Market timing,investment, and risk management

The 2008 financial crisis exemplifies significant uncertainties in corporate financing conditions. We develop a unified dynamic q-theoretic framework where firms have both a precautionary-savings motive and a market-timing motive for external financing and payout decisions, induced by stochastic financing conditions. The model predicts (1) cuts in investment and payouts in bad times and equity issues in good times even without immediate financing needs; (2) a positive correlation between equity issuance and stock repurchase waves. We show quantitatively that real effects of financing shocks may be substantially smoothed out as a result of firms' adjustments in anticipation of future financial crises.     

The Relevance of Responsibility to Ethical Business Decisions

This paper addresses researchers’ call for integrating workplace spirituality with organizational literature. This paper points out that self-interest transcendence is a common aspect in the workplace spirituality concept that emerged in the last decade and also in four OB concepts – transformational leadership, organizational citizenship behavior, organizational support, and procedural justice – that emerged in OB about two decades ago. Based on this common aspect of self-interest transcendence and the temporal precedence of these four OB concepts’ emergence, it indicates that these four OB concepts constitute a precursor of workplace spirituality. It places workplace spirituality in the larger context of OB␣and outlines the associated research and practice implications. The author also holds a lien on the position of professor at XLRI School of Business and Human Resources, India.     

Did Hayek have a monetary theory of business cycles?

Joseph Schumpeter, a careful reader of Hayek, categorized Hayek??s theory of economic cycles as non-monetary. Almost every other source, including Hayek himself, categorized the theory as monetary. The issue turns on the concept of causality being used. The question of what causality concept to apply to complex phenomena has substantive implications for economic theory. A simple concept of causality, appropriate to the study of some physical phenomena, will mislead when applied to complex phenomena. We provide examples of errors in analysis that follow from the wrong choice of a causal paradigm.     

On the incidence of commissions in auction markets

We analyze the welfare consequences of an increase in the commissions charged by intermediaries in auction markets. Commissions are similar to taxes imposed on buyers and sellers, and standard economics suggests that both sellers and buyers are made worse off by the tax. However, we show that when the buyers' participation constraint binds and when sellers set optimal reservation prices, the level of commissions correlates to participation and reservation prices in such a way that participating buyers strictly gain from higher commissions.     

Monitoring the future. Building an early warning system for the Dutch Ministry of Justice

To determine the sustainability of the policy, an Early Warning System (EWS) has been developed for the Dutch Ministry of Justice. An EWS is used to monitor various developments and to place them within the perspective of future scenarios. Without actually predicting the future, this makes it possible to determine which scenario is the most relevant at any given moment, allowing the department to adapt its policies. Regular modifications to the EWS make it possible to monitor in the direction of which scenario society appears to be moving. This creates a path to the future with which the sustainability of (new) policies can be tested periodically.     

Dispensing with NAFTA Rules of Origin? Some Policy Options

The objective of this paper is to use a computable general equilibrium (CGE) methodology to estimate the economic gains, for both Canada and Mexico, of: (1) adopting a North American customs union (CU) that would also liberalise rules of origin (ROO); and (2) reviving the WTO scenario of multilateral free trade, thereby eliminating preferential commerce and thus the need for preferential ROO across free trade agreements (FTAs). Such a CGE methodology is useful as the approach permits computation of an efficiency (or ex post) cost of ROO that might, in some contexts, be more relevant than the existing ex ante indices of ROO restrictiveness, which are unable to account for the fact that the use of preferential access in an FTA (and the concomitant ROO compliance) is an option, not an obligation. The paper shows that the erosion of NAFTA tariff preferences at the end of the 1990s and early 2000s, which resulted from a different phasing of the NAFTA and Uruguay Round measures, has reduced the efficiency cost of NAFTA ROO, making these rules economically less relevant, especially for Canada, and therefore limiting somewhat the gains from liberalising them through a CU. Given this, the WTO scenario of multilateral free trade remains the approach that would deliver the largest economic gains in terms of GDP and welfare, while making preferential commerce and ROO obsolete.     

Ronald Coase's Method of Building More Realistic Models of Choice

This paper argues that Ronald Coase's major contributions to economic theory are best understood in terms of the distinct method he used to build more realistic models of choice. We call his method the benchmark-comparison method. It consists of building models of choice and then using them as benchmarks in the further investigation of economic interaction, either by comparing the benchmark models with observed interaction or by building additional models of choice, which may themselves function as benchmarks. The paper first describes the method then demonstrates how Coase used it in his two most famous papers. We go on to show how an understanding of the method confirms Coase's own statements about the continuity of his thought. Finally, we assess Coase's critique of Milton Friedman's positivist methodology and discuss a recent paper on Coase's methodology.     

Swedish technology teachers’ views on assessing student understandings of technological systems

Technology education is a new school subject in comparison with other subjects within the Swedish compulsory school system. Research in technology education shows that technology teachers lack experience of and support for assessment in comparison with the long-term experiences that other teachers use in their subjects. This becomes especially apparent when technology teachers assess students’ knowledge in and about technological systems. This study thematically analysed the assessment views of eleven technology teachers in a Swedish context. Through the use of in-depth semi-structured qualitative interviews, their elaborated thoughts on assessing knowledge about technological systems within the technology subject (for ages 13–16) were analysed. The aim was to describe the teachers’ assessment views in terms of types of knowledge, and essential knowledge in relation to a progression from basic to advanced understanding of technological systems. The results showed three main themes that the interviewed teachers said they consider when performing their assessment of technological systems; understanding (a) a system’s structure, (b) its relations outside the system boundary and (c) its historical context and technological change. Each theme included several underlying items that the teachers said they use in a progressive manner when they assess their students’ basic, intermediate and advanced level of understanding technological systems. In conclusion, the results suggest that the analysed themes can provide a basis for further discussion about defining a progression for assessing students’ understanding about technological systems. However, the findings also need to be examined critically as the interviewed teachers’ views on required assessment levels showed an imbalance; few students were said to reach beyond the basic level, but at the same time most assessment items lay on the intermediate and advanced levels.