democratization and institutional change in mexico the logic of partial insulation this article builds on previous work examining the incentives facing authoritarian elites to use central bank reform to constrain the economic policy choices of future governments it suggests that because creating an autonomous agency is costly authoritarian elites will only cede policymaking powers to an independent body commensurate with the degree of democratic threat that they face when a transition is looming insulation should be complete so as to tie the hands of successor governments to the greatest extent possible but when this risk of replacement is milder incumbent elites will be careful to design rules that continue to afford them some margin of maneuver as long as they remain in office the mexican central bank reform of 1993 is used as an illustration of the partial insulation strategy at work

time consistent public policy in this paper we study how a benevolent government that cannot commit to future policy should trade off the costs and benefits of public expenditure we characterize and solve for markov perfect equilibria of the dynamic game between successive governments the characterization consists of an inter temporal first order condition a generalized euler equation for the government and we use it both to gain insight into the nature of the equilibrium and as a basis for computations for a calibrated economy we find that when the only tax base available to the government is capital income an inelastic source of funds at any point in time the government still refrains from taxing at confiscatory rates we also find that when the only tax base is labour income the markov equilibrium features less public expenditure and lower tax rates than the ramsey equilibrium

hospital choices hospital prices and financial incentives to physicians we estimate an insurer speci c preference function which rationalizes hospital referrals for privately insured births in california the function is additively separable in a hospital price paid by the insurer the distance traveled and plan and severity speci c hospital xed eects capturing hospital quality we use an inequality estimator that allows for errors in price and detailed hospital severity interactions and obtain markedly dierent results than those from a logit the estimates indicate that insurers with more capitated physicians are more responsive to price capitated plans send patients further to utilize similar quality lower priced hospitals but the cost quality trade odoes not vary with capitation rates the patient protection and aordable care act of 2010 includes provisions to establish ac countable care organizations acos in the medicare program these are groups of health care providers that oer services to a large number of patients and are eligible to share in any cost savings they achieve for the medicare program 1 private sector acos are forming in parallel to this initiative often with very similar structures and payment arrangements the proportion of savings acos keep is linked to their performance on quality standards the goal of the initiative is to reduce health care costs in both medicare and private insurance and to improve coordination of care the tying of cost savings to quality standards is designed to mitigate the concern that an increase in incentives to control costs might lead to a decrease in the quality of care the health policy literature has noted that similar cost control incentives are currently utilized by some health maintenance organizations hmos in california and elsewhere 2 in this paper we investigate the impact of these incentives on the cost and quality of care provided to patients focusing in particular on the choice of hospital for privately insured patients giving birth we use

central bank independence a critical view from a developing country perspective abstract merely establishing an independent central bank may not bring about its professed benefits in developing countries with shallow financial markets where there is limited scope for a truly independent monetary policy the benefits of an independent central bank may be eroded by conflicts between fiscal and monetary policy and by inherent problems of central bank institutional design so that problems of dynamic inconsistency associated with monetary policy are not solved but merely transformed less developed countries wishing to establish a low inflation path should concentrate on instituting financial policy reforms that bolster opposition to inflation and institutional arrangements that force discipline on fiscal policy directly rather than indirectly through monetary policy

a critical assessment of measures of central bank independence the methodology of measuring central bank independence suggested by bade and parkin three decades ago and inverse correlations between the measures and inflation have been widely accepted the measurement literature has made important contributions identifying elements of institutional design that establish the relationship between the central bank and the government and the measurements from an ordinal perspective provide some useful insights about the major institutional redesigns of central banks during the past several decades at the same time the measurement literature is problematic first a dummy variable bifurcating central banks into groups of independent and less independent central banks can duplicate the standard correlations suggesting the information content of the specific measures is limited second the correlations between inflation and measures of independence are not as stable as claimed and most important the measurements are subject to classification problems that have not been fully appreciated review of the institutional design and history of the bank of korea bank of japan and the federal reserve provide evidence the classification problems are important the measures of independence are more appropriately regarded as ordinal rankings of central bank independence rather than considered cardinal measures suitable for econometric modeling jel e50 e58 e65

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

political institutions and central bank independence a cross country analysis using three quantitative measures of central bank independence we apply ols and tsls regression methods to investigate the possible correlation between political liberty political instability and central bank independence for a sample of western democracies and highly democratic developing countries we show that cukierman s legal independence index is positively correlated with political freedom and regime political stability it is negatively correlated with party political stability for a sample of developing countries that excludes dictatorships we show that a special index of legal central bank autonomy is positively associated with political freedom and political stability finally we observe that for the same sample of nations the turnover index of central bank independence is not sensitive to our political variables

the supply of charity services by nonprofit hospitals motives and market structure this article studies provision of charity care by private nonprofit hospitals we demonstrate that in the absence of large positive income effects on charity care supply convex preferences for the nonprofit hospital imply crowding out by other private or government hospitals extending our model to include impure altruism rivalry provides a possible explanation for the previously reported empirical result that both crowding out and income effects on indigent care supply are often weak or insignificant empirical analysis of data for hospitals in maryland provides evidence of rivalry on the supply of charity care

corruption a review as is increasingly recognised in academic literature and by international organisations corruption acts as a major deterrent to growth and development the aim of this survey is to organise and summarise existing theoretical and empirical work on corruption with a view to identifying opportunities for further research the paper begins with a brief overview of key definitions of corruption and then turns to a review of the factors that favour or deter the growth of corruption together with a brief look at related models this is followed by an examination of the consequences of corruption for society and the consideration of measures that might help to reduce corruption the paper ends with suggestions for future research and includes summaries of data sources and key variables for use in this research

rules and discretion with noncoordinated monetary and fiscal policies the time inconsistency of optimal monetary policy is due to the effects of tax distortions thus the issue of how to improve upon the time consistent suboptimal monetary policy is related to that of the coordination of monetary and fiscal policy we present a model with three players the central bark the fiscal authority and wage setters in which distortionary taxes are explicitly modelled we show that binding commitments to monetary rules are not necessarily welfare improving if monetary and fiscal policy are not coordinated we also examine the effects of different degrees of independence of the central bank

central bank independence and public debt policy the various proposals for the institutional design of the european monetary union have drawn fresh attention to the link between monetary and public debt policies this paper explores the strategic interaction between fiscal authorities setting public debt and the central bank controlling monetary policy in the absence of political distortions an optimally designed conservative independent central bank is sufficient to establish the second best in the presence of political distortions or with coordination of monetary and fiscal policy however also a debt target is needed

insurer hospital bargaining negotiated discounts in post deregulation connecticut this paper uses unique data from the state of connecticut to examine discounting patterns in the state s hospital industry for the years following deregulation 1995 1998 the data provide a rare opportunity to study payer level differences in negotiated discounts for hospital services in addition to presenting descriptive evidence on how discounts vary across payers payer types and hospital types this study uses matched revenue data to analyze the economic determinants of discount magnitudes payer size appears to affect bargaining power but the economic significance of the effect is small the data exhibit patterns consistent with a bargaining explanation in which discount magnitudes depend critically on payers abilities to channel patients to hospitals with which favorable discounts have been negotiated

the effects of regulation and competition in the nhs internal market the case of general practice fundholder prices the 1989 reforms of the uk national health service introduced competition in supply within a tightly regulated framework the paper examines whether this competition affects the prices posted by sellers of medical services we argue that despite regulation market forces may have an impact on price we test this using the posted prices for one of the two types of buyer general practice fundholders we find the regulatory rules are not observed and some evidence of the impact of market forces on price

impact of information technology capital on firm scope and performance the role of asset characteristics this research draws on transaction cost and resource based theory to examine how information technology it capital moderates the relationship between different types of assets and firm scope both vertical integration and diversification the analysis suggests that it capital enables firms with narrowly valuable assets to be less vertically integrated and less diversified and enables firms with broadly valuable assets to be more vertically integrated and more diversified the moderating influence of it capital on the relationship between different types of assets and firms vertical and product market scope is consistent with transaction cost as well as resource based traditions abstract from author

who wants an independent central bank monetary policy making and politics the costs and benefits of cooperative monetary and fiscal policy are analysed in the framework of a partisan business cycles model it is shown that political parties with different ideologies prefer to choose different arrangements for macroeconomic policy making more specifically right wing parties favour independent central banks more than left wing parties an independent central bank is also the generally preferred option from a social welfare point of view in addition the form of policy making arrangements between the fiscal and monetary authorities is shown to influence the extent of partisan cycles

testing commitment models of monetary policy evidence from oecd economies in ation rates in a number of oecd follow a common trend over the past four decades in ation starts out low in the 1960s rises for a time before peaking in the 1970s or early 1980s and then falls back to initial levels this similarity in the behavior of trend in ation suggests that any explanation of long run in ation trends ought to apply across oecd countries ireland 1999 shows that a simple time inconsistency model of monetary policy modifled to allow for a time varying nairu can explain long run trends in u s in ation in this paper we show that this result cannot serve as an explanation of the common trend in oecd in ation as it flts the data only in the u s we investigate two important variants of the hypothesis i that time inconsistency was an important component of central bank behavior in earlier decades but has become less signiflcant in recent years and ii that time inconsistency problems drive u s in ation which afiects in ation rates in other countries as a result of central bankers attempts to manage nominal exchange rate movements vis a vis the u s dollar we flnd that the flrst hypothesis flts the data no better than the baseline model we flnd some support for the international spillovers version of the model but the behavior of non u s central bankers with respect to domestic unemployment rates is not well described by the time inconsistency mechanism

evil is the root of all money plenary talk delivered at the annual meeting of the society for economic dynamics this abstract was borrowed from another version of this item

revenue decentralization and inflation a re evaluation abstract a problematic feature of the existing empirical literature on the relationship between revenue decentralization rd and inflation is the use of inaccurate measures for rd using a newly constructed measure for rd that accounts for over time changes in sub national tax autonomy this paper finds that rd leads to lower inflation

electoral governance matters explaining the quality of elections in contemporary latin america this article provides a systematic cross national analysis of the role of electoral administration in explaining acceptable democratic presidential elections in 19 countries in latin america since the year 1980 or the first pivotal transitional election the authors provide two alternative measures of election administration one focused on the degree of partisanship or professional independence and another on formal legal institutional independence as well as on other key factors to test partial proportional odds ordered logit models predicting the probability of an acceptable flawed or failed electoral process the results show an important positive role for professional independent electoral commissions on electoral outcomes in latin america controlling for other socioeconomic and political factors formal legal independence matters when the rules of the game are likely to be respected in addition low quality elections are found disproportionately where incumbents seek reelection and where vic

revenue decentralization and income distribution abstract due to varying local revenue collection capacities and interest group activities revenue decentralization rd may lead to increased inequality this paper provides empirical evidence however that if coupled with good governance rd could improve income distribution

market structure and prices the responses of hospitals in the uk national health service to competition abstract the internal market reforms to the uk national health service nhs are a model adopted in many health care systems they introduce competition in supply little is known about the impact of these reforms this paper examines the pricing responses of nhs suppliers to competition the incentives of the reformed system are analysed these indicate that prices should differ between buyers and markets these hypotheses are tested using data on spot market transactions between hospitals and health care buyers the results indicate considerable price variability but offer broad support for the hypotheses

further evidence on revenue decentralization and inflation abstract results from a panel regression study of 19 oecd member countries suggest that when the measure of revenue decentralization is limited to the revenues over which sub national governments have full autonomy its impact on inflation is not statistically significant

who chooses to inflation target abstract in this article we seek what are the factors behind a country s decision to move to inflation targeting we find that high past inflation low debt levels and the absence of a nominal exchange rate anchor increase the probability that a country will end up opting for it

employment horizon and the choice of performance measures empirical evidence from annual bonus plans of loss making entities we examine the extent to which employment horizon concerns affect the relative emphasis on financial versus nonfinancial performance measures in annual bonus plans we argue that managers of loss making firms are likely to voluntarily or forcibly depart in the near future and consequently have a shorter employment horizon loss making firms then need to increase the emphasis on forward looking nonfinancial performance measures to motivate long term effort of their managers thus we hypothesize that the emphasis on nonfinancial performance measures is greater in loss making than in profitable firms even after controlling for the informativeness of earnings we find consistent support for our hypothesis using different archival survey and field data sources and various proxies for short employment horizon and the emphasis on nonfinancial performance measures

measuring customer relationships the case of the retail banking industry arguing that gaap is ill suited for estimating the future profitability of intangibles the accounting literature e g kaplan and norton 1996 lev 2001 has recently proposed alternative measurement models these models view intangibles as composed of a set of fundamental business activities and use multiple financial and nonfinancial metrics causally interlinked to profits to represent this view using a unique and proprietary cross sectional data set of the retail banking industry we provide some of the first tests on the empirical validity of such measurement models we characterize the core deposit intangible an important retail banking intangible representing a bank s relationships with its customers using financial and nonfinancial metrics on price service customer usage and customer satisfaction we find that the metrics do not individually predict future earnings but gain individual significance in a collective setting increasing the predictive power substantially we argue that this result occurs because the activities underlying the measures are causally interlinked to profits and explicitly illustrate these linkages with a structural path model our measurement model also predicts significant interactive effects in the way our measures are informative about future profits and we document such effects not just among the individual measures but also across the measures and environmental factors such as the bank s strategy in sum our measurement model illustrates the key drivers measures and interactions in retail banking customer relationships

fiscal decentralization central bank independence and inflation abstract we develop earlier cross sectional studies of inflation rates by adding the degree of tax centralization as another explanatory variable this makes central bank independence perform appreciably better as an explanatory variable also we find that centralized countries have higher inflation

political influence on the central bank international evidence political influence on the central bank is measured bere by looking at the probability that a central bank governor will be replaced shortly after a political change of government the governor changes about half the time witbin six months of a nonconstitutional or other radical change of government a military coup or a restoration of democracy the governor is much less likely to change within six months following a routine change in the head of government about one fourth of the time in developing countries and one tenth in industrial countries these indicators vary across countries and correlate statistically with inflation and its variability and with real growth and real interest rates differences in the vulnerability of the central bank to political instability in political instability itself and in central bank turnover in nonpolitical periods seem to be a major part of the explanation for why developing countries have on average higher and more variable inflation than industrial countries do

nonprofit hospital mergers and the exercise of market power government challenges to mergers within the hospital industry have become more frequent many of those mergers involve nonprofit organizations rather than the for profit firms that are the norm in most other industries this difference in ownership has made no apparent difference in the antitrust agencies approach to proposed hospital mergers in this article i test the proposition that nonprofit and for profit hospitals price differently in response to the structure of the markets in which they compete based on a cross sectional analysis of california hospitals i find that estimated merger effects on hospital prices do vary by type of ownership in response to either higher market share or to the joint combination of higher share and higher market concentration private nonprofit hospital prices are statistically significantly lower than for profit hospital prices and on balance in this sample there is no evidence of any systematic price increasing effect on private nonprofit hospitals

financial system development in transition economies this paper provides an overview of the major issues with respect to financial system development in transition economies which were discussed at a conference in groningen the netherlands december 1997 after a brief remark on the role of financial system design during economic transition the paper focuses on the role of stock markets in the process of financial intermediation with emphasis on the role of regulations in these markets the role of deposit insurance to improve bank system stability and the importance of an independent central bank measurement issues relating to central bank independence and its impact on inflation and growth 2000 elsevier science b v all rights reserved

the effectiveness of monetary policy anchors firm level evidence analyses of monetary policy posit that exchange rate pegs inflation targets and central bank independence can help anchor private sector inflation expec tations yet there are few direct tests of this argument we offer cross national micro level evidence on the effectiveness of monetary anchors in controlling private sector inflation concerns using firm level data from eighty one countries approximately 10 000 firms we find evidence that international anchors exchange rate commit ments correlate significantly with a substantial reduction in private sector concerns about inflation while domestic anchors inflation targeting and central bank inde pendence do not our conjecture is that private sector inflation expectations are more responsive to exchange rate anchors because they are more transparent more con straining and more costly than domestic anchoring arrangements the literature on monetary policy highlights the role of monetary institutions in stabilizing private sector inflation expectations central bank independence cbi inflation targeting it and fixed exchange rates pegs are widely viewed as insti tutions that have the capacity to mitigate private sector concerns that policymak ers will exploit them after they have locked in their price wage and investment decisions while other empirical research explores the institutional correlates of inflation and its variability yielding mixed results we use firm level data in our study to directly assess the impact of monetary anchors on private sector inflation concerns we find evidence that pegs mitigate firm owners concerns with infla tion but that domestic anchors such as it and cbi are uncorrelated with our micro indicators of inflation expectations considerable research has investigated the use of it cbi and pegs as institu tions that establish monetary policy credibility whereas these anchors are expected

the relationship between hospital mortality rates and hospital market and patient characteristics this study analyses the relationship between hospital outcome specifically mortality rates and various hospital and market characteristics the data are for all general acute care hospitals in california in 1991 that had at least 50 medicare cases selected by the health care financing administration hcfa for their computation of 1991 observed and predicted mortality rates the dependent variable was constructed from these mortality rates hospital and market characteristics were obtained from california s office of statewide health planning and development 1991 tapes the american hospital association s annual 1991 report 1990 census data and hcfa s 1991 medicare hospital mortality information report highly significant results p 0 01 were found for three of the predictor variables improved mortality rates were associated with a lower proportion of medicaid patients with a larger market and with a higher prior year profit margin other factors that contributed to improved mortality rates p

price and concentration in hospital markets the switch from patient driven to payer driven competition perhaps the most widely accepted paradigm of industrial organization i o is that competition lowers prices or alternatively that price cost margins are lower in less concentrated markets 1 the applicability of this paradigm for hospital markets has been questioned for example in united states vs carilion health system and roanoke valley hospital the district and appellate courts accepted evidence that hospital prices are lower in more concentrated markets and thereby approved a merger between the two largest hospitals in a three hospital market 2 the view that competition has a weak or perverse effect on hospital prices is shared by a number of researchers 3 is a common theme in newspaper stories

fiscal decentralization central bank independence and inflation a panel investigation we reinvestigate the relationship between revenue decentralization rd central bank independence cbi and inflation by modifying the paper by eco 72 2001 95 we show that in contrast to the earlier findings rd has a negative impact on inflation if accompanied by both cbi and local accountability in low inflation countries however rd has a negative impact on inflation even without these additional factors though cbi accentuates this effect

how citizens participate in macroeconomic policy international experience and implications for poverty reduction summary many developing and transitioning countries have difficulty sticking to sound macroeconomic policy international donors are pushing recipient countries to forge a public consensus on macroeconomic policy as a means to enhance sustainability and impacts on the poor finance and budget officials central bank staff and economic policymakers however often assume that citizens cannot understand or contribute to macroeconomic policy yet the poor often do not trust the government to make the right decisions for them how can citizen participation help bridge this gap based on a review of international experience the paper explores this question and identifies how development administrators can employ civic participation in macroeconomic policy the discussion highlights where citizens have the greatest options for participation and notes the impacts participation can have on fostering policies and outcomes that target poverty reduction 2003 elsevier science ltd all rights reserved

the political economy of monetary institutions in recent decades countries have experimented with a variety of monetary institutions including alternative exchange rate arrangements and different levels of central bank independence political economists have analyzed the choice of these institutions emphasizing their role in resolving both the time inconsistency problem and dilemmas created by an open economy this first generation work however suffers from a central limitation it studies exchange rate regimes and central bank institutions in isolation from one another without investigating how one monetary institution affects the costs and benefits of the other by contrast the contributors to this volume analyze the choice of exchange rate regime and central bank independence together and in so doing present a second generation of research on the determinants of monetary institutions the articles incorporate both economic and political factors in explaining the choice of monetary institutions investigating how political institutions democratic processes political party competition and interest group pressures affect the balance between economic and distributional policy objectives

how does fiscal decentralization affect aggregate national and subnational government size abstract beyond conducting the usual regression analysis of the relationship between fiscal decentralization and aggregate government size national and subnational combined this paper makes the first attempt to examine how different fiscal decentralization measures affect the sizes of national and subnational state and local combined governments an econometric analysis using panel data from 32 industrial and developing countries 1980 1994 finds that 1 expenditure decentralization leads to smaller national governments larger subnational governments and larger aggregate governments 2 revenue decentralization increases subnational governments by less than it reduces national governments hence leads to smaller aggregate governments and 3 vertical imbalance tends to increase the sizes of subnational national and aggregate governments

domestic capacity and the implementation gap in regional trade agreements regional trade agreements rtas all over the world share many of the same institutional features from dispute settlement mechanisms to legalized language to escape clauses and espouse many of the same goals but many of those features are unimplemented in different contexts across the world many observers have pointed to an implementation gap in rtas most of which promise much but deliver relatively little but offer no explanation for this gap i argue that this is explained by domestic capacity in countries where the rule of law is weak and infrastructure is insufficient and particularly when those elements interact it is difficult to implement trade agreements this article utilizes expert survey data to demonstrate that member states with poor infrastructure and little respect for the rule of law are unable to carry out the obligations they agree to in their trade agreements domestic capacity both physical and institutional can explain the implementation gap between what agreements promise and wh

managed care s price bargaining with hospitals research has shown that managed care mc slowed the rate of growth in health care spending in the 1990s primarily via lower unit prices paid however the mechanism of mc s price bargaining has not been well studied this article uses a unique panel dataset with actual hospital prices in massachusetts between 1994 and 2000 to examine the sources of mc s bargaining power i find two significant determinants of price discounts first plans with large memberships are able to extract volume discounts across hospitals second health plans that are more successful at channeling patients can extract greater discounts patient channeling can add to the volume discount that plans negotiate

central bank reform liberalization and inflation in transition economies an international perspective this paper develops extensive new data on the legal independence of new central banks in 26 former socialist economies fse this data is constructed using the codification system for measuring legal independence developed in cukierman webb and neyapti 1992 and in chapter 19 of cukierman 1992 this makes it comparable with earlier data on central bank independence cbi in the industrial democracies and in non fse developing countries and permits experimentation with alternative indices of cbi like those reviewed in eijffinger and van keulen 1995 the new indices of independence indicate that central bank cb reform in the fse during the nineties has been quite ambitious in spite of the large price shocks induced by the transformation from plan to market reformers in those countries chose to create central banks with levels of legal independence that are substantially higher on average than those of developed economies during the eighties based on data from 1989 through 1998 the evidence in the paper suggests that cbi is unrelated to inflation during the early stages of liberalization but for sufficiently high and sustained levels of liberalization and controlling for variables like price decontrols and wars legal cbi and inflation are significantly and negatively related these findings are consistent with the view that legal cbi no matter how high cannot contain the powerful inflationary impact of wide scale liberalization of formerly controlled prices but once the process of liberalization has gathered sufficient momentum legal independence becomes effective in slowing inflation down and the cumulative liberalization index developed by de melo et al 1996 becomes relatively less important the paper also presents evidence on factors that affect the level of cbi and examines the relation between inflation and cbi within a broader sample composed of the transition and of the developed economies

macro prudential governance and central banks facts and drivers abstract the great crisis has highlighted the importance of establishing macro prudential architectures to address problems of financial stability central banks are always part of macro prudential settings but their role is far from being homogeneous across countries reflecting the fact that according to economic theory there are pros and cons in extending central bank influence to macro prudential supervision the issue is then genuinely empirical are there any meaningful drivers explaining the actual choices made by policymakers about the central bank s role in macro prudential governance we identify three potential drivers micro supervision involvement monetary policy discretion overall institutional independence and test for their relevance by analysing current institutional settings in 31 advanced and emerging market economies we find that central bankers already in charge of micro supervision and less politically independent are more likely to get extended macro prudential powers the same is true if they have low monetary policy discretion being constrained by a monetary stability objective we interpret these results by using a political economy perspective

debt inflation and central bank independence abstract increasing the independence of a central bank from political influence although ex ante socially beneficial and initially successful in reducing inflation would ultimately fail to lower inflation permanently the smaller anticipated policy distortions implemented by a more independent central bank would induce the fiscal authority to decrease current distortions by increasing the deficit over time inflation would increase to accommodate a higher public debt by contrast imposing a strict inflation target would lower inflation permanently and insulate the primary deficit from political distortions

the effect of central bank independence on inflation in developing countries abstract ismihan and ozkan ismihan m ozkan f g 2004 does central bank independence lower inflation economics letters 84 305 309 provide theoretical support for prior studies empirical findings of positive or no significant relationship between central bank independence cbi and average inflation performance the present paper argues that these findings are spurious because the studies use an econometric methodology that does not account for the measurement error in their proxies for cbi this paper employs an econometric methodology that does account for this measurement error and finds a strong negative relationship between cbi and inflation even though the sample is limited to developing countries

does the dynamic time consistency model of inflation explain cross country differences in inflations dynamics dynamic time consistency models of monetary policy imply that the size of the inflationary response to price shocks and the persistence of inflation is inversely related to factors that enhance the central bank s ability to commit to low average inflation hence these models predict that the dynamics of inflation vary over time and across countries in response to changes in measures of political support for low inflation we find support for this hypothesis in data fromeighteen oecd countries over the period 1961 94 however political variables account for only a small fraction of the variation in inflation dynamics across countries 2004 elsevier ltd all rights reserved

reconsidering the principal components of central bank independence the more the merrier we use principal component analysis to reassess the link between different attributes of central bank independence and inflation performance we suggest that coding problems may account for the fact that almost none of the attributes included in the cukierman index has a systematic plausible relationship with inflation the multi faceted cukierman index also seems to be out performed by a much narrower index focusing solely on policy independence these findings point to the importance of using public choice analysis to isolate the real problem here namely finding specific central bank structures that effectively insulate central bankers from political pressures

fair value disclosures by bank holding companies abstract this paper examines the value relevance of fair value data disclosed under sfas 107 by banks for 1992 and 1993 collectively the evidence suggests differences between fair and book values of financial instruments are associated with market to book ratios however fair value disclosures for financial instruments other than securities are value relevant only in limited settings in addition only in 1992 are fair value variables associated with market to book ratios after incorporating existing historical cost information further analysis suggests the weaker 1993 results are not necessarily due to increased measurement error in fair value numbers

the interplay between forward looking measures and target setting we examine whether financial targets are based on both forward looking and financial information rather than on financial information only we collect sales and performance appraisal data of store managers in a retail chain the firm issues directives focused on the provision of excellent customer service and assesses store managers compliance with these directives subjectively we demonstrate that controlling for current sales compliance with directives scores predicts future sales performance we find that next to objective sales information this forward looking information is impounded in the next year s sales target finally we find some evidence that suggests that incorporating forward looking information improves the accuracy of sales targets this paper was accepted by mary barth accounting

central bank independence and inflation good news and bad news abstract the bad news is that the findings of recent studies of central bank independence and inflation are very sensitive to outliers the good news is that evidence presented here reinforces the existing case for bank independence in high income economies

central bank independence and the monetary instrument problem we study the monetary instrument problem in a dynamic noncooperative game between separate discretionary fiscal and monetary policy makers we show that monetary instruments are equivalent only if the policy makers objectives are perfectly aligned otherwise an instrument problem exists when the central bank is benevolent while the fiscal authority is short sighted relative to the private sector excessive public spending and debt emerge under a money growth policy but not under an interest rate policy despite this property the interest rate is not necessarily the optimal instrument

central bank independence and macroeconomic performance some comparative evidence this note uses information on a sample of sixteen oecd countries to assess the relationship between central bank independence and macroeconomic performance as previous work suggests politically controlled central banks are more likely to pursue policies that lead to high and variable inflation however the authors find little evidence that political control of central bank policy has any impact on measures of the level or variability of growth unemployment or the ex ante real interest rate copyright 1993 by ohio state university press

inflation and central bank independence a meta regression analysis using 59 studies we perform a meta regression analysis of studies examining the relationship between inflation and central bank independence cbi the studies considered are very different with respect to the cbi indicator used the sample of countries and time periods covered model specification estimators used and publication outlet we conclude that there is a significant publication bias however we also find a significant genuine effect of cbi on inflation differences between studies are not caused by differences in cbi indicators used

does central bank independence lower inflation this paper provides a potential explanation for the recent findings of no significant relationship between central bank independence cbi and lower inflation we argue that although cbi delivers lower inflation in the short term it may reduce the scope for productivity enhancing public investment and so harm future growth potential we also argue that the effects on growth make cbi less likely to achieve lower inflation in the long term

monopoly monopsony and contestability in health insurance a study of blue cross plans i introduction blue cross and blue shield plans the plans have historically occupied a unique niche in health care pauly 1987 notes that the plans serve both as sellers of health insurance and as buyers of health services marmor 1991 described the plans development of health insurance concepts in the 1930s their role as innovators permitted them to occupy a dominant market share position in most geographic areas as a result blair ginsburg and vogel 1975 believe they have traditionally received favorable regulatory treatment including non profit organization status and exemption from taxation potentially the plans have dual market power 1 monopoly power in the market for health insurance and monopsony power in the market for health services this may result in operating inefficiencies and may produce adverse welfare consequences monopsony theory posits that the plans will reduce payments to providers and may stifle innovation in the market for health services this occurs as the result of the plans dominant market shares generated from the fact that they were often the first in the market for insurance and from their ability to enforce a credible threat to reduce providers business should providers refuse to provide reduced cost services the plans dominant market share and their advantage in the market for health services permit them to maintain a competitive advantage in the market for health insurance 2 monopoly theory suggests that the plans advantage in the market for medical services due to regulatory and tax advantages will cause them to i raise premium prices ii sell only a limited range of health insurance policies iii offer policies with more complete coverage than consumers demand 3 iv reduce innovation in the health insurance market and v demonstrate unduly high administrative costs in the 1970s empirical work supported these predictions however the 1980s has been an era of growth of competition and the potential for even more competition in the market for health insurance baumol panzar and willig 1982a noted that a credible threat of entry can produce competitive market conditions in a concentrated market resulting in reduced prices increased quantity and more efficient administrative cost structures if pauly is correct that there are no inherent scale economies in the health insurance market and if the market for health insurance is contestable the plans will pass advantages along to subscribers as reduced premiums and will tolerate fewer administrative cost inefficiencies accordingly the plans present an opportunity to study market structure and its impact in both the market for health care and the market for health care insurance to date no study has evaluated this interplay greater understanding of these interactions is important not only to deal with the phenomena of the plans for instance more appropriate regulatory policies but also to refine the single payer debate and to consider operating standards for health alliances and health plans included in the administration s health care reform package outlined by the white house domestic policy council 1993 section ii of this paper evaluates prior studies of the plans section iii motivates the model for plan behavior section iv describes the results of our empirical study of the plans premium pricing provider payment and administrative costs section v contains our conclusions ii prior studies of plan behavior a number of prior studies have evaluated the plans unique position in the market for health insurance and in the market for health care most focus on the plans monopsony power and payments to providers most important they evaluate markets that have gone through substantial change as health maintenance organizations and preferred provider organizations hmos and ppos have replaced fee for service plans several assess market power and administrative costs

on the joint determination of fiscal and monetary policy abstract the conduct of fiscal and monetary policy absent commitment depends on the interaction between the objective of smoothing distortions intertemporally and a time consistency problem when net nominal government obligations are positive both fiscal and monetary policies are distortionary and the choice of debt depends on how the anticipated response in future monetary policy affects the current demand for money and bonds there exists a unique steady state with positive net nominal government obligations which is stable and time consistent for any initial level of debt the welfare loss due to lack of commitment is small

inflation and central bank independence revisited abstract king and ma economics letters 72 2001 95 claim that evidence which they report for a sample of 42 countries shows that central bank independence cbi and inflation are not significantly related the present paper argues that this putative failure of cbi to affect inflation is due to king and ma s use of an econometric methodology that does not account for the inaccuracy of their proxy for cbi employing an alternative econometric methodology that tackles the measurement error problem directly this paper finds a strong negative relationship between cbi and inflation

fiscal decentralization fiscal rules and fiscal discipline fiscal decentralization fd and fiscal rules fr are institutional mechanisms that are implemented by varying degrees in increasing number of countries this paper investigates empirically the effect of fr on the effectiveness of fd in achieving fiscal discipline panel evidence strongly supports that balanced budget and expenditure rules help fd to achieve this goal while debt rule has a direct disciplinary effect

decentralization and inflation commitment collective action or continuity do political and fiscal decentralization make it easier or harder to control inflation statistical analysis of average annual inflation rates in a panel of 87 countries in the 1970s and 1980s found no clear relationship between decentralization and the level of inflation political decentralization however does appear to reduce change in countries relative inflation rates over time by creating additional veto players federal structure may lock in existing patterns of monetary policy whether inflationary or strict among the mostly developed countries that started with low inflation inflation tended to increase more slowly in federations than in unitary states among the mostly developing countries that started with high inflation inflation tended to increase faster in the federations there is evidence that political decentralization locks in a country s degree of practical central bank independence whether high or low and the relative hardness or softness of budget constraints on subnational governments

assessing empirical research in managerial accounting a value based management perspective this paper applies a value based management framework to critically review empirical research in managerial accounting this framework enables us to place the exceptionally diverse set of managerial accounting studies from the past several decades into an integrated structure our synthesis highlights the many consistent results in prior research identifies remaining gaps and inconsistencies discusses common methodological and econometric problems and suggests fruitful avenues for future managerial accounting research

inflation and central bank independence conventional wisdom redux until recently there existed a broad consensus that an important institution for combating inflation is a central bank insulated from political influence this conventional wisdom has been challenged by among others campillo and miron 1997 who present evidence purporting to show that if an inflation regression equation is expanded to include not only their proxy for central bank independence cbi but other regressors as well then the negative correlation between inflation and cbi vanishes the present paper argues that allegations of the demise of this nexus should not be accepted uncritically this paper which reports the results of an analysis of covariance structures finds a strong negative relationship between inflation and cbi

does central bank independence really matter new evidence for developing countries using a new indicator abstract this paper provides a new indicator for central bank independence cbi based on the turnover rate of central bank governors for 82 developing countries over the period 1980 1989 using this new indicator it is concluded that this proxy for cbi is related to inflation only if the high inflation countries are included in the sample the view that both cbi and inflation are caused by effective opposition towards inflation is not supported using both the extreme bound analysis and sala i martin s method we do not find evidence that cbi is robustly related to economic growth

checks and balances and the supply of central bank independence abstract the paper analyzes the institutional conditions under which policymakers can credibly commit to an independent central bank and thereby mitigate the well known time consistency problem in monetary policy it is shown theoretically that granting independence via a statute is only credible for legislative systems with at least two heterogeneous decision making bodies which both have veto rights for example bicameral systems this thesis is supported by empirical evidence the legal independence of central banks is significantly higher in those oecd countries whose legislative processes are characterized by extensive checks and balances furthermore the negative relation between legal independence and inflation is larger in countries with checks and balances than in countries without checks and balances

replacing a disobedient central bank governor with a docile one a novel measure of central bank independence and its effect on inflation this paper identifies two mechanisms that empirical papers on central bank independence assume to be embedded in the yardstick measure of turnover rate of central bank governor i the removal of a governor who is perceived as a challenger by the government and ii whether his her replacement is an ally of the government we identify the first mechanism with premature exits of central bankers and the second by examining whether or not the incoming governor is drawn from the ranks of the executive branch of the government we find that only premature exits and replacements with government allies increase inflation

competition between non profit and for profit health insurers this study investigates the effects of tax regulatory and reimbursement policies and other factors exogenous to the health insurance market on the relative price to commercial insurers paid by blue cross plans for hospital care their administrative expense and accounting profits premiums and ultimately blue cross market share we specify and estimate a simultaneous equation model to assess interrelationships among these variables we conclude that premium tax advantages enjoyed by the blues have virtually no effect on the blues premiums or their market shares a blue cross plan s market share has a positive effect on the discount it obtains from hospitals as does coverage of blue shield charges by a state mandated rate setting plan an upper bound on the effect on the blue cross market share of covering blue cross under rate setting but excluding the commercials from such coverage is seven percentage points tests for administrative slack in the operation of blue cross plans yield mixed results

the effects of market structure and bargaining position on hospital prices ppos and hmos have gained widespread acceptance due in part to the belief that excess capacity and competitive market conditions can be leveraged to negotiate lower prices with health care providers we investigated prices obtained in different types of markets by the largest ppo in california our findings indicate that greater hospital competition leads to lower prices furthermore as the importance of a hospital to the ppo in an area increases the price rises substantially our testing of alternative methods for defining hospital geographic markets reveals that the common practice of using counties to define the market leads to an underestimate of the price increasing effects of a merger

central bank independence and monetary control ing from details these conclusions imply that inflation is lower the higher is cbi and that given independence countries that pre announce monetary policy have even lower rates of inflation furthermore there is no evidence that cbi retards growth or investment as a matter of fact for ldcs the evidence points in the opposite direction low independence is associated with lower growth and investment some economists feel that excessive independence may interfere with the potential stabilisatory function of monetary policy since fluctuations in the growth rate of the economy are found to be unrelated to cbi this does not appear to be the case iii commitment via central bank independence and

mobile capital domestic institutions and electorally induced monetary and fiscal policy the literature on global integration and national policy autonomy often ignores a central result from open economy macroeconomics capital mobility constrains monetary policy when the exchange rate is fixed and fiscal policy when the exchange rate is flexible similarly examinations of the electoral determinants of monetary and fiscal policy typically ignore international pressures altogether we develop a formal model to analyze the interaction between fiscal and monetary policymakers under various exchange rate regimes and the degrees of central bank independence we test the model using data from oecd countries we find evidence that preelectoral monetary expansions occur only when the exchange rate is flexible and central bank independence is low preelectoral fiscal expansions occur when the exchange rate is fixed we then explore the implications of our model for arguments that emphasize the partisan sources of macroeconomic policy and for the conduct of fiscal policy after economic and monetary union in europe

money is memory abstract this paper examines the sets of feasible allocations in a large class of economic environments in which commitment is impossible following myerson 8 the standard definition of feasibility is adapted to take account of the lack of commitment the environments feature either memory or money memory is defined as knowledge on the part of an agent of the full histories of all agents with whom he has had direct or indirect contact in the past money is defined as an object that does not enter utility or production functions and is available in fixed supply the main proposition is that any allocation that is feasible in an environment with money is also feasible in the same environment with memory depending on the environment the converse may or may not be true hence from a technological point of view money is equivalent to a primitive form of memory journal of economic literature classification numbers e40 c73 d82

on the impossibility of central bank independence four decades of time and intellectual inconsistency the intellectual justification for modern central banking time inconsistency celebrated its fortieth anniversary in 2017 alongside the cambridge journal of economics however the key progeny of the time inconsistency literature central bank independence has fundamental flaws that have been thus far neglected in mainstream research in the first instance the argument for independence relies on a utilitarian rather than institutional analysis one that neglects the genesis of central banks and their relation to other institutions within a country second central bank independence neglects the complex interdependencies of the global monetary and financial system applying an institutional lens to the concept of central bank independence i conclude that independence fails under the reality of globalization as much as it does in a domestic context with central banks reliant on all manner of political institutions they are never really independent operationally or in terms of policy

do central bank law reforms affect the term in office of central bank governors in this paper we confirm the hypothesis that central bank independence reforms reduce the likelihood that a central bank governor will be replaced however the strength of this effect depends on the rule of law and the degree of political polarization c 2009 elsevier b v all rights reserved

who is afraid of political instability abstract an unstable macroeconomic environment is often regarded as detrimental to economic growth among the sources contributing to such instability much of the blame has been assigned to political issues this paper empirically tests for a causal and negative long run relation between political instability and economic growth but finds no evidence of such a relationship sensitivity analysis indicates that there is a contemporaneous negative relationship but also that in the long run and ignoring institutional factors the group of african countries plays the determining role

hospital profits the effects of reimbursement policies this paper provides a theoretical and empirical analysis of the effect of cost based reimbursement cbr on hospital costs and charges it takes issue with previous analyses which have treated cbr as paying economic costs plus a mark up and have concluded that the mark up is too small to significantly distort hospital decision making the basic thesis here is that if reimbursement is based on costs accounting costs become a price to cost paying patients and will be optimized to maximize revenue a hospital serving both cost and charge paying private patients can set two price schedules accounting profits ratio of charges to costs are not a measure of economic profit but of relative prices to these two groups of patients in the absence of constraints from regulation or patient co payment the optimum level of accounting costs would be infinite in practice the medicare reimbursement formula links allowable costs to charges received from charge paying patients this formula creates incentives for the hospital to raise charges above the single price profit maximizing monopoly level this inflationary effect of the medicare formula does not presuppose that medicare pays less than full cost the empirical analysis of hospital laboratory costs and charges generally supports the predictions for other departments the conclusions are consistent but more tentative because of data limitations overall evidence suggests minimal cross subsidy between cost and charge paying patients comparisons of cost and charge levels in for profit voluntary non profit and government hospitals are presented but it is emphasized that inferences about relative efficiency and profitability cannot be drawn from accounting data given the incentives created by cbr

central bank independence centralization of wage bargaining inflation and unemployment theory and some evidence abstract this paper proposes a conceptual framework to investigate the effects of central bank independence of the degree of centralization of wage bargaining and of the interaction between those institutional variables on real wages unemployment and inflation in a framework in which unions are averse to inflation this aversion moderates union s wage demands as they attempt to induce the central bank to inflate at a lower rate an increase in the degree of centralization of wage bargaining a decrease in the number of unions triggers two opposite effects on real wages unemployment and inflation it reduces the substitutability between the labor of different unions and therefore the degree of effective competition between them this reduced competition effect raises real wages unemployment and inflation but the decrease in the number of unions also strengthens the moderating effect of inflationary fears on the real wage demands of each union this strategic effect lowers real wages unemployment and inflation for sufficiently inflation averse unions the interaction between those two effects produces a calmfors driffill type relation between real wages and centralization the paper analyzes the effects of central bank independence on the position and the shape of this relation as well as on inflation and unemployment the paper features two mechanisms one of which is novel through which monetary institutions have real effects the model implies that if there is a single union social welfare is maximized when the central bank attaches a zero weight to inflation but when the number of unions is larger than one this result is no longer true in general empirical evaluation of some of the theoretical implications using data from 19 developed economies is for the most part supportive of those implications

distortionary taxes and public investment when government promises are not enforceable abstract we characterize the optimal financing of productive public capital and compute the welfare loss from being unable to commit to the ramsey policy because this calculation ultimately relies on numerical approximations we contrast alternative approaches while perturbation and linear quadratic methods deliver accurate steady states the latter can yield misleading policy implications during transitions we find that moving from a regime with commitment to one with discretion implies only a small welfare loss although markov perfect consumption falls noticeably short of its ramsey counterpart in steady state consumption under discretion is higher in the short run which largely offsets this long run loss

market share and the illusion of power can blue cross force hospitals to discount researchers in health care financing have claimed that large private insurers like blue cross frequently exercise monopsony power to obtain discounts from normal hospital charges they claim that the monopsony power derives from a large blue cross share of a given hospital cost shifting whereby hospitals offset the discount by raising charges to less powerful customers this paper re examines both theoretically and empirically the conditions necessary for a private insurer to extract discounts from a hospital we demonstrate that the theoretical conditions necessary for blue cross to force a discount do not exist in the indiana market using revenue data from 110 indiana hospitals we reject the traditional claim that blue cross pays less than other insurers as a function of market share