generational accounting a meaningful way to evaluate fiscal policy this paper illustrates the technique of generational accounting a new way to evaluate fiscal policy that overcomes the inherent ambiguities of traditional deficit accounting the authors illustrate why there is no correct measure of the deficit and how generational accounting estimating the fiscal burdens current policy places on different generations provides a clearer picture of the intergenerational and macroeconomic effects of fiscal policy than any measure of the deficit their calculations suggest that despite recent changes u s fiscal policy is unsustainable in that it will ultimately require future generations to bear a much higher burden than those currently alive

transfers in a polarized country bridging the gap between efficiency and stability we consider a political economy model of country whose citizens have heterogeneous preferences for a national policy and some regions may contemplate a threat of secession the country is efficient if its break up into smaller countries leads to aggregate utility loss we show that in an efficient country whose citizens preferences exhibit a high degree of polarization a threat of secession cannot be eliminated without interregional transfers we also demonstrate that if majority voting is used to determine the redistribution schemes within the country then a high degree of polarization yields the full compensation scheme as the unique political equilibrium

dispersed knowledge and an entrepreneurial theory of the firm in this article we propose an entrepreneurial theory of the firm that is based on dispersed knowledge we argue that the dispersion of knowledge over people and places and over time leads to uncertainty this uncertainty combined with heterogeneous expectations and the nexus of an individual and opportunity explains the emergence of new firms we then suggest that the theory of the firm proposed by us answers questions that have been overlooked by alternative theories the specific question we discuss in this article is when and why an entrepreneurial opportunity will be taken to market through an existing firm and when and why a new firm will be chosen as a vehicle for taking a new idea to market i e whether the residual will be concentrated in an existing or in a new firm d 2003 published by elsevier inc

forecasting aggregate demand an analytical evaluation of top down versus bottom up forecasting in a production planning framework abstract we study the relative effectiveness of top down td and bottom up bu strategies for forecasting the aggregate demand in a production planning framework the aggregate demand series is composed of several correlated subaggregate components or items each of which is assumed to follow a stationary time series process which is correlated over time as is common in a production planning environment it is assumed that exponential smoothing is used as the forecasting technique under both strategies we analytically show that there is no difference in the relative performance of td and bu forecasting strategies when the time series for all of the subaggregate components follow a first order univariate moving average ma 1 process with identical coefficients of the serial correlation term we then perform a simulation study to examine the case when the coefficients of the serial correlation term for the subaggregate components are not identical it is found from the simulation study that the difference in the performance of the two forecasting strategies is relatively insignificant when the correlation between the subaggregate components is small or moderate

increasing the capital income tax may lead to faster growth this paper shows that under rather mild conditions higher capital income taxes lead to faster growth in an overlapping generations economy with endogenous growth government expenditures are financed with labor income taxes as well as capital income taxes since capital income accrues to the old taxing it reliefs the tax burden on the young and leaves them with more income out of which to save we argue that savings are sufficiently interest inelastic so that higher savings and therefore higher growth result the basic argument is not seriously challenged by a grandfather clause for initial capital or by the old receiving some labor income as well the reasoning is similar to feldstein 1978 auerbach 1979 and in particular jones and manuelli 1992 but in contrast to the conventional wisdom about the effect of capital income taxation as say in lucas 1990

embeddedness cooperation and popular economy firms in the informal sector this paper is motivated by empirical observations on popular economy firms pefs in the informal sector of santiago de chile these are labor managed firms embedded in popular milieu where cooperation between their members plays a central role this paper develops a partial equilibrium microeconomic theory of pefs first it endogeneizes the level of cooperation between the workers second it develops a static and a dynamic model to analyze whether embeddedness influences the behavior of the pef embeddedness is assumed to be captured by three different characteristics suggested by the empirical observations most of them influence the employment and income levels in the pef

regions of europe a feasible status to be discussed regions of europe jacques dreze a new concept is proposed that of regions of europe which do not have full statehood and belong not to any state but to the community directly without endorsing this possibility and limiting itself to its economic aspects this article discusses the various dimensions of its economic desirability it appears that in general autonomous regions will not find it advantageous to insure each other investigating how assets and liabilities should be apportioned at the time of secession it argues in favour of distributive neutrality net incomes are unchanged by the secession itself in both the seceding region and the rest of the nation how distributive neutrality could be implemented is explored through a number of suggestive examples in general a region receives a share of the public debt related to its share of the public primary deficit with corrections to account for growth unsustainability of the public debt and so on

status effects and environmental externalities abstract this paper examines a static competitive economy where the production of a consumption good generates pollution that adversely affects human welfare preferences are defined over consumption leisure pollution and economic status each person s status increases with her own consumption but decreases with the average consumption of society the achievement of a pareto efficient resource allocation requires a consumption tax to offset the incentive to overconsume in the pursuit of enhanced status in contrast with standard prescriptions the efficient pollution tax generally exceeds the sum of individuals marginal willingness to pay for pollution abatement these findings remain unaltered when preferences are modified to incorporate altruistic concern for others well being altruism however suggests a potential role for government intervention to achieve a desirable i e pareto efficient distribution of welfare between individuals

altruism and the demand for environmental quality this paper asks whether individuals consider the value that future generations will receive from environmental quality when deciding what level of environmental protection to provide using data on life expectancy i develop two tests for altruism towards future generations one a test for strong altruism asks whether individual motives are purely altruistic when deciding to provide environmental quality the second a test for weak altruism combines an individual s concern for both self interest and the interest of future generations using data from a washington post survey on environmental attitudes to implement the test i find evidence of weak altruism

agency relationships in family firms theory and evidence does owner management necessarily eliminate the agency costs of ownership drawing on agency literature and on the economic theory of the household we argue that private ownership and owner management expose privately held owner managed firms to agency threats ignored by jensen s and meckling s 1976 agency model private ownership and owner management not only reduce the effectiveness of external control mechanisms they also expose firms to a self control problem created by incentives that cause owners to take actions which harm themselves as well as those around them jensen 1994 p 43 thus shareholders have incentive to invest resources in curbing both managerialand owner opportunism we extend this thesis to the domain of the family firm after developing hypotheses which describe how family dynamics and specifically altruism exacerbate agency problems experienced by these privately held owner managed firms we use data obtained from a large scale survey of family businesses to field test our hypotheses and find evidence which suggests support for our proposed theory finally we discuss the implications of our theory for research on family and other types of privately held owner managed firms

unfunded liabilities and uncertain fiscal financing we develop a rational expectations framework to study the consequences of alternative means to resolve the unfunded liabilities problem the projected exponential growth in federal social security medicare and medicaid spending with no known plan for financing the transfers resolution requires specifying a probability distribution for how and when monetary and fiscal policies will change as the economy evolves through the 21st century beliefs based on that distribution determine the existence of and the nature of equilibrium we consider policies that in expectation combine reaching a fiscal limit some distorting taxation modest inflation and some reneging on the government s promised transfers in the equilibrium inflation targeting monetary policy and debt targeting tax policy cannot anchor expectations on those target variables expectational effects are always present but need not have large impacts on inflation and interest rates in the short and medium runs in the economy s stationary distribution the capital stock may grow or shrink and substantial probability falls on little or no reneging

an integrated mixture of local experts model for demand forecasting abstract demand forecasting is an important issue in the supply chain planning process due to its usage for efficiently managing different planning tasks the common techniques adopted to perform such task are easy to use forecasting methods performed in computerised systems with minimum human intervention such as the simple exponential smoothing concerning the drawbacks of these modelling approaches past evidence suggests that they have been less successful in predicting short term fluctuations on demand in this work the simple exponential smoothing method is employed to build an integrated mixture of local experts model imlem for demand forecasting using as independent variable a lagged gross domestic product gdp indicator the imlem is usually employed to deal with rapidly changing situations and it is used in this work to improve the performance of the forecasts by providing a way to take into account short term fluctuations on demand due to changes on economic activity growth within an easy to use forecasting method the proposed method was applied on one step ahead demand forecasting for a brazilian beverage manufacturer for 130 non seasonal stock keeping units skus and the accuracy of the generated forecasts allowed to reduce the forecasting errors the obtained results also supported the decision making process by aiding demand planners concerning how to react to short term fluctuations on demand

inter vivos transfers and intergenerational exchange the surge of interest in intergenerational transfers in the past decade has sparked a debate over the motivation for them are transfers given out of altruism or part of an exchange while each motive is probably at work to some extent we know little about whether one motive predominates the question is relevant for issues concerning public income redistribution and inequality in the family but despite its importance empirical evidence about motives is scarce because of limited data we investigate a new data set the national survey of families and households which remedies many of the shortcomings of other data sets containing private transfer information we find that empirical patterns for inter vivos transfers i e transfers between living persons are more consistent with exchange than altruism

on the stock control performance of intermittent demand estimators the purpose of this paper is to assess the empirical stock control performance of intermittent demand estimation procedures the forecasting methods considered are the simple moving average single exponential smoothing croston s method and a new method recently developed by the authors of this paper we first discuss the nature of the empirical demand data set 3000 stock keeping units and we specify the stock control model to be used for experimentation purposes performance measures are then selected to report customer service level and stock volume differences the out of sample empirical comparison results demonstrate the superior stock control performance of the new intermittent demand forecasting method and enable insights to be gained into the empirical utility of the other estimators

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

is the dollar high because of large budget deficits abstract it is widely believed that the u s dollar has been high in recent years because of large u s budget deficits using three statistical techniques this paper shows that the belief has no empirical support ricardian equivalence may explain the lack of a positive association between the budget deficit and the dollar s exchange rate

generational accounting and intergenerational welfare we investigate the intergenerational welfare implications of generational accounting when it is used as the basis for intertemporal fiscal policy decisions in particular we consider an economy with a paygo social security system out of steady state due to a permanent fall in fertility in a highly stylized cge overlapping generations model we illustrate that policy recommendations based on a standard application of generational accounting may not be compatible with intertemporal welfare maximization our model provides an example where such policies are either time inconsistent or welfare decreasing

leviathan and competition among jurisdictions the case of benefit taxation abstract this paper shows that interjurisdictional competition for mobile factors of production forces the government to raise the efficiency of the public sector and thus helps to tame leviathan governments however this result is derived under some restrictive assumptions concerning the kind of tax policy used by the government in the case of benefit taxes e g user charges a leviathan may be tamed by interjurisdictional competition whereas this is not necessarily true in the case of lum sum taxes

on the irrelevance of government debt when taxes are distortionary abstract we consider a government that can only raise funds by levying distortionary taxes we allow the government to collect taxes in a given period that are based on incomes earned in previous periods we show that once we do so given any debt path the government can adjust its tax policy so as to attain that debt path without affecting equilibrium allocations or prices

variants of agency contracts in family financed ventures as a continuum of familial altruistic and market rationalities abstract funding is a critical dimension of new creation although instances of family involvement in new venture financing are common ironically their role has been largely ignored in much of the mainstream business and economics literature when family members invest in the ventures of other family members they must make many choices either explicitly or implicitly about organizational form and governance consequently the governance of these exchange relationships tends to be highly variable this paper explores the primary rationalities governing the exchange relationships in family investment decisions during the early stages of new venture creation it presents activities as variants of agency contracts occurring within a continuum of familial altruistic and business market rationalities existing venture capital theory is extended through the introduction of rationalities and more comprehensive models of decision making

the dynamic capabilities of firms an introduction an expanded paradigm is needed to explain how competitive advantage is gained and held firms resorting to resource bas ed strategy attempt to accumulate valuable technology assets and employ an aggressive intellectual property stance however winners in the global marketplace have been firms demonstrating timely responsiveness and rapid and flexible product innovation along with the management capability to effectively coordinate and redeploy internal and external competences this source of competitive advantage dynamic capabilities emphasizes two aspects first it refers to the shifting character of the environment second it emphasizes the key role of strategic management in appropriately adapting integrating and re configuring internal and external organizational skills resources and functional competences toward changing environment 3 only recently have researchers begun to focus on the specifics of developing firm specific capabilities and the manner in which competences are renewed to respond to shifts in the business environment the dynamic capabilities approach provides a coherent framework to integrate existing conceptual and empirical knowledge and facilitate prescription this paper argues that the competitive advanis tage of firms stems from dynamic capabilities rooted in high performance routines z operating inside the firm embedded in the firm s processes and conditioned by its history it offers dynamic capabilities as an emerging paradigm of the modern business j firm that draws on multiple disciplines and advances with the help of industry studies in the usa and elsewhere

performance analysis of demand planning approaches for aggregating forecasting and disaggregating interrelated demands a synchronized and responsive flow of materials information funds processes and services is the goal of supply chain planning demand planning which is the very first step of supply chain planning determines the effectiveness of manufacturing and logistic operations in the chain propagation and magnification of the uncertainty of demand signals through the supply chain referred to as the bullwhip effect is the major cause of ineffective operation plans therefore a flexible and robust supply chain forecasting system is necessary for industrial planners to quickly respond to the volatile demand appropriate demand aggregation and statistical forecasting approaches are known to be effective in managing the demand variability this paper uses the bivariate var 1 time series model as a study vehicle to investigate the effects of aggregating forecasting and disaggregating two interrelated demands through theoretical development and systematic analysis guidelines are provided to select proper demand planning approaches a very important finding of this research is that disaggregation of a forecasted aggregated demand should be employed when the aggregated demand is very predictable through its positive autocorrelation moreover the large positive correlation between demands can enhance the predictability and thus result in more accurate forecasts when statistical forecasting methods are used

the perception and measurement of transaction costs the chapter discusses various explanations of how transaction cost minimising corporate configurations come about it contrasts darwinian with rational explanations finding both unsatisfactory what matters rather than computation of fully recognised transaction costs are managerial perceptions of transaction costs these perceptions are not expressed in numbers but in language this is related to arguments derived from bounded rationality and from transaction cost economics the chapter argues that issues of managerial perception must become central to analysis existing academic traditions which accord primacy to perception and to language are drawn upon and argued to be of great relevance to future work

the effect of entrepreneurial rhetoric on microlending investment an examination of the warm glow effect microlending provides a valuable alternative to traditional financing for entrepreneurs in impoverished countries drawing from theory on political rhetoric and the concept of warm glow giving we examine characteristics of entrepreneurial narratives that are related to how quickly entrepreneurs receive funding using a sample of 6051 narratives from entrepreneurs in developing countries we demonstrate that narratives higher in language indicating blame and present concern lead to more rapid funding while narratives higher in accomplishment tenacity and variety lead to slower funding our findings suggest that the presentation of investment profiles should be carefully managed to maximize funding likelihood

is it a car or a truck managerial beliefs the choice of product architecture and the emergence of the minivan market segment new markets segments are a common setting for studies in technology strategy these studies generally assume that new segments already exist or have formed following the introduction of a product innovation by an entering firm thus theory on the role of established firms in the emergence of new market segments is underdeveloped this study informs current research by explaining the product innovation decisions of established firms during the emergence of a new market segment the results of a case study on the development and commercialization of the minivan at chrysler ford and general motors between 1970 and 1985 indicate that existing theories based on managerial cognition firm capabilities economic incentives and organizational structure are insufficient to explain the decisions this article develops theory based on the interrelationship of these four mechanisms

application of multi steps forecasting for restraining the bullwhip effect and improving inventory performance under autoregressive demand recent research suggests that the bullwhip effect or increasing variability of inventory replenishment orders as one moves up a supply chain illustrates inventory management inefficiencies this paper quantifies the bullwhip effect in the case of serially correlated external demand if autoregressive models are applied to obtain multiple steps demand forecasts a materials requirements planning mrp based inventory management approach is proposed to reduce the order variance simulation modeling is used to investigate the impact of the forecasting method selection on the bullwhip effect and inventory performance for the most downstream supply chain unit the mrp based approach is shown to reduce magnitude of the bullwhip effect while providing the inventory performance comparable to that of a traditional order up approach the application of autoregressive models compares favorably to other forecasting methods considered according to both the bullwhip effect and inventory performance criteria

non stationary demand forecasting by cross sectional aggregation in this paper the relative effectiveness of top down td versus bottom up bu approaches is compared for cross sectionally forecasting aggregate and sub aggregate demand we assume that the sub aggregate demand follows a non stationary integrated moving average ima process of order one and a single exponential smoothing ses procedure is used to extrapolate future requirements such demand processes are often encountered in practice and ses is one of the standard estimators used in industry in addition to being the optimal estimator for an ima process theoretical variances of forecast error are derived for the bu and td approach in order to contrast the relevant forecasting performances the theoretical analysis is supported by an extensive numerical investigation at both the aggregate and sub aggregate level in addition to empirically validating our findings on a real dataset from a european superstore the results demonstrate the increased benefit resulting from cross sectional forecasting in a non stationary environment than in a stationary one valuable insights are offered to demand planners and the paper closes with an agenda for further research in this area

revisiting the value of information sharing in two stage supply chains abstract there is a substantive amount of literature showing that demand information sharing can lead to considerable reduction of the bullwhip effect inventory costs the core argument analysis underlying these results is that the downstream supply chain member the retailer quickly adapts its inventory position to an updated end customer demand forecast however in many real life situations retailers adapt slowly rather than quickly to changes in customer demand as they cannot be sure that any change is structural in this paper we show that the adaption speed and underlying unknown demand process crucially affect the value of information sharing for the situation with a single upstream supply chain member manufacturer and a single retailer we consider two demand processes stationary or random walk these represent two extremes where a change in customer demand is never or always structural respectively the retailer and manufacturer both forecast demand using a moving average where the manufacturer bases its forecast on retailer demand without information sharing but on end customer demand with information sharing in line with existing results the value of information turns out to be positive under stationary demand one contribution though is showing that some of the existing papers have overestimated this value by making an unfair comparison our most striking and insightful finding is that the value of information is negative when demand follows a random walk and the retailer is slow to react slow adaptation is the norm in real life situations and deserves more attention in future research exploring when information sharing indeed pays off

supply chain forecasting when information is not shared the operations management literature is abundant in discussions on the benefits of information sharing in supply chains however there are many supply chains where information may not be shared due to constraints such as compatibility of information systems information quality trust and confidentiality furthermore a steady stream of papers has explored a phenomenon known as downstream demand inference ddi where the upstream member in a supply chain can infer the downstream demand without the need for a formal information sharing mechanism recent research has shown that under more realistic circumstances ddi is not possible with optimal forecasting methods or single exponential smoothing but is possible when supply chains use a simple moving average sma method in this paper we evaluate a simple ddi strategy based on sma for supply chains where information cannot be shared this strategy allows the upstream member in the supply chain to infer the consumer demand mathematically rather than it being shared we compare the ddi strategy with the no information sharing nis strategy and an optimal forecast information sharing fis strategy in the supply chain the comparison is made analytically and by experimentation on real sales data from a major european supermarket located in germany we show that using the ddi strategy improves on nis by reducing the mean square error mse of the forecasts and cutting inventory costs in the supply chain

dominance by birthright entry of prior radio producers and competitive ramifications in the u s television receiver industry the u s television receiver industry evolved to be an oligopoly dominated by firms that produced radios prior to tvs data on the experience of all u s radio manufacturers and on the length of survival and rate of innovation of all u s tv entrants are collected to analyze how radio experience influenced entry firm performance and the evolution of market structure in the tv industry consistent with a model of the evolution of an oligopolistic industry more experienced radio firms were more likely to enter tv manufacturing had higher innovation rates and in turn had greater market shares and longer survival suggesting that firm capabilities and the evolution of the tv industry s market structure were critically shaped by firms experience prior to entry copyright 2000 john wiley sons ltd

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

forecasting with multivariate temporal aggregation the case of promotional modelling demand forecasting is central to decision making and operations in organisations as the volume of forecasts increases for example due to an increased product customisation that leads to more skus being traded or a reduction in the length of the forecasting cycle there is a pressing need for reliable automated forecasting conventionally companies rely on a statistical baseline forecast that captures only past demand patterns which is subsequently adjusted by human experts to incorporate additional information such as promotions although there is evidence that such process adds value to forecasting it is questionable how much it can scale up due to the human element instead in the literature it has been proposed to enhance the baseline forecasts with external well structured information such as the promotional plan of the company and let experts focus on the less structured information thus reducing their workload and allowing them to focus where they can add most value this change in forecasting support systems requires reliable multivariate forecasting models that can be automated accurate and robust this paper proposes an extension of the recently proposed muliple aggregation prediction algorithm mapa which uses temporal aggregation to improve upon the established exponential smoothing family of methods mapa is attractive as it has been found to increase both the accuracy and robustness of exponential smoothing the extended multivariate mapa is evaluated against established benchmarks in modelling a number of heavily promoted products and is found to perform well in terms of forecast bias and accuracy furthermore we demonstrate that modelling time series using multiple temporal aggregation levels makes the final forecast robust to model misspecification

reduction of the value of information sharing as demand becomes strongly auto correlated information sharing has been identified in the academic literature as one of the most important levers to mitigate the bullwhip effect in supply chains a highly cited article on the bullwhip effect has claimed that the percentage inventory reduction resulting from information sharing in a two level supply chain when the downstream demand is autoregressive of order one is an increasing function of the autoregressive parameter of the demand in this paper we show that this is true only for a certain range of the autoregressive parameter and there is a maximum value beyond which the bullwhip ratio at the upstream stage is reduced and the percentage inventory reduction resulting from information sharing decreases towards zero we also show that this maximum value of the autoregressive parameter can be as high as 0 7 which represents a common value that may be encountered in many practical contexts this means that large benefits of information sharing cannot be assumed for those stock keeping units skus with highly positively auto correlated demand instead equally careful analysis is needed for these items as for those skus with less strongly auto correlated demand

prisoner s dilemmas cooperative norms and codes of business ethics prisoner s dilemmas can lead rational people to interact in ways that lead to persistent inefficiencies these dilemmas create a problem for institutional designers to solve devise institutions that realign individual incentives to achieve collectively rational outcomes i will argue that we do not always want to eliminate misalignments between individual incentives and efficient outcomes sometimes we want to preserve prisoner s dilemmas even when we know that they systematically will lead to inefficiencies no doubt prisoner s dilemmas can create problems but they also create opportunities to practice the cooperative norms that make market institutions possible in the first place an ethical market culture i argue benefits from the presence of prisoner s dilemmas i first consider standard approaches for solving prisoner s dilemmas i then argue for the value of prisoner s dilemmas finally i show the significance of this argument for advocating codes of business ethics

school spirit legislator school ties and state funding for higher education abstract we explore a new mechanism to understand state funding for public colleges and universities by leveraging data on the educational experiences of state legislators specifically if and where they received postsecondary education using novel hand collected data from 2002 through 2014 we provide comprehensive documentation for the first time in the literature on the educational backgrounds of state legislators we find a statistically significant positive association between the share of legislators who attended their states public institutions and state funding for their entire public higher education system we also find a similar positive relationship between the share of state legislators who attended particular campuses of the state s public university system and funding for those campuses this relationship is more pronounced among publicly educated legislators who represent legislative districts close to their alma mater s district and becomes most consequential when the legislator s district contains his or her alma mater we discuss the implications of our findings for academic studies on how politics and legislators personal experiences influence support for higher education

investing in peace the motivational dynamics of diaspora investment in post conflict economies post conflict economies often prove daunting for foreign investors many of these nations are reaching out to diasporans emigrants and their descendants living abroad for much needed foreign investment capital little is known about why diasporans invest in their countries of origin recent scholarly inquiry regarding investment decision making has suggested that non pecuniary psychological concerns often motivate investment decisions we develop a conceptual model identifying three types of investment return expectations financial emotional and those related to social status that may drive diaspora investment interest we contend that the psychological realities and social status structure of the diaspora experience generate greater salience for non pecuniary investment motivations particularly when the origin country emerges from a period of conflict we outline an agenda for future research and discuss the implications of our model for policies seeking to promote peace utilizing diaspora investment

economic integration and political disintegration in a world of trade restrictions large countries enjoy economic benefits because political boundaries determine the size of the market under free trade and global markets even relatively small cultural linguistic or ethnic groups can benefit from forming small homogeneous political jurisdictions this paper provides a formal model of the relationship between openness and the equilibrium number and size of countries and successfully tests two implications of the model firstly the economic benefits of country size are mediated by the degree of openness to trade secondly the history of nation state creations and secessions is influenced by the trade regime

an arima supply chain model this paper presents a multistage supply chain model that is based on autoregressive integrated moving average arima time series models given an arima model of consumer demand and the lead times at each stage it is shown that the orders and inventories at each stage are also arima and closed form expressions for these models are given the paper also discusses the causes of the bullwhip effect a phenomenon in which variation in demand produces larger variations in upstream orders and inventory this discussion reveals how different modeling can lead to different insights because they make different assumptions about the cause of the bullwhip effect these observations are used to develop managerial insights about reducing the bullwhip effect

aggregate wealth in canada this paper describes a comprehensive measure of aggregate private sector wealth in canada that includes both human and nonhuman wealth wealth and its components are measured at a quarterly frequency from 1963 to 1994 human wealth is computed as the expected present value of aggregate labor income net of government expenditures using a finite state markov approximation to an estimated bivariate var for the real interest rate and net income growth nonhuman wealth is constructed by consolidating the assets and liabilities of the various sectors of the economy to the extent possible assets and liabilities are measured at market value

investigating the added value of integrating human judgement into statistical demand forecasting systems abstract whilst the research literature points towards the benefits of a statistical approach business practice continues in many cases to rely on judgmental approaches for demand forecasting in today s dynamic environment it is especially relevant to consider a combination of both approaches however the question remains as to how this combination should occur this study compares two different ways of combining statistical and judgmental forecasting employing real life data from an international publishing company that produces weekly forecasts on regular and exceptional products two forecasting methodologies that are able to include human judgment are compared in a restrictive judgement model expert predictions are incorporated as restrictions on the forecasting model in an integrative judgment model this information is taken into account as a predictive variable in the demand forecasting process the proposed models are compared on error metrics and analysed with regard to the properties of the adjustments direction size and of the forecast itself volatility periodicity the integrative approach has a positive effect on accuracy in all scenarios however in those cases where the restrictive approach proved to be beneficial the integrative approach limited these beneficial effects the study links with demand planning by using the forecasts as input for an optimization model to determine the ideal number of skus per point of sale pos making a distinction between sku forecasts and sku per pos forecasts importantly this enables performance to be expressed as a measure of profitability which proves to be higher for the integrative approach than for the restrictive approach

defining the government s debt and deficit although the budget deficit and the public debt feature prominently in political debate and economic research there is no agreement about how they should be measured they can b e defined for different sets of public institutions including the nested sets corresponding to central government general government and the public sector and for any definition of government there are many measures of the debt and deficit including those generated by four kinds of accounts cash financial full accrual and comprehensive which can be derived from four nested sets of assets and liabilities each debt and deficit measure says something about public finances but none tells the whol e story each is also vulnerable to manipulation and is likely to be manipulated if it is subject to a binding fiscal rule or target narrow definitions of government encourage the shifting of spending to entities outside the defined perimeter of governme nt narrow definitions of debt and deficit encourage operations involving off balance sheets assets and liabilities while broad measures are susceptible to the mismeasurement of on balance sheet assets and liabilities reviewing the literature on these is sues the paper concludes that governments should publish several measures of the debt and deficit in a form that clearly reveals their interrelationships

on bullwhip in a family of order up to policies with arma 2 2 demand and arbitrary lead times a number of papers have recently appeared that investigate the bullwhip effect the variance amplification of ordering decisions in the supply chain produced by the order up to replenishment policy an adapted policy with a proportional inventory position feedback controller has shown improved bullwhip behaviour the dynamic behaviour of this so called proportional order up to policy has been investigated for arbitrary lead times and several demand models such as i i d demand and autoregressive moving average ar 1 and arma 1 1 models it has been shown that for a correct choice of the feedback parameter the bullwhip effect can always be avoided however less attractive properties of this policy have also become clear herein we investigate the behaviour of the proportional order up to policy for arma 2 2 demand with arbitrary lead times in order to compensate for possible weaknesses of the proportional out policy we propose another replenishment rule that accounts for the characteristics of the demand in a superior manner the characteristics of both policies are compared for several parameter settings of the arma 2 2 model finally the consequences of our full state feedback order up to policy are discussed

interest rates and expected future budget deficits in the united states several recent empirical studies have found no evidence of a positive association between interest rates and current and past budget deficits one possible explanation for this finding is that interest rates are related much more to the expectation of future budget deficits than to current and past budget deficits in this paper i investigate whether this explanation is valid finding no evidence that it is section ii briefly formulates and discusses the hypothesis under consideration stating some of its implications section iii presents the results of regressing the commercial paper rate moody s aaa bond rate and the ex post real commercial paper rate on current and past government spending budget deficits and real money supplies the regressions have been fitted to the entire sample of monthly data spanning the period between june 1908 and march 1984 and to 11

conditional cooperation and voluntary contributions to public goods we compare a partners condition where the same small group of subjects plays a repeated publi c good game to a strangers condition where subjects play this game in changing group formations subjects in the partners conditi on contribute from t he first period on significantly more to the publi c good than subjects in the strangers conditi on in the strangers conditi on contributions show a continual decay whil e in the partners conditi on contributions fluctuate on a high level until t hey decrease in the final periods we interpret subjects behavior in terms of conditional cooperation which is characterized by both future oriented and reactive behavior

compliance with agreements in cross cultural transactions some analytical issues assessing whether the other party is likely to fulfil all obligations can be arduous when a transaction is international the mechanisms that underpin compliance with agreements and the functional detail of these mechanisms may vary in relative importance between countries perplexing the foreign operative additionally a foreigner may suffer from informational constraints communications distortions and difficulty in achieving full acceptance in the local business culture

altruistic investment decision behavior in early stage ventures in this study we develop and test a gendered social capital model of altruistic investment behavior that explains why some informal investors expect high returns on their investments while others expect no payback at all prior literature predominantly assumes that informal investors engage in investment activities with a return on investment and profit in mind however other non financial objectives for informal investment e g altruistic informal investment have also been suggested although their antecedents unexplored we suggest altruistic investment behavior depends on life circumstances determined by social capital gender and their combination our empirical evidence supports these propositions

fiscal policy and educational attainment in the united states a generational accounting perspective in this paper we investigate the consequences of the rise in educational attainment on us generational accounts we build on the 1995 existing accounts and disaggregate them per schooling level contrary to medium and high skill newborns we show that low skill newborns are characterized by negative generational accounts compared to the results obtained with the traditional methodology our baseline forecast is more optimistic nevertheless the rise in educational attainment is not strong enough to restore the generational balance balancing the budget requires increasing taxes by 1 2 or reducing transfers by 2 7 our results are robust to the main assumptions

factor mobility risk and redistribution in the welfare state economic integration reduces the costs of factor mobility producing efficiency gains and contributing to equalization of net factor returns this raises the cost of income redistribution policy thus threatening a basic function of the welfare state a simple model of costly factor mobility under uncertainty shows that greater factor mobility enables factor owners to pool industry specific region specific or occupation specific risks due to uncertain technology or terms of trade economic integration may thus reduce some of the potential social insurance benefits of redistributive policy

inside the black box technology and economics economists have long treated technological phenomena as events transpiring inside a black box and on the whole have adhered rather strictly to a self imposed ordinance not to inquire too seriously into what transpires inside that box the purpose of professor rosenberg s work is to break open and examine the contents of the black box in so doing a number of important economic problems be powerfully illuminated the author clearly shows how specific features of individual technologies have shaped a number of variables of great concern to economists the rate of productivity improvement the nature of learning processes underlying technological change itself the speed of technology transfer and the effectiveness of government policies that are intended to influence technologies in particular ways the separate chapters of this book reflect a primary concern with some of the distinctive aspects of industrial technologies in the twentieth century such as the increasing reliance upon science but also the considerable subtlety and complexity of the dialectic between science and technology other concerns include the rapid growth in the development of costs associated with new technologies as well as the difficulty of predicting the eventual performance characteristics of newly emerging technologies

family ownership altruism and agency costs in australian small and medium sized enterprises given the continuing uncertainty about whether family firms enjoy lower agency costs this article hypothesizes that a combination of the effects of family ownership altruism and self control is instead at play to begin with family ownership can indeed reduce agency costs through better aligning the interests of owners and managers this is a determining effect in that it independently mitigates one source of agency problems however altruism combined with self control problems arising from the highly concentrated ownership often found in family firms can also increase agency costs this is an embedding effect as it is rooted in the personal relationships within the family firm using the business longitudinal database compiled by the australian bureau of statistics on small and medium sized enterprises smes we find that for larger smes those with 20 200 employees the gains in lower agency costs arising from family ownership are almost completely offset by the losses from altruism and the l

toward a theory of agency and altruism in family firms surprisingly the majority of u s family firms offer employed family members short and long term performance based incentive pay we draw on the household economics and altruism literatures to explain why family firms might feel compelled to do so and develop theory that predicts when this practice will be beneficial results based on data obtained from 883 family firms show that altruism as reflected by the parents estate and share transfer intentions moderates the effect of these pay incentives as our theory predicts as such this article helps explain both how altruism influences agency relationships in family firms and why business practice in family firms differs from those found in other types of firms

an economic approach to business ethics moral agency of the firm and the enabling and constraining effects of economic institutions and interactions in a market economy the paper maps out an alternative to a behavioural economic approach to business ethics special attention is paid to the fundamental philosophical principle that any moral ought implies a practical can which the paper interprets with regard to the economic viability of moral agency of the firm under the conditions of the market economy in particular competition the paper details an economic understanding of business ethics with regard to classical and neo classical views on the one hand and institutional libertarian thought on the other hand implications are derived regarding unintentional and passive intentional moral agency of the firm the paper moves on to suggest that moral agency can be economically viable in competitive market interactions which is conventionally disputed by classical neo classical and institutional libertarian economics the paper here conceptualises active moral agency of the firm as the utilisation of ethical capital in firm stakeholder interactions this yields a reinterpretation of instrumental stakeholder theory

perspectives from the president s commission on social security reform recently we were asked to serve on the president s commission to strengthen social security csss along with 14 other members drawn equally from both major political parties the commission s charge was to provide recommendations to modernize the social security system restore its fiscal soundness and develop a workable system of personal retirement accounts this paper explains how the commission arrived at some of its recommendations and the role that economics played in contributing to these recommendations we describe the key institutional constraints confronting efforts to reform social security and how these constraints influenced commission decisions we also illustrate how economics research influenced the commission s analysis of how to structure personal accounts ways to enhance traditional social security program finances and means of measuring the extent of financial progress achieved through reform

opportunism and ngos entrepreneurship and green north south transfers abstract through the lens of entrepreneurship this paper applies the new institutional economics to examine two case studies of environmental nongovernmental organizations ngos in latin america to clarify their political economic roles southern ngos that rely on northern donors are viewed as entrepreneurial economic entities producing international public goods these nonprofit ngos take their place alongside for profit firms as contributors to economic production employment institutional innovation and technology transfer the theoretical framework proposed assumes that self interested behavior coexists with loyalty commitment and altruism as well as opportunism

debt sharing and secession a generational accounting approach cattoir p and docquier f 2004 debt sharing and secession a generational accounting approach reg studies38 293 303 this paper investigates one of the most important financial issues arising from a secession or a country partitioning namely the sharing of the national public debt extending dreze s distributive neutrality condition we use the generational accounting technique and propose a dynamic debt sharing criterion which takes into account both the true debt future generations inherit and their contributive capacity the equivalence with dreze s static rule is only obtained on the balanced growth path and in the absence of initial regional debt an application of our criterion to the belgian case offers striking results cattoir p et docquier f 2004 secession et partage de la dette publique une approche par la comptabilite generationnelle reg studies38 293 303 ce papier analyse l une des principales questions budgetaire posee en cas de secession ou de partage d un etat en plusieurs

accountability and decentralisation in government an incomplete contracts model this paper approaches the question of the appropriate level of decentralisation of power in government as a problem in the allocation of control rights under incomplete contracts the model of the paper compares allocations of power to local central and regional government as alternative means of motivating governments to act in the interests of citizens centralisation allows benefits from policy coordination but has costs in terms of diminished accountability which can be precisely defined as the reduced probability that the welfare of a given region can determine the re election of the government the model is extended to allow for conflicts of interest within regions and externalities between central and local governments in a federation it is also applied to determining levels of fiscal transfer between localities and to circumstances where governments may act as leviathans appropriating resources for their own use

the capabilities of new firms and the evolution of the us automobile industry firms that diversify into new and existing industries typically outperform de novo entrants but in some new industries diversifying firms are displaced by later entering de novo firms little is known about when and how new firms can overcome the advantages of diversifying firms this is investigated for one industry automobiles where new firms had considerable success all the entrants into the industry from its inception in 1895 through 1966 are identified the heritage of every entrant into the industry is traced including the founders of de novo entrants to explore how time of entry and pre entry experience affected firm survival while diversifying firms on average outperformed de novo entrants de novo entrants founded by individuals that worked for the leading automobile firms outperformed all firms and dominated the industry this is attributed to the novel organizational challenges faced by automobile firms which made the leading firms ideal training grounds for new entrants the implications of these findings for firm capabilities industry competition and regional economic development are discussed copyright 2002 oxford university press

demand forecasting with four parameter exponential smoothing abstract exponential smoothing methods are powerful tools for denoising time series predicting future demand and decreasing inventory costs in this paper we develop a smoothing and forecasting method that is intuitive easy to implement computationally stable and can satisfactorily handle both additive and multiplicative seasonality even when time series contain several zero entries and large noise component we start with the classical additive holt winters method and introduce an additional smoothing parameter in the level recurrence equation all parameters are required to lie within 0 1 and estimated by minimizing the one step ahead forecasting errors in the sample doing so the errors decrease substantially especially for the time series with strong trends the newly developed method produces more accurate short term out of sample forecasts than the classical holt winters methods and the holt winters methods with damped trend the performance of the method is evaluated using a battery of real quarterly and monthly time series from the m3 competition a simulation study is conducted for further in depth analysis of the method under different demand patterns we developed and justified the use of a symmetric relative efficiency measure that allows researchers ad practitioners to evaluate the performance of different smoothing and forecasting methods

togetheror separately issues on the costs and benefits of political and fiscal unions abstract around the world one observes a tendency toward political separatism the economic literature generally but not always emphasizes several benefits of large fiscal and therefore political jurisdictions in this paper we discuss several politico economic arguments which reconcile this tension between normative economic models and empirical observations

a model for selecting the appropriate level of aggregation in forecasting processes abstract demand forecasting is a major issue in several industrial sectors a relevant choice for companies is the proper level of forecast aggregation forecasters need to properly identify what is the object of the forecasting process in terms of time bucket e g forecasts are produced on a daily level or on weekly one set of items the demand refers to e g single item or group of items set of locations the demand refers to e g single store or chain of stores managers can follow two basic approaches on the one hand they can adopt a detailed forecasting approach i e they can forecast demand for the item at the store by simply looking at the demand for the specific item store on the other hand they can adopt an aggregated forecasting approach in this paper we aim at figuring out what is the balance between the strengths and weaknesses of these two options and to identify the contingent variables that might lead managers to adopt one approach rather than the other in this paper we study the aggregation across locations by evaluating the components of forecasting error under the assumption of stationary demand finally we suggest metrics that one can adopt to support the choice of the appropriate forecasting process thus providing help to managers in defining the proper level of aggregation for a specific situation

technological pre adaptation speciation and emergence of new technologies how corning invented and developed fiber optics this article investigates how established firms innovate and even initiate new technological trajectories we build on and expand the notion of technological speciation to describe how a new technology emerges when a firm leverages its technological knowledge into a new application domain current research on technological speciation does not investigate how firms accumulate the technological knowledge which they eventually redeploy into different domains nor does it clarify the precise role of luck historical accidents and foresight strategy in shaping the overall process this requires a finer grained investigation of the microprocesses and evolutionary forces underlying the dynamics of technological speciation to this end we use a longitudinal case study of corning s invention and development of fiber optics technology we focus less on testing theory and more on describing a phenomenon to generate new theoretical insight

the effects of integrating management judgement into out levels in or out of context physical inventories constitute a significant proportion of companies investments in today s competitive environment the trade off between customer service levels and inventory reserves is addressed in practice by statistical inventory software solutions given the tremendous number of stock keeping units skus that contemporary organizations deal with such solutions are fully automated however empirical evidence suggests that managers habitually judgementally adjust the output of such solutions such as replenishment orders or re order levels this research is concerned with the value being added or not when statistically derived inventory related decisions order up to out levels in particular are judgementally adjusted we aim at developing our current understanding on the effects of incorporating human judgement into inventory decisions to our knowledge such effects do not appear to have been studied empirically before and this is the first endeavour to do so a number of research questions are examined and a simulation experiment is performed using an extended database of approximately 1 800 skus from the electronics industry in order to evaluate human judgement effects the linkage between adjustments and their justification is also evaluated given the apparent lack of comprehensive empirical evidence in this area including the field of demand forecasting this is a contribution in its own right insights are offered to academics to facilitate further research in this area practitioners to enable more constructive intervention into statistical inventory solutions and software developers to consider the interface with human decision makers

the effects of integrating management judgement into intermittent demand forecasts empirical research suggests that quantitatively derived forecasts are very frequently judgementally adjusted nevertheless little work has been conducted to evaluate the performance of these judgemental adjustments in a practical demand sales context in addition the relevant analysis does not distinguish between slow and fast moving items currently there are neither conceptual developments nor empirical evidence on the issue of integrating judgements and statistical forecasts for slow intermittent demand items moreover no results have ever been reported on the stock control implications of these human judgements our work analyses monthly intermittent demand forecasts for the uk branch of a major international pharmaceutical company the company relies upon a commercially available statistical forecasting system to produce forecasts that are subsequently judgementally adjusted based on marketing intelligence gathered by the company forecasters the benefits of the intervention are evaluated by comparing the actual sales to system and final forecasts using both forecast accuracy and inventory control accuracy implication metrics our study allows insights to be gained on potential improvements to intermittent demand forecasting processes and subsequently the design effectiveness of forecasting support systems

generational accounting a new approach for understanding the effects of fiscal policy on saving working pa er 9107 generational accounting a new approach for understanding the effects of fiscal policy on saving by alan j auerbach jagadeesh gokhale and laurence j kotlikoff alan j auerbach is a professor of economics at the university of pennsylvania and an associate of the national bureau of economic research jagadeesh gokhale is an economist at the federal reserve bank of cleveland and laurence j kotlikoff is a professor of economics at boston university and an asso ciate of the national bureau of economic research working papers of the federal reserve bank of cleveland are preliminary materials circu lated to stimulate discussion and critical comment the views stated herein are those of the authors and not necessarily those of the federal reserve bank of cleveland or of the board of governors of the federal reserve sys tem may 1991

do budget deficits raise nominal interest rates evidence from six countries abstract it is widely believed that budget deficits raise nominal interest rates this paper shows that the belief has no empirical support for six countries ricardian equivalence may explain the lack of a positive association between budget deficits and nominal interest rates

the slow pace of rapid technological change gradualism and punctuation in technological change discussions of technological change have offered sharply contrasting perspectives of technological change as gradual or incremental and the image of technological change as being rapid even discontinuous these alternative perspectives are bridged using the punctuated equilibrium framework of evolutionary biology using this framework it is argued that the critical event is not a transformation of the technology but speciation the application of existing technology to a new domain of application as a result of the distinct selection criteria and the degree of resource abundance in the new domain a new technological form may emerge the new technological form may be able to penetrate other niches and in particular may precipitate a process of creative destruction and out compete prior technologies this framework is applied to an historical study of wireless communication from the early experimental efforts of hertz to the modern development of wireless telephony

outlines of a behavioral theory of the entrepreneurial firm abstract in a behavioral theory of the firm btf cyert and march cyert r m march j g 1963 a behavioral theory of the firm prentice hall englewood cliffs nj present a clutch of ideas for explaining the behavior of established firms within an environment of well defined markets stakeholder relationships technologies and so on in this paper we outline a behavioral theory of the entrepreneurial firm that emphasizes transforming environments rather than acting within extant ones in particular we explicate three ideas that parallel key concepts in btf 1 accumulating stakeholder commitments under goal ambiguity in line with a political conception of goals 2 achieving control as opposed to managing expectations through non predictive strategies and 3 predominately exaptive rather than adaptive orientation

the dilemma of accountability for professionals a challenge for mainstream management theories professional institutions are increasingly confronted by fiscal constraints and political pressures to improve and increase their accountability in a competitive consumer driven market accordingly the need to ensure efficiency and accountability is of strategic importance this article reports on a qualitative study of medical professionals that assessed the utility of financial incentives and external control methods derived from agency theory to ensure accountability of professionals the authors argue that approaches derived from stewardship and institutional theories can extend the principal agent perspective to sustain greater social and ethical accountability

defining the government s debt and deficit defining the government s debt and deficit although the budget deficit and the public debt feature prominently in political debate and economic research there is no agreement about how they should be measured they can be defined for different sets of public institutions including the nested sets corresponding to central government general government and the public sector and for any definition of government there are many measures of the debt and deficit including those generated by four kinds of accounts cash financial full accrual and comprehensive which can be derived from four nested sets of assets and liabilities each debt and deficit measure says something about public finances but none tells the whole story each is also vulnerable to manipulation and is likely to be manipulated if it is subject to a binding fiscal rule or target narrow definitions of government encourage the shifting of spending to entities outside the defined perimeter of government narrow definitions of debt and deficit encourage operations involving off balance sheets assets and liabilities while broad measures are susceptible to the mismeasurement of on balance sheet assets and liabilities reviewing the literature on these issues the paper concludes that governments should publish several measures of the debt and deficit in a form that clearly reveals their interrelationships

random walks and sustained competitive advantage strategy is concerned with sustained interfirm profitability differences observations of such sustained differences are often attributed to unobserved systematic a priori differences in firm characteristics this paper shows that sustained interfirm profitability differences may be very likely even if there are no a priori differences among firms as a result of the phenomenon of long leads in random walks even a random resource accumulation process is likely to produce persistent resource heterogeneity and sustained interfirm profitability differences a cournot model in which costs follow a random walk shows that such a process could produce evidence of substantial persistence of profitability the results suggest that persistent profitability does not necessarily provide strong evidence for systematic a priori differences among firms nevertheless since the phenomenon of long leads is highly unrepresentative of intuitive notions of random sequences such evidence may still be persuasive

is the extended family altruistically linked direct tests using micro data this paper uses panel study of income dynamics data on parents and their adult children to test the standard altruism model this model predicts that within the extended family the distribution of consumption is independent of the distribution of resources the authors findings strongly reject this prediction copyright 1992 by american economic association

measuring and avoiding the bullwhip effect a control theoretic approach an important contributory factor to the bullwhip effect i e the variance amplification of order quantities observed in supply chains is the replenishment rule used by supply chain members first the bullwhip effect induced by the use of different forecasting methods in order up to replenishment policies is analysed variance amplification is quantified and we prove that the bullwhip effect is guaranteed in the order up to model irrespective of the forecasting method used thus when production is inflexible and significant costs are incurred by frequently switching production quantities up and down order up to policies may no longer be desirable or even achievable in the second part of the paper a general decision rule is introduced that avoids variance amplification and succeeds in generating smooth ordering patterns even when demand has to be forecasted the methodology is based on control systems engineering and allows important insights to be gained about the dynamic behaviour of replenishment rules

forecasting and inventory performance in a two stage supply chain with arima 0 1 1 demand theory and empirical analysis the arima 0 1 1 demand model has been analysed extensively by researchers and used widely by forecasting practitioners due to its attractive theoretical properties and empirical evidence in its support however no empirical investigations have been conducted in the academic literature to analyse demand forecasting and inventory performance under such a demand model in this paper we consider a supply chain formed by a manufacturer and a retailer facing an arima 0 1 1 demand process the relationship between the forecasting accuracy and inventory performance is analysed along with an investigation on the potential benefits of forecast information sharing between the retailer and the manufacturer results are obtained analytically but also empirically by means of experimentation with the sales data related to 329 stock keeping units skus from a major european superstore our analysis contributes towards the development of the current state of knowledge in the areas of inventory forecasting and forecast information sharing and offers insights that should be valuable from the practitioner perspective