New Working Papers from Norges Bank.

• Position: Bibliography - Statistical Data Included

Norges Bank's Working Papers (Arbeidsnotater) present research projects (not necessarily in their final version), and are published among other reasons to enable the author to benefit from the comments of colleagues and interested parties. Only Working Papers published in English are listed. Subscriptions are available free of charge and individual copies may be obtained from Norges Bank's Library. Postal address: PO Box 1179 Sentrum, N-0107 Oslo, Norway.

Oistein Roisland and Ragnar Torvik: "Optimum curency areas under inflation targeting". Arbeidsnotat 1999/10. 24 pp. ISSN 0801-2504. ISBN 82-7553-148-9.

Several countries face the choice between targeting inflation independently and entering into a monetary union that targets inflation. The present paper extends the theory of optimum currency areas to deal with this choice. In contrast to the conventional theory, it is shown that the more asymmetric supply shocks are, the more countries form an optimal currency area.

JEL classification: E52, F33, F42.

Keywords: monetary union, common currency, asymmetric shocks, output stability.

Eirik Gaard Kristiansen: "Explicit and implicit incentives in fund management". Arbeidsnotat 1999/11.38 pp. ISSN 0801-2504. ISBN 82-7553-149-7.

Fund managers compete to attract new investors. Competition and fund management contracts provide implicit and explicit incentives, respectively, for fund management. A study is made of the combined effect of these two types of incentives on i) investors' search for talented fund managers and on ii) talented fund managers' use of private investment signals. It is shown that a moderate level of competition yields less efficient use of private investment signals and lower average rate of return than in the case of either a high or a low level of competition in the fund management industry. Furthermore, it is shown that although explicit incentives improve managers use of private information, they may harm new investors' search for talented fund managers. Explicit incentives may improve current performance, but detract from the prospective performance of the fund industry.

JEL classification: D83, G23, L15

Keywords: competition, fund managers, incentives, performance, selection.

Randi Noes and Bernt Arne Odegaard: "Equity trading by institutional investors: To cross or not to cross? The case of the Norwegian Government Petroleum Fund". Arbeidsnotat 1999/12. 23 pp. ISSN 0801-2504. ISBN 82-7553-150-0.

The costs to institutional...