. An important paper in this area is the study by Chan, Karolyi, Longstaff and Sanders (1992, CKLS hereafter), who considered various one-factor models nested in their general interest rate model. The CKLS general model captured various aspects of interest rate behaviour, including drift and mean reversion of interest rates. It also allowed for a general relationship between the level of interest rates and the volatility of rates. By imposing restrictions on these parameters, various well-known models in the literature that are used extensively by financial market operators can be utilized.
This article addresses the question regarding the ability of the Andean Multinational Enterprises for fostering intraregional inward investment within the pale of the Andean Community of Nations. The deficiencies in the philosophy behind the regime, inspired by the Regional Industrialisation Programme Model (RIPM), the insufficiency of the benefits, and the rigor of the requirements have conduced to an impairment of the regional scheme. This paper explores these problems studying the main characteristics of the transnational Andean corporations, assessing the role of the RIPM in the decay of the regime, and proposing a reform that moulds a new policy of business facilitation for regional investors. Fecha de recepcion: 15 de abril de 2005