Profit-maximizing communities and the theory of local public expenditures: Comment

It is argued that Sonstelie and Portney's proof that property-value maximization by each local community leads to Pareto efficient supplies of public goods is incorrect. In their analysis, property-value maximization is equivalent to profit maximization by communities. They contend that less than maximum levels of profits would lead to lower utility levels for consumers. However, in their proof, Sonstelie and Portney do not correctly characterize the implications of utility maximization. When those implications are correctly stated, their proof no longer holds.     

Strategic action generation: A comparison of emphasis placed on generic competitive methods by U.S. And Japanese managers

The paper identifies similarities and differences in the emphases and patterns that U.S. and Japanese managers attribute to a set of 22 generic competitive methods. It highlights the different ways that Japanese and American managers combine these methods to form general business strategies. Using factor analyses and smallest space analyses, the study shows differences in business strategy patterns between managers in Japan and the U.S. Such differences reflect the organizing principles underlying the strategy approaches in U.S. and Japanese firms. The organizing principle underlying U.S. responses is the desire to find way to differentiate a firm from its competitors. In contrast, the organizing principle underlying Japanese responses is a desire to establish a comprehensive, stable and defensible position. The paper discusses the implications of these results for strategic management and suggests directions for future U.S. and Japanese comparative strategy research.     

Mixed signals among tests for cointegration

This paper illustrates that, under the null hypothesis of no cointegration, the correlation of p‐values from a single‐equation residual‐based test (i.e., ADF or ) with a system‐based test (trace or maximum eigenvalue) is very low even as the sample size gets large. With data‐generating processes under the null or ‘near’ it, the two types of tests can yield virtually any combination of p‐values regardless of sample size. As a practical matter, we also conduct tests for cointegration on 132 data sets from 34 studies appearing in this Journal and find substantial differences in p‐values for the same data set. Copyright © 2004 John Wiley & Sons, Ltd.     

Financial collapse: 1933

Financial collapse in the winter of 1933, culminating in the bank holiday of early March, was a climactic event. It ended the downswing phase of the great depression. It produced widespread losses to depositors and owners of bank capital, which, soon after, led to the establishment of the Securities and Exchange Commission, separation of commercial and investment banking, federal deposit insurance, and other landmark financial legislation. It put an end to the gold standard in the U.S., followed in a few years by the remaining adherents of that standard.Presidential Address presented at the Fiftieth International Atlantic Economic Conference, October 15–18, 2000, Charleston, South Carolina. This paper is based on the author's own work,A History of the Federal Reserve [forthcoming, chap. 5].     

Ethical dilemmas in performance appraisal

As the interest in ‘the quality of work life’ grows, it becomes increasingly apparent that certain practices within this arena require critical scrutiny. This paper is an examination of one such area, performance appraisal (PA). We examine some of the main conceptual issues in PA, and we sketch some key, practical dilemmas that may arise in the use of PA. We conclude that one can morally justify the use of PA under certain condition, and we suggest possible solutions to key ethical dilemmas that are faced by the manager and the employee.     

Reviews

INNER CITIES.

MacGregor, S. and Pimlott, B. (eds) 1990: Tackling The Inner City. Oxford: Oxford University Press, £35.00 cloth.

RECYCLING.

Geoff Wright, 1990: The Need to Restructure the Economics of Recycling (SWAP

Report No 1). Leeds: Save Waste and Prosper, £1.95.

POPULISM.

Norman Pollack, 1990: The Humane Economy: Populism, Capitalism and Democracy. New Brunswick, New Jersey: Rutgers University Press, $40.00 cloth.

PRESSURES ON LOCAL GOVERNMENT AUTONOMY.

King, D. and Pierre, J. (eds) 1990: Challenges to Local Government. Sage Modern Politics Series Volume 28 sponsored by the European Consortium for Political Research. London: Sage, £30.00 cloth.

LOCAL GOVERNMENT AND THE MARKET.

Bennett, R.J. (ed) 1990: Decentralisation, Local Governments and Markets: Towards a Post-Welfare Agenda. Oxford: Clarendon Press, £40.00 cloth.

LABOUR MARKET POLICY.

Adnett, N. 1990: Labour Market Policy. Harlow: Longman, £9.95 paper.     

EXCESS RETURNS AND RISK AT THE LONG END OF THE TREASURY MARKET: AN EGARCH-M APPROACH

In this paper we model weekly excess returns of ten-year Treasury notes and long-term Treasury bonds from 1968 through 1993 using an exponential generalized autoregressive conditional heteroskedasticity in mean (EGARCH-M) approach. The results indicate the presence of conditional heteroskedasticity and a strong tendency for the ex-ante volatility of excess returns to increase more following negative excess return innovations compared with positive innovations of equal magnitude. In addition, increases in ex-ante volatility are associated in some subperiods with rising excess returns on longer-term instruments, although the slope of the yield curve and lagged excess returns generally remain significant predictors of excess returns.     

Inflation and capital accumulation under a finite horizon

The effect of inflation on demand for capital and the aggregate capital-labor ratio is investigated in a finite-horizon utility-maximization model. It is shown that deriving saving and asset choice decisions from utility maximization does not in itself lead to superneutrality (independence of steady-state capital-labor ratio from the rate of monetary growth) as in the work of Sidrauski, and that a finite horizon is crucial in explaining this difference. It is further shown that it is possible under very general conditions to show that increases in the rate of inflation will increase the aggregate capital-labor ratio, allowing us to extend the Mundell-Tobin effect to a wider class of models.