The Policy Choices and Reaction Functions of Bank of England MPC Members

The results of an econometric exercise are presented, showing that Monetary Policy Committee (MPC) members appointed from outside the ranks of Bank of England staff (outsiders) react differently to forecasts of inflation and output than those appointed from within the Bank (insiders). All results are reinforced by the well‐established findings that, compared with outsiders, insiders choose higher interest rates, are more likely to vote as a bloc, and feature on the winning side of policy decisions more frequently. On the basis of these results, it is argued that the current MPC framework is biased toward the policy choices of insiders.     

Optimal route decision with a geometric ground-airborne hybrid model under weather uncertainty

Adverse weather is the dominant cause of delays in the National Airspace System (NAS). Since the future weather condition is only predictable with a certain degree of accuracy, managing traffic in the weather-affected airspace is a challenging task. In this paper, we propose a geometric model to generate an optimal combination of ground delay and route choice to hedge against weather risk. The geometric recourse model (GRM) is a strategic Probabilistic Air Traffic Management (PATM) model that generates optimal route choice, incorporating route hedging and en-route recourse to respond to weather change: hedged routes are routes other than the nominal or the detour one, and recourse occurs when the weather restricted airspace becomes flyable and aircraft are re-routed to fly direct to the destination. Among several variations of the GRM, we focus on the hybrid Dual Recourse Model (DRM), which allows ground delay as well as route hedging and recourses, when the weather clearance time follows a uniform distribution. The formulation of the hybrid DRM involves two decision variables - ground delay and route choice - and four parameters: storm location, storm size, maximum storm duration time, and ground-airborne cost ratio. The objective function has two components: expected total ground delay cost and expected total airborne cost. We propose a solution algorithm that guarantees to find the global optimum of the hybrid-DRM. Based on the numerical analysis, we find that ground-holding is effective only when combined with the nominal route. Otherwise, it is optimal to fly on the route determined by the DRM without ground delay. We also find the formula of the threshold ground-airborne cost ratio, which we call the Critical Cost Ratio (CCR), that determines the efficacy of ground delay: the higher the CCR, the more effective the strategies involving ground delay. We conclude that both ground delay and route hedging should be considered together to produce the best ATM decisions.     

Accounting and the absence of a business economics tradition in the United Kingdom

Economics was slow to emerge as a distinct academic and professional discipline in the United Kingdom. In the years around 1900, some British universities began to offer degrees in commerce, including accounting. These degrees were influenced by the contemporary emergence of business economics (betriebswirtschaftslehre) in Germany. However, there was no substantive emergence of a body of economic theory relating specifically to the business organization. Later attempts in the 1930s to apply economic argumentation to the problems of business and accounting, in the context of both profit determination and costing, centred around the Department of Business Administration and the Accounting Research Association, based at the London School of Economics. Although the activities of these groups are often viewed in terms of the influence of economics on accounting, there were reverse currents in that accounting notions helped in the formalization of macroeconomic notions such as national income and in the development of social accounting by Richard Stone and others. However, the intervention of the Second World War curtailed this interchange of ideas. In the post-war period, the rapid expansion of accounting as both an academic discipline and a professional practice was accompanied by a greater awareness of economic ideas and concepts. In financial reporting, these had an important influence on the inflation accounting debate of the 1970s and 1980s. In management accounting, economic ideas often operated as criticisms of existing practices. However, both the comparatively underdeveloped application by economists of their theories to business problems and the continuing intellectual barriers between academic and professional accountants made the practical interaction of accounting and economics a sporadic phenomenon.     

A Five-Year Review, Update, and Assessment of Ethics and Governance in Strategic Management Journal

Although business ethics has a long history as a core theme within the realm of strategic management it has not received considerable attention in top strategy journals until recently. In this paper, we assess the state of business ethics research published over a 5-year period (2006–2010) in Strategic Management Journal to ascertain whether there has been an increase in business ethics research published in the top strategy outlet. The results of our content analysis reveal that ethics research in SMJ is indeed on the rise yet this research stream is still underrepresented with only 5.8 % of all articles published over the five-year period having an ethics theme. Moreover, the link between Corporate Social Performance and Financial Performance was identified as the top theme during the review period.     

Virtue ethics and customer relationship management: towards a more holistic approach for the development of ‘best practice’

This paper focuses much‐needed attention on the ethical nature of customer relationship management (CRM) strategies in organisations. The research uses an in‐depth case study to reflect on the design, implementation and use of ‘best practice’ associated with CRM. We argue that conventional CRM philosophy is based on a fairly narrow construct that fails to consider ethical issues appropriately. We highlight why ethical considerations are important when organisations use CRM and how a more holistic approach incorporating some of Alasdair MacIntyre's ideas on virtue ethics could be relevant.     

Assessing Advertising Effectiveness: The Potential of Goal‐Directed Behavior

Advertising clutter and declining audience attention means advertisers need pretesting to ensure the effectiveness of their advertisements. This study uses, for the first time, a variable‐resolution display to measure viewers’ visual attention to advertising. The display features only the part of an ad that corresponds with the observer's eye gaze with high acuity, whereas the resolution of the other parts reflects the decline in spatial resolution of the human visual system. Participants keep the highest resolution area aligned with their foveal vision using manual cursor movements. In accordance with neuroscientific theory, recorded cursor movements parallel the eye gaze patterns observed in a control group. However, unlike tracking eye movements, the instrument offers a simple, unobtrusive, low‐cost, and time‐efficient way to measure the effectiveness of visual advertising. The results encourage the use of goal‐directed manual pointing movements to indicate attentional signals generated in the brain.     

Major league baseball’s Moneyball at age 15: a re-appraisal

In the 15 years since publication of the book Moneyball: The Art of Winning an Unfair Game in 2003, major-league baseball (MLB) has seen the embrace of analytics by both fans and teams. Using 45 seasons of MLB data, since the introduction of the designated-hitter in the American League in 1973, the present study validates the central premise in Moneyball regarding the importance of certain performance metrics, such as on-base percentage (OBP). The terms in our empirical model are constructed such that our results permit a straightforward comparison of the relative contribution of each factor towards MLB teams’ success in winning games. We also provide evidence indicating that MLB teams have moved to align their payrolls with Moneyball analytics in the years following the book’s publication.     

Changes in volatility of credit spread and market efficiency during rapid growth of credit-related securities

This paper investigates the changes in credit spread volatility during 1993–2001. We find that the credit spreads between junk-grade corporate bonds and Treasury bonds were significantly more volatile in the second half of this period when credit-related securities became popular. In contrast, investment-grade bonds exhibited no significant change in volatility. The junk bonds variance ratios changed from being less than one to greater than one. Using the GJR-Garch model, the conditional volatilities of junk bonds increased in the second half of the period and the mean reversion speeds slowed, suggesting a longer time for mean reversion to occur. Our analysis rules out treasury volatility, credit spread level, equity market return, T-bill rate, curvature of the Treasury curve, financial crisis, quantity of defaults and standard deviation of defaults as explanations for the increase in junk bond volatility. In contrast, volatility of equity returns provides a partial explanation of junk bond spread volatility in the later period.     

AN AXIOMATIZATION OF QUANTILES ON THE DOMAIN OF DISTRIBUTION FUNCTIONS

In an environment in which the primitive is the space of distribution functions, we characterize the quantile functions by the axioms ordinal covariance, monotonicity with respect to first-order stochastic dominance, and upper semicontinuity. We show how to characterize the VaR in a similar manner.     

University – industry collaboration in R&D: the role of labor market rigidity

We investigate how R&D university – industry collaboration (R&D UIC) is influenced by labor market rigidity. While it is well-established that an educated and skilled workforce will facilitate R&D UIC, another aspect of these alliances has been under-researched: the role of labor market rigidity, in particular the difficulties employers face in hiring and firing workers. We hypothesize that the size of the R&D labor pool in a country will encourage R&D UIC, and that the ease with which employers are legally allowed to hire and fire will directly and indirectly influence R&D UIC. Integrating data from various sources, we test our model on a sample of 73 countries for which information on the size of the R&D labor pool and labor market regulations are available. We also conduct a robustness test using a different proxy for R&D labor pool on a larger sample of 109 countries. Results confirm the strong link between a country's R&D labor pool and R&D UIC, as well as direct negative impacts of hiring and firing rigidity and an indirect negative impact of hiring rigidity. The findings have implications for managers, policy makers, and researchers of R&D collaboration between universities and industry.