investment and interest rate policy abstract the paper s theorems reverse two standard results of new keynesian economics simply by appending endogenous investment to a benchmark imperfect competition sticky price model our results are a a passive interest rate rule where the monetary authority responds to inflation by lowering the real interest rate implies local equilibrium uniqueness whereas an active rule does not generate a locally unique equilibrium b a temporary exogenous increase in the nominal interest rate causes a temporary increase in output and investment extensions of the benchmark model including generalized preferences and alternative interest rate rules are also examined journal of economic literature classification numbers e12 e31 e52

sticky prices and volatile output abstract we examine the effect of introducing a specific type of price stickiness into a stochastic growth model subject to a cash in advance constraint as in previous studies we find the introduction of price rigidities provides a substantial source of monetary non neutrality which contributes significantly to output volatility we show that the introduction of this form of sticky prices improves the model s performance at explaining inflation but worsens it for output the most dramatic failure of the model is the extremely high frequency fluctuations in output that it generates sticky prices not only fail to produce persistent business cycle fluctuations but they generate extreme volatility at very high frequencies

research advances in environmentally and socially sustainable operations abstract consumers and governments are pressuring firms to strike a balance between profitability and sustainability however this balance can only be maintained in the long run if the firm can take a holistic approach to sustain the financial flow profit resource flow planet and development flow people for the entire ecosystem comprising poor producers in emerging developing markets global supply chain partners consumers in developed countries and the planet by considering the flows associated with different entities within the ecosystem we classify and summarize recent operations research management science or ms research developments also we identify several gaps for future research in this important area

money new keynesian macroeconomics and the business cycle abstract we show in this paper that the typical modern business cycle cannot be reduced to the real business cycles archetype a monopolistic competition model with price adjustment costs affected by technological and monetary shocks better mimics the economic fluctuations in two countries with very different cyclical properties namely france and the united states in our model monetary shocks are necessary to reproduce the standard deviation of output the money output correlation the labour productivity worked hours relative standard deviation the labour productivity worked hours correlation and the mark up output correlation with two independent shocks one real more specifically defined than the solow residual and one nominal the model gives an answer to some empirical puzzles which were left unexplained by traditional rbc models

determinacy and identification with taylor rules the new keynesian taylor rule theory of inflation determination relies on explosive dynamics by raising interest rates in response to inflation the fed induces ever larger inflation unless inflation jumps to one particular value on each date however economics does not rule out explosive inflation so inflation remains indeterminate attempts to fix this problem assume that the government will choose to blow up the economy if alternative equilibria emerge by following policies we usually consider impossible the taylor rule is not identified without unrealistic assumptions thus taylor rule regressions do not show that the fed moved from passive to active policy in 1980

industry self regulation without sanctions the chemical industry s responsible care program industry self regulation the voluntary association of firms to control their collective action has been proposed as a complement to government regulation proponents argue that the establishment of

matching markets with adverse selection abstract this paper considers a market with adverse selection in the spirit of rothschild and stiglitz quart j econ 90 1976 629 the major departure from existing approaches is that we model a decentralized market that is open ended and constantly refilled by new participants e g by new workers and firms in the case of a labor market the major novelty of this approach is that the distribution of types in the market becomes an endogenous variable which is jointly determined with equilibrium contracts as frictions become small we show that the least cost separating contracts are always supported as an equilibrium outcome regardless of the distribution of types among entrants moreover we derive conditions under which this outcome is also unique

organic production and ethical trade definition practice and links abstract in recent years there has been a growing debate about ethical aspects of production and trade this has evolved from concerns about fair trade safe working conditions for producers and employees and sustainable and environmentally safe natural resource management the principles of organic agriculture are wide ranging and include concerns for safe food production for the environment for animal welfare and for issues of social justice a working definition of ethical trading and an assessment of the links between organic production and ethical trading were obtained from 34 organisations in the uk involved in ethical or fair trading or organic agriculture interviewees were from major supermarkets independent and multiple retailers alternative trading organisations importers wholesalers accreditation bodies non governmental development agencies and lobby groups a definition of ethical trading based on the interviewees responses is developed and discussed the paper examines current practice in ethical and organic trading and assesses the role of the ethical trading initiative and major supermarkets current and potential links between organic production and ethical trade are explored constraints to linking the two concepts more fully both conceptual and practical are evaluated there is potential for organic production to be ethical using the holistic definition given here by the addition of social criteria to the standards of the organic regulatory authorities ethical trading is now becoming mainstream trading and internationally traded organic produce will therefore have to comply with the current view of what is ethical

multivariate detrending under common trend restrictions implications for business cycle research abstract this paper outlines a methodology to detrend multiple time series under common trend restrictions the same filters used to construct the estimated trend in univariate exercises are shown to be appropriate in multivariate studies with a single common trend however to estimate the common trend in the multivariate case the filter is applied to a linear combination of series rather than to each series individually an empirical example and simulation exercises illustrate the implications of common trend detrending for measurement of business cycle properties

tax disturbances and real economic activity in the postwar united states abstract this paper investigates the macroeconomic effects of cyclical fluctuations in marginal tax rates it finds that systematically including tax variables in a standard real business cycle model substantially improves the model s ability to reproduce basic facts about postwar u s business cycle fluctuations in particular modeling fluctuations in personal and corporate income tax rates increases the model s predicted relative variability of hours and decreases its predicted correlation between hours and average productivity fluctuations in tax rates produce large substitution effects that alter the leisure labor supply decision

productivity growth consumer confidence and the business cycle abstract the objective of this paper is to provide in the context of a dynamic general equilibrium model an answer to the following five questions 1 to what extent does an economy subject to regular variations in labor productivity growth differ from one where labor productivity is constant 2 what is the impact on major macro indicators of a one time change in labor productivity growth 3 what are the business cycle implications of autonomous non falsifiable changes in growth expectations 4 what is the potential of such expectation changes for explaining the volatility of consumption to output ratio 5 can autonomous changes in growth expectations help us understand recent business cycle episodes

challenges to legitimacy at the forest stewardship council the forest stewardship council fsc is a global private governance system overseeing the sustainability and biodiversity of the world forestry system through certification of forests and forestry processes and products and is perceived as the strongest of the various certification schemes available domask globalization and ngos transforming business government and society 2003 gulbrandsen global environmental politics 2004 it has seen more success in developed than developing countries in terms of amount of forest certified and number of chain of custody certificates issued raising questions as to its ability to promote biodiversity gulbrandsen global environmental politics 2004 a number of challenges have risen to the pragmatic and moral legitimacy of the fsc as a global governance system alternative certification schemes output and market access cost of certification plantations and illegal logging i examine each of these challenges as they pertain to the dimensions of pragmatic and moral legitimacy of the fsc i conclude with a discussion of theoretical implications for global governance systems using ecolabel schemes as well as a discussion of practical implications for the fsc in particular

nominal price rigidity money supply endogeneity and business cycles abstract this paper investigates the ability of nominal price rigidity to explain the co movement of inflation with the cyclical component of output observed in the post war u s data a dynamic general equilibrium model is constructed with the introduction of monopolistic competition and nominal price rigidity in a standard real business cycle model allowing for an endogenous money supply rule it is then demonstrated that sticky price models can explain the observed associations between movements in inflation and output much better than flexible price models this result depends little on whether money supply is assumed to be endogenous or not

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

family labor supply and aggregate fluctuations abstract this paper considers an economy which is populated by a continuum of identical families consisting of two members the two members have different productivities and the family faces a fixed utility cost if both members supply labor simultaneously although both family members have the same preferences they display very different elasticities of labor supply a real business cycle model is calibrated and it is seen that this cross sectional heterogeneity results in interesting forms of aggregation bias

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

corporate responsibility in scandinavian supply chains this article examines corporate responsibility in the supply chains of four of the largest scandinavian multinational corporations ikea nokia novo nordisk and statoilhydro and offers two key findings first these scandinavian companies have all implemented responsible supply chain practices where suppliers in developing nations and the communities of these suppliers are engaged as key stakeholders and treated as partners second these supply chain practices all share the common bond of having honesty and the establishment of trust based relationships at their foundation as a result these scandinavian companies have developed a cooperative advantage in their ability to form successful long term partnerships in their respective supply chains

investment interest rate policy and equilibrium stability abstract carlstrom and fuerst 2005 investment and interest rate policy a discrete time analysis journal of economic theory 123 4 20 show that in the presence of investment activity and price stickiness indeterminacy of equilibrium is induced by forward looking monetary policy that sets the interest rate in response only to future inflation in a stochastic version of their model we find that this indeterminacy problem is due to a cost channel of monetary policy whereby inflation expectations become self fulfilling and the problem can be overcome once the forward looking policy responds also to current output or contains sufficiently strong interest rate smoothing since this prevents the self fulfilling expectations we also show that when e stability is adopted as the selection criterion from multiple equilibria even the forward looking policy generates a locally unique non explosive e stable fundamental rational expectations equilibrium as long as the policy response to expected future inflation is sufficiently strong

supply chain specific understanding the patchy success of ethical sourcing initiatives as a number of high profile companies have found to their cost corporate reputations can be significantly affected by firms management of sustainability issue including those that are outside their direct control such as the environmental and social impacts of their supply networks this paper begins by examining the relationship between corporate social responsibility reputation and supply network conditions it then looks at the effectiveness of one tool for managing supply network sustainability issues ethical sourcing codes of conduct by examining how the characteristics of three supply networks branded clothes diy wood products and branded confectionary affects the implementation ethical sourcing codes of conduct it ends by setting out conclusions on why implementation of such codes has been so much more successful in some sectors than others and recommendations on effective approaches to managing sustainability issues in supply networks

monk mortgages in a new keynesian model abstract there has been much interest recently in the role of household long term mortgage debt in the transmission of monetary policy this paper offers a tractable framework that integrates the long term debt channel with the standard new keynesian channel providing a tool for monetary policy analysis that reflects the recent debates in the literature as there is a nontrivial role in the model for both short and long term debt it provides a laboratory to investigate the effects of monetary policy operating not only through its current short term actions but also through expected persistent changes in its stance

the impacts of public sustainability concerns on length of product line abstract this paper studies how the public sustainability concerns affect a firm s decisions of product line design under different channel structures both centralized distribution channel and decentralized distribution channel are taken into consideration our research shows that the public sustainability concerns can make the centralized firm shorten its product line when the coefficient of consumer mismatching disutility is moderate in addition when the centralized firm makes the decision of product line extension from the aspect of maximizing social welfare a relative low level of the public sustainability concerns can incent it to extend the product line the public sustainability concerns are shown to be able to weaken the positive impact of channel decentralization that has on product line extension when the coefficient of consumer mismatching disutility is moderate as well

identifying the free riders a simple algorithm for determining who will contribute to a public good abstract when a heterogeneous group of people provide themselves with a pure public good the resulting nash equilibrium outcome will divide the group into contributors and free riders this paper proposes a general algorithm for discovering which individuals in the group fall into which of these two classes the algorithm is based on identifying for each individual how much of the public good must be provided by others to drive that individual s contribution to zero

the role of the private sector in global climate and energy governance the private sector plays an active role in implementation of mechanisms concerning the mitigation of climate change in spite of that the corporate actors play a limited direct role in international arenas when it comes to negotiating the design of climate and energy regime the climate and energy governance in the united nations system remains mostly state centric but the active participation of corporate actors in negotiation of climate and energy regimes is essential to increase the effectiveness of their governance business is not just a subject of a regulatory climate and energy imposed by the state rather business is an intrinsic part of the fabric of climate and energy governance as rule maker particularly in the many voluntary regimes however the architecture in place should guarantee that the private sector does not highjack the decisions and its positions are balanced by other non governmental actors in the process this article analyzes the role that the private sector can play in the global climate and energy governance the private sector does not only play a rule taker role in the climate change and energy regime indeed they are not passive observers as they influence through indirect means the results suggest that the private sector is able to play a key role in global climate and energy governance based on the principle of multi stakeholder participation in global decision making but the architecture should be able to balance the goods and bads of private direct influence in international regimes

a profit driven approach to building a people responsible supply chain abstract today an increasing number of companies have publicized policies to improve corporate social responsibility performance related to human resources in their supply chain management practices such as safer and healthier working conditions higher payment better benefits and fewer working hours however there are still concerns about the sincerity and effectiveness of such efforts this could be attributed to the fact that the economic benefit of those improvements is not clearly structured as an integral part in the companies decision making process in this paper we develop a stylized analytic framework that links a firm s supply chain social performance in people with its economic performance in profit specifically we examine how consumers responses to the outbreak of social misconduct in supply chains affect competing firms market segmentation and profit and subsequently provide economic incentive for proactive social responsibility investment closed form optimal solutions for proactive social responsibility strategy are found for our model setup numerical tests and sensitivity analyses have been conducted to study the effects of various factors on the firms supply chain social responsibility strategies factors such as consumers ethical disposition the social environment and consumers perception of a product s functional versus social value are a few among them the results of our analysis demonstrate that proactive investment in supply chain social responsibility can enhance a firm s competitive advantage and economic performance thereby suggesting a profit driven approach to achieving supply chain social responsibility and sustainability

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

learning about monetary policy rules abstract we study macroeconomic systems with forward looking private sector agents and a monetary authority that is trying to control the economy through the use of a linear policy feedback rule we use stability under recursive learning a la evans and honkapohja learning and expectations in macroeconomics princeton university press princeton new jersey 2001 as a criterion for evaluating monetary policy rules in this context we find that considering learning can alter the evaluation of alternative policy rules

stakeholder forces of socially responsible supply chain management orientation this project investigates salient stakeholder forces of socially responsible supply chain orientation srsco in the apparel and footwear sector focusing on fair labor management issues srsco was conceptualized as a composite of internal organizational direction and external partnership for a creation and continuation of fair labor conditions throughout the supply chain primary stakeholders identified were consumers regulation industry and media a total of 209 mail survey responses from sourcing managers of u s apparel and footwear companies were analyzed two dimensions of srsco were confirmed internal direction and external partnership consumer and industry peer pressures were found significantly related to internal direction while industry peers and media were significantly related to the external partnership regulation was not significantly related to either internal direction or external partnerships lack of regulation forces to govern labor issues and roles of consumers industry peers and media in promoting fair labor management are discussed in this article

robust control of forward looking models abstract this paper shows how to formulate and compute robust ramsey aka stackelberg plans for linear models with forward looking private agents the leader and the followers share a common approximating model and both have preferences for robust decision rules because both doubt the model since their preferences differ the leader s and followers decision rules are fragile to different misspecifications of the approximating model we define a stackelberg equilibrium with robust decision makers in which the leader and follower have different worst case models despite sharing a common approximating model to compute a stackelberg equilibrium we formulate a bellman equation that is associated with an artificial single agent robust control problem the artificial bellman equation contains a description of implementability constraints that include euler equations that describe the worst case analysis of the followers as an example the paper analyzes a model of a monopoly facing a competitive fringe

supplier switching decisions abstract in order to maximize profit a buying firm should continuously search for and access sources which offer more favorable prices while the literature is replete with works on the formation and development of buyer supplier relationships there is surprisingly only scarce research on the termination of such relationships and supplier switching using the concept of switching costs in a principal agent framework we at first analyze whether a firm switches the entire or a partial quantity to an alternative supplier when there is either symmetric or asymmetric information about the alternative supplier s cost structure information asymmetry results in inert supplier switching decisions subsequently we extend our model and take competitive reactions of the incumbent supplier and economies of scale effects into consideration we find conditions under which no partial and complete switching occurs which depend on the buying firm s beliefs about the alternative supplier s unit costs switching costs the price offered by the incumbent supplier and refinements of the price offered by the incumbent supplier due to competitive reactions and economies of scale broader implications for supplier relationship management and sourcing strategy decisions are also provided

globalization and the good corporation a need for proactive co existence large corporations are coming under intense pressure to act in a socially responsible manner corporations have accepted this notion provided that it is exercised voluntarily it has also been argued that corporations can do well by doing good and that good ethics is good business this paper presents an alternative viewpoint by demonstrating that while voluntary socially responsible conduct is desirable it plays a rather small role in inspiring good corporate conduct instead a it is the external economic competitive conditions that define the parameters and opportunities for good corporate conduct and b the values and traditions of the corporations and their perceived risk in exploiting those opportunities that influence the extent of a corporation s socially responsible conduct the framework presented here analyzes certain market competitive conditions which determine the scope and direction of socially responsible corporate conduct and the instruments available to society to enhance ethical corporate conduct it suggests that from society s perspective we should move away from the notion of corporate social responsibility and toward corporate social accountability most modern economies operate under conditions of imperfect competition where corporations gain above normal profits i e market rent from market imperfections therefore corporations should be held accountable for a more equitable distribution of these above normal profits with other groups e g customers employees etc who were deprived of their market based gains because of market imperfections and corporate power three approaches are suggested for measuring corporate accountability through corrections these are information imbalance bargaining power imbalance and adjudication remedy and relief imbalance

the monetary transmission mechanism an empirical framework this paper provides an overview of the monetary transmission mechanism describing the impact of changes in monetary policy on real gdp changes in financial market prices including long term interest rates and exchange rates are the main vehicle for the transmission of policy the framework incorporates rational expectations and policy rules it is empirical and appears to fit the facts well

impacts of corporate code of conduct on labor standards a case study of reebok s athletic footwear supplier factory in china this study examines the social impacts of labor related corporate social responsibility csr policies or corporate codes of conduct on upholding labor standards through a case study of csr discourses and codes implementation of reebok a leading branded company enjoying a high profiled image for its human rights achievement in a large taiwanese invested athletic footwear factory located in south china i find although implementation of reebok labor related codes has resulted in a race to ethical and legal minimum labor standards when notoriously inhumane and seriously illegal labor rights abuses were curbed chinese workers were forced to work harder and faster but earned less payment and the employee elected trade union installed through codes implementation operated more like a company union rather than an autonomous workers organization representing worker interests in order to explain the paradoxical effects of reebok labor related codes on labor standards i argue the result is determined by both structural forces and agency related factors embedded in industrial national and local contexts to put it shortly i find the effectiveness of reebok labor related codes is constrained not only by unsolved tension between reebok s impetus for profit maximization and commitment to workers human rights but also by hard nosed competition realities at marketplace and chinese government s insufficient protection of labor rights despite drawing merely from a single case study these findings illuminate key determinants inhibiting the effectiveness of labor related csr policies or codes in upholding labor standards and hence two possible way outs of the deadlock 1 sharing cost for improving labor standards among key players in global supply chain and 2 combining regulatory power of voluntary codes and compulsory state legislations

average marginal tax rates from social security and the individual income tax we extend previous estimates of the average marginal tax rate from the federal individual income tax to include social security our computations consider the tax rates on employers employees and the self employed the income that accrues to persons with earnings below the ceiling and the effective deductibility of employers social security contributions from workers taxable income the next effect of social security on the average marginal tax rate is below 02 until 1966 but then rises to 03 in 1968 04 in 1973 05 in 1974 06 in 1979 and 07 in 1982 this abstract was borrowed from another version of this item

responsible innovation and the innovation of responsibility governing sustainable development in a globalized world earth s life support system is facing megaproblems of sustainability one important way of how these problems can be addressed is through innovation this paper argues that responsible innovation that contributes to sustainable development sd consists of three dimensions 1 innovations avoid harming people and the planet 2 innovations do good by offering new products services or technologies that foster sd and 3 global governance schemes are in place that facilitate innovations that avoid harm and do good the paper discusses global governance schemes based on deliberation as a means to foster such responsible innovation these schemes can provide voluntary soft law regulations that complement and extend national and international hard law regulations and facilitate collective innovation that contributes to sd goals the article addresses the facilitative role of governments and international organizations in overcoming problems of deliberation and offers illustrative examples of such governance schemes

the relative adjustment of wages and prices direct tests within a multiple equation system in order to assess the relative rigidity of the aggregate price level and the nominal wage rate most researchers have focused on the implied behaviour of the real wage rate in response to a purely demand disturbance the present work examines the explicit behaviour of the two variables and is therefore able to analyse the variables short run responses within the context of their defined long run behaviour while the paper reports evidence of long run stability in the real wage rate additional evidence is presented which supports both sticky price and sticky wage models the determining factor is the choice of lag

straight time and overtime in equilibrium abstract we formulate an equilibrium model of straight time and overtime wages by imposing restrictions on agents consumption sets and using a commodity space that includes employment lotteries we extract some time series implications from a linear quadratic approximation to our model evaluated at particular parameter values we use our model informally to interpret some features of observed time series for wages and employment

production growth and business cycles ii new directions abstract this paper outlines new directions for investigations of real business cycle models consideration of stochastic growth of exogenous and endogenous forms analysis of suboptimal outcomes arising due to externalities of distorting taxes and implications of labor market heterogeneity

on the mechanics of new keynesian models abstract the monetary transmission mechanism in new keynesian models is put to scrutiny we show that contrary to the conventional view the transmission mechanism does not operate through the real interest rate channel instead equilibrium inflation is approximately determined as in a flexible price model output is then pinned down by the new keynesian phillips curve the real rate only reflects the feasibility to keep consumption smooth when income changes contractionary monetary policy shocks reducing output and inflation are consistent with an increase decline or no change in the real rate consistency with the real rate channel is observational not structural

mattel inc global manufacturing principles gmp a life cycle analysis of a company based code of conduct in the toy industry over the last 20 years multinational corporations mncs have been confronted with accusations of abuse of market power and unfair and unethical business conduct especially as it relates to their overseas operations and supply chain management these accusations include among others worker exploitation in terms of unfairly low wages excessive work hours and unsafe work environment pollution and contamination of air ground water and land resources and undermining the ability of natural government to protect the well being of their citizens mncs have responded to these accusations by creating voluntary codes of conduct which commit them to specific standards for addressing these issues these codes are created at both the industry wide and the individual company level unfortunately these codes have generated little credibility and public trust because their compliance claims cannot be independently verified and they lack transparency and full public disclosure in this article we present a case study of the voluntary code of conduct by mattel inc the world s largest toy company the code called the global manufacturing principles gmp confronts the general criticism leveled against voluntary codes of conduct by a creating detailed standards of compliance b independent external monitoring of the company s compliance with its code of conduct and c making full and uncensored public disclosure of the audit findings and company s response in terms of remedial action we present a detailed account of how mattel s voluntary code of conduct was created implemented and ultimately abandoned over 9 years we provide an evaluative analysis of the company s gmp compliance throughout its life span which suggests a bell shaped curve where early top management commitments were met with pockets of resistance from operational groups who were concerned about balancing gmp compliance efforts with traditional performance criteria the early stage response from mattel s top management was quick and supported with the requisite resources as a result the compliance process accelerated becoming increasingly more robust and effective the success of code compliance and increased transparency in public disclosure energized field managers with a sense of professional satisfaction and publicly recognized accomplishments the decline in gmp compliance was equally steep when all the easily attainable targets had been reached at the company operated plants addressing vendor plants compliance presented a new set of challenges which taxed corporate resources and management commitment it would seem that value based and ethics oriented considerations i e doing the right thing for the right reason were no longer the driving force for mattel s management mattel did not see any economic benefit from its proactive stance when competitors did not seem to suffer adverse consequences for not following suit the final contributing factor to the code s abandonment was a widely publicized series of product recalls which absorbed top management s attention

sticky price models and durable goods the inclusion of a durable goods sector in sticky price models has strong and unexpected implications even if most prices are flexible a small durable goods sector with sticky prices may be sufficient to make aggregate output react to monetary policy as though most prices were sticky in contrast flexibly priced durables with sufficiently long service lives can undo the implications of standard sticky price models in a limiting case flexibly priced durables cause monetary policy to have no effect on aggregate output our analysis suggests that durable goods prices are the most relevant data for calibrating price rigidity jel e21 e23 e31 e52

to do well by doing good improving corporate image through cause related marketing as part of their corporate social responsibility many organizations practice cause related marketing in which organizations donate to a chosen cause with every consumer purchase the extant literature has identified the importance of the fit between the organization and the nature of the cause in influencing corporate image as well as the influence of a connection between the cause and consumer preferences on brand attitudes and brand choice however prior research has not addressed which cause composition most appeals to consumers or the impact of cause choice on corporate image a between subjects field experiment in the netherlands examines the influence of three core cause attributes cause type cause scope and cause acuteness on consumers perceptions of corporate image furthermore this experiment examines the extent to which consumer identification with the cause mediates the influence of the cause attributes on corporate image the findings indicate that identification with the cause leads to more positive evaluations of marketing campaigns for cause type and cause scope also however our results uncover a negative direct relationship between cause scope and corporate image cause acuteness is only marginally influential in corporate image perceptions by proposing and testing a comprehensive model of the influence of cause attributes on corporate image in cause related marketing this article provides important implications and suggests avenues for further research

united nations global compact the promise performance gap the united nations global compact ungc was created in 2000 to leverage un prestige and induce corporations to embrace 10 principles incorporating values of environmental sustainability protection of human rights fair treatment of workers and elimination of bribery and corruption we review and analyze the gc s activities and impact in enhancing corporate social responsibility since inception first we propose an analytical framework which allows us to assess the qualities of the ungc and its principles in the context of external and internal elements that influence code effectiveness and implementation second we analyze ungc performance in encouraging companies to become signatory members and bring about demonstrable change in corporate csr sustainability activities in its 10 year report ungc has proclaimed growth in both membership and program activity however all credible and publicly available data and documentation conclusively demonstrate that the ungc has failed to induce its signatory companies to enhance their csr efforts and integrate the 10 principles in their policies and operations the result has been a loss of public trust and support of ungc from important constituencies among civil society organizations and those individuals and groups adversely impacted by corporate activities and resultant negative externalities this diminished credibility has also made ungc largely dependent on the corporate sector for its very survival we conclude that this dependence has in turn impaired and would continue to hinder ungc s ability to fulfill its mission such an outcome raises serious questions as to the viability usefulness and continued existence of ungc

macroeconomic modeling for monetary policy evaluation we describe some of the main features of the recent vintage macroeconomic models used for monetary policy evaluation we point to some of the key differences with respect to the earlier generation of macro models and highlight the insights for policy that these new frameworks have to offer our discussion emphasizes two key aspects of the new models the significant role of expectations of future policy actions in the monetary transmission mechanism and the importance for the central bank of tracking of the flexible price equilibrium values of the natural levels of output and the real interest rate we argue that both features have important implications for the conduct of monetary policy

estimating and testing rational expectations models when the trend specification is uncertain abstract this paper explores various strategies for estimating and testing rational expectations models when the trend specification is uncertain one approach seeks to make estimators and tests robust to trend misspecification by reducing the influence of low frequency dynamics however contrary to intuition the effects of trend specification errors are not confined to low frequencies but are spread across the entire frequency domain thus operations that damp low frequency components do not remove trend specification errors and are not sufficient for constructing robust estimators and tests another approach seeks representations of approximating models that do not condition on a specification of the trend and it uses gmm to estimate parameters and test over identifying restrictions because these methods do not condition on assumptions about trends they are robust to errors in that part of the approximating model

do consumers care about ethical luxury this article explores the extent to which consumers consider ethics in luxury goods consumption in particular it explores whether there is a significant difference between consumers propensity to consider ethics in luxury versus commodity purchase and whether consumers are ready to purchase ethical luxury prior research in ethical consumption focuses on low value commoditized product categories such as food cosmetics and high street apparel it is debatable if consumers follow similar ethical consumption patterns in luxury purchases findings indicate that consumers propensity to consider ethics is significantly lower in luxury purchases when compared to commoditized purchases and explores some of the potential reasons for this reduced propensity to identify or act upon ethical issues in luxury consumption

implementing supplier codes of conduct in global supply chains process explanations from theoretic and empirical perspectives western buying companies impose supplier codes of conduct scc on their suppliers in developing countries however many suppliers cannot fully comply with scc and some of them even cheat in scc in this research we link contract characteristics price pressure production complexity contract duration to the likelihood of supplier s commitment to scc through a mediating process how the buying companies govern their suppliers our structural equation model analysis shows that the hierarchy relational norms governance is a perfect mediator of contract characteristics effects on the likelihood of supplier s commitment the market governance an insignificant one the managerial implications are provided for successfully implementing scc in global supply chains

investment and interest rate policy a discrete time analysis this paper analyzes the restrictions necessary to ensure that the interest rate policy rule used by the central bank does not introduce local real indeterminacy into the economy it conducts the analysis in a calvo style sticky price model a key innovation is to add investment spending to the analysis in this environment local real indeterminacy is much more likely in particular all forward looking interest rate rules are subject to real indeterminacy

information constrained insurance the revelation principle extended abstract private information induced incentive constraints can cause allocations to diverge from full information optimal allocations often in the direction of limited insurance but can bring unanticipated anomalies related plausible contract exclusion restrictions can be damaging in welfare terms more generally private information optimal allocations can be sensitive to the information structure suggesting that the latter be specified with an eye toward realism as well as tractability in an effort to make tractability less of a constraint the paper shows how two apparently difficult information structures a costly state verification environment and a multiperiod multilateral private information environment can be handled theoretically by revelation principle methods the paper also shows how solutions can be generated numerically

the united nations global compact as a facilitator of the lockean social contract the united nations global compact ungc has difficulties in attracting new voluntary members and inciting them to implement its ten principles the present article analyzes this implementation deficit from the perspective of lockean social contract theory and derives new strategies for reducing it on this view the ungc presents itself as the attempt to realize a set of moral norms typically enforced by an impartial minimal state protecting its citizens from violations of their natural rights negative externalities and discrimination by bribed officials it will only succeed in facilitating the realization of those norms on a strictly voluntary basis if it manages to overcome the underlying n person prisoner s dilemma this requires the existence of a critical mass k n of conditionally moral firms which are willing to observe the ungc principles and to resist the temptation to free ride on their observance by others if it does not disadvantage them in comparison to their situation in a state of universal non observance four contracting problems can impede the conclusion of this lockean social contract the ungc has a slim chance of overcoming its implementation deficit on a non coercive basis by cultivating four institutional capabilities assisting conditionally moral firms in surmounting those four problems of voluntary norm compliance

cyclical uncertainty precautionary saving and economic growth this paper studies the interaction between cyclical uncertainty precautionary saving and economic growth in a stochastic endogenous growth model the analysis provides insight into the potential connection between technological uncertainty of the sort popularized in real business cycle models and the determinants of economic growth in a stochastic version of a popular model of endogenously determined economic growth the magnitude of the link between cyclical uncertainty and growth is quantified and found to be small in terms of its effect on the growth rate but possibly large in terms of its effect on levels of macroeconomic variables moreover the welfare costs of reduced cyclical uncertainty can be substantial owing to the lower historical rate of capital accumulation induced by a decrease in precautionary saving the chief implications of the model are found to be roughly consistent with the postwar experience of several countries although the predictions of the model with regard to growth rates are too small to explain much of the variation in growth rates across time or across countries

the workweek of capital and its cyclical implications abstract the neoclassical growth model studied in the kydland and prescott time to build paper is modified to permit the capital utilization rate to vary the effect of this modification is to increase the amplitude of the aggregate fluctuations predicted by theory as the equilibrium response to technological shocks if following solow the changes in output not accounted for by changes in the labor and tangible capital inputs are interpreted as being the technology shocks the statistical properties of the fluctuations in the postwar united states economy are close in magnitude and nature to those predicted by theory

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

consumer ethics an assessment of individual behavior in the market place a national sample of 362 respondents assessed the ethical predisposition of the american marketplace by calculating a consumer ethics index the results indicate that the population is quite intolerant of perceived ethical abuses the situations where consumers are ambivalent tend to be those where the seller suffers little or no economic harm from the consumer s action younger more educated and higher income consumers appear more accepting of these transgressions the results provided the basis for developing a four group taxonomy of consumers which retailers should find insightful in assessing potential consumer actions in a variety of situations

socially and environmentally responsible purchasing comparing the impacts on buying firm s financial performance competitiveness and risk abstract the paper presents a study that aims to compare the contribution of social and environmental practices along the purchasing process to economic performance competitiveness and risk mitigation of the buying firm the number of studies dealing with the topic has significantly increased in the last few years the majority of the extant research is focused on the environmental dimension whereas fewer studies have explored the social dimension or the combination of both factors the results are mixed with some scholars supporting the existence of a positive relationship between socially and environmentally oriented purchasing management and financial performance competitiveness and risk mitigation and others being more cautious relying on suggestions from earlier literature the study presents an analysis of a database made up of 189 international buying companies operating in italy and the results have provoked two main observations data were collected through a closed question questionnaire to purchasing managers which was defined from items and variables identified in the previous literature on the one hand the results corroborated the hypotheses of the study confirming that both dimensions contribute to firm performance on the other hand the findings showed that differences do exist and that the positive relationship between social and environmental dimensions and firm performance depends upon the stage into which those criteria are integrated the integration of social criteria has proven to impact only risk mitigation throughout the purchasing process whereas the environmental dimension contributes to risk mitigation and competitiveness when included in the supplier selection phase and to economic performance when considered in supplier relationship management