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AbstractIn this article, we study the effect of the Pole Position in Formula 1 history on the outcome of the race. Using data for every race between 1950 and 2013, we use two approaches to quantify the effect of being on Pole. First, we estimate the effect on the probability of winning the race using a logit model. Second, we estimate a Poisson model to express the effect in terms of finishing positions. We find that the Pole sitter does have a significant advantage over the other drivers on the grid: two positions at the finish line or about a 10 percentage point higher probability of winning the race. These estimates capture the effect controlling for various confounding factors and a rich set of fixed effects, including driver ability, track characteristics and constructor performance. We also document that the effect varies over seasons.

Purpose
This paper aims to examine the impact of the Brexit referendum on the risk structure of financial asset prices. Co-movements are analysed using daily price returns of major stock and bond indices as well as commodities and exchange rates from June 2014 to June 2018. The authors used a multivariate GARCH model to study the dynamics of the conditional correlation matrix of asset returns. It was found that the conditional variances and correlations of assets spike on and after the Brexit referendum and then quickly revert to normal levels, suggesting that the effect of the referendum was transient rather than structural. The findings are of interest to investors as co-movements of financial assets can significantly impact financial portfolios and hedging strategies.


Design/methodology/approach
The authors used a multivariate GARCH model to study the dynamics of the conditional correlation matrix of asset returns.


Findings
It was found that the conditional variances and correlations of assets spike on and after the Brexit referendum and then quickly revert to normal levels, suggesting that the effect of the referendum was transient rather than structural.


Research limitations/implications
The findings are of interest to investors as co-movements of financial assets can significantly impact financial portfolios and hedging strategies.


Originality/value
To the best of the authors' knowledge, research studying the underlying asset co-movements around Brexit does not exist.

PurposeThis paper aims to analyze the macroeconomic effects of a monetary policy shock considering that fiscal policy is under fiscal constraints. For that, a dynamic stochastic general equilibrium (DSGE) model was developed for Brazil, which was estimated through Bayesian econometrics.Design/methodology/approachIn the basic model, the government does not have any type of fiscal restriction. The other two estimated models, however, consider that the fiscal authority implements some kind of fiscal rule. One of these rules is the Constitutional Amendment 95/2016 (EA 95/2016), which includes a limitation for government spending. The other Alternative Rule seeks to represent the characteristics of a more austere fiscal rule, as proposed by Wesselbaum (2017).FindingsIt was possible to verify in this paper that the implementation of EA 95/2016 by the Brazilian government does not produce statistically different results and that it reduces the welfare of the households in relation to the scenario without fiscal rule. Thus, the proportionate benefit of EA 95/2016 is less than the cost associated with this fiscal rule (less welfare). If the government adopts a fiscal constraint similar to the Alternative Rule, it is possible to considerably reduce the interaction between fiscal and monetary policy, thereby reducing the fiscal dominance policy over monetary policy. However, the cost in terms of welfare is much higher than the baseline scenario. Thus, the fiscal authority is subject to a trade-off among public debt stabilization and household welfare.Originality/valueThe study intends to contribute to the literature on three specific points. First, the monetary–fiscal policy interaction within a representative model of the Brazilian economy is discussed. In addition, the study considers that the government can adopt EA 95/2016 and the Alternative Rule, used in the US economy. Second, the impacts of EA 95/2016 and the Alternative Rule on household welfare will be quantified. Finally, two types of individuals (Ricardian and non-Ricardian agents) and two sectors of production (wholesalers and retailers) are considered. In this paper, the DSGE model is estimated, since the previously mentioned authors performed simulations