Underlying the standard methods of pricing derivative contracts is the assumption that market participants can borrow and lend in unlimited amounts at the risk-free rate. The most frequently traded interest rate derivatives have payoffs that depend on the inter-bank borrowing rate (LIBOR). Traditionally, the pricing and risk management of these interest rate derivatives have assumed that this rate is ‘risk-free’.
How agents form expectations and, in particular, whether they are rational and efficiently incorporate all available information into their forecasts, is a question of fundamental importance in macroeconomic analysis. Ultimately this question can best be resolved through empirical analysis of expectations data. It is therefore not surprising that a large literature has been devoted to empirically testing forecast rationality based on survey data such as the Livingston data or the Survey of Professional Forecasters (SPF). Unfortunately, the empirical evidence is inconclusive and seems to depend on the level of aggregation of data, sample period, forecast horizon and type of variable under consideration.
This article provides an overview of noncompliance in the Northeast multispecies groundfish (NEGF) fishery; presents an assessment of how it contributes to overfishing and could prevent successful fish stock rebuilding plans in that fishery; and provides recommendations regarding what can be done to improve the situation.
This assessment is based primarily on the results of a recently completed study of enforcement and compliance in the NEGF fishery which draws on data from: a) a mail survey of fishermen; b) an online survey of federal and state enforcement staff, regulators, and scientists; c) in-person and phone interviews with fishermen and fishery enforcement staff; and d) analysis of 6 years of National Oceanic and Atmospheric Administration (NOAA) enforcement statistics (2001 through 2006) for the Northeast region.
