The game-theoretic approach to international policy coordination: Assessing the role of targets

Zusammenfassung Der spieltheoretische Ansatz zur internationalen Koordination der Konjunkturpolitik: Die Rolle der Ziele. - In spieltheoretischen Modellen zur internationalen Koordination der Konjunkturpolitik wird die Rolle der von den Politikern verfolgten Ziele oft nur unzul?nglich berücksichtigt. Der vorliegende Artikel behebt den Mangel, indem er die Ziele der Politiker in die modelltheoretische Analyse explizit einbezieht. Der Spielraum für Wohlfahrtsverbesserungen durch Koordination erweist sich als direkt proportional zur Abweichung des angestrebten Wertes vom tats?chlichen Wert der Zielvariablen. Es zeigt sich, da? nach einem externen Schock die Anpassung der Ziele an die neue Situation eine Koordination der Konjunkturpolitik überflüssig macht. Darüber hinaus ergeben sich erhebliche Zweifel, ob das bisherige Vorgehen zur Quantifizierung m?glicher Wohlfahrtsgewinne durch Koordination logisch zul?ssig ist.

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Résumé L’approche jeu-théorique à la coordination internationale de la politique de conjoncture: Evaluation du r?le des buts. - Le r?le des buts poursuivis par les politiciens n’est considéré que insuffisamment dans les modèles jeu-théoriques de la coordination internationale de la politique de conjoncture. Cet article remédie ce problème en incluant expressément les buts des politiciens dans l’analyse modèle-théorique. La marge pour des améliorations de bien-être par la coordination est trouvée comme être directement proportioneile à la déviation de la valeur actuelle de la valeur aspirée du but. Les auteurs démontrent que l’ajustement des buts à la nouvelle situation après un choc externe rend superflu la coordination de la politique de conjoncture. De plus, il y a des doutes considérables si la procédure actuelle pour quantifier des gains de bien-être possibles par la coordination soit logiquement correcte.

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Resumen Aplicación de la teoría de juegos a la coordinación internacional de políticas económicas: el rol de las metas. - En los modelos de teoría de juegos aplicados a la coordinación internacional de la política económica las metas perseguidas por los políticos solo son tomadas en cuenta de manera inadecuada. En este trabajo se corrige esta desventaja, al incorporarse las metas de los políticos al análisis teórico. Las posibilidades de lograr niveles m’as altos de bienestar através de la coordinación resultan directamente proporcionales a la distancia entre el valor deseado y el valor realizado. Se demuestra que después de un shock externo la adecuación de las metas a la nueva situación hace redundante la coordinación de la política económica. Además résulta dudosa la coherencia del procedimiento tradicional para cuantificar ganancias de bienestar potenciales derivadas de la coordinación.

     

Financial instability, oligopolistic banking, and monetary growth

This paper analyzes the dynamics of a monetary economy whichis characterized by increasing returns to scale in financialintermediation. The intermediation technology is linear in deposits,but its operation requires a fixed verification cost to overcomethe asymmetric information about a borrower's investment outcome.Intermediaries, termed banks, can avoid the costly duplicationof information disclosure. Due to the non–convexity inintermediation activities, two stationary monetary equilibriaexist. The first is a saddle with high economic activity andhigh competition in banking. In the second equilibrium, competitionbetween banks and economic activity are low. Under adverse economicconditions, the low activity equilibrium can bifurcate intoa sink and the economy may experience periods of financial instabilityand banking crises. Although crises are random events, the economy'sexposure to financial instabilities depends on fundamental conditions.Thus, the predictive power of fundamentals does not contradictthe random theory of crises.     

A New Approach to Markov-Switching GARCH Models

The use of Markov-switching models to capture the volatilitydynamics of financial time series has grown considerably duringpast years, in part because they give rise to a plausible interpretationof nonlinearities. Nevertheless, GARCH-type models remain ubiquitousin order to allow for nonlinearities associated with time-varyingvolatility. Existing methods of combining the two approachesare unsatisfactory, as they either suffer from severe estimationdifficulties or else their dynamic properties are not well understood.In this article we present a new Markov-switching GARCH modelthat overcomes both of these problems. Dynamic properties arederived and their implications for the volatility process discussed.We argue that the disaggregation of the variance process offeredby the new model is more plausible than in the existing variants.The approach is illustrated with several exchange rate returnseries. The results suggest that a promising volatility modelis an independent switching GARCH process with a possibly skewedconditional mixture density.     

Balancedness and the core in economies with asymmetric information

Summary. A condition is given that is equivalent to balancedness of all NTU-games derived from an exchange economy with asymmetric information when endowments are variable. The condition is applicable to the ex-ante model with expected utilities, but also to the more general model of Arrow-Radner type economies without subjective probabilities. Differences in the interpretation of measurability assumptions between these two models are discussed, and another model with information consistent utility functions is developed in which the result would also hold. Received: December 12, 2001; revised version: November 1, 2002 RID="*" ID="*"I thank two anonymous referees whose comments led to an improvement of the paper.     

To change or not to change–antecedents and outcomes of strategic renewal in SMEs

Companies need to constantly renew themselves to remain competitive in rapidly changing market environments, regardless of their size or age. Even though strategic renewal is a crucial factor for sustainable success of organizations, it is only an emergent area in literature. This article examines potential antecedents of strategic renewal and impact on firm performance. Based on 104 companies’ responses to a structured questionnaire, the empirical findings demonstrate that strategic renewal positively impacts firm performance, and that entrepreneurial orientation and organizational learning are antecedents. From a practical managerial viewpoint, our results suggest that firms following a strategic renewal approach can increase the long-term success of their organizations: Firms that are entrepreneurially oriented and willing to learn can successfully manage strategic renewal.     

Lump‐Sum versus Pay‐As‐You‐Go: The Moderating Effect of Contract Types on the Optimal Logistics Decisions

When outsourcing their logistics operations to transportation companies, manufacturers/retailers need to design a contract, under which payment can be made either in a lump sum or over time (i.e., per each delivery). This paper investigates how the payment method (i.e., type of contracts) impacts the transporter's delivery schedule by developing an analytical model based on the optimal control and game theories. Our findings show that the transporter's delivery schedule depends on the method of payment and the overall cost of hiring a transporter varies with the types of contracts. We provide theoretical explanations to these findings along with managerial implications. Copyright © 2016 John Wiley & Sons, Ltd.     

Wenn nicht jetzt, wann dann? Zur Reform der Pflegeversicherung

The recent reform of the German compulsory long-term care insurance provides for an adjustment of the benefits. According to our calculations, the reform proposal will fail to ensure constant benefits in real terms, due to an increase of the demand for long-term care associated with population ageing. Furthermore, as long-term care insurance is payroll based and pay-as-you-go financed, it will substantially burden future generations. For this reason, further reforms are needed if sustainability is to be achieved. A transition from a pay-as-you-go to a funded system would disburden future generations almost completely, at the cost of transitory generations whose payments would markedly increase. Delaying the reform even a few years would however increase the burden for future generations again.     

Inside shareholders’ effective tax rates and dividends

Using information collected from the Swedish tax authorities, we calculate insiders’ actual effective tax rates on dividends. With this unique dataset, we find a significant negative cross-sectional relationship between insiders’ effective tax rates and dividend payout. This result is consistent with a tax-induced clientele effect for dividends. We also look at the impact of large block trades on dividends. We find that when insiders with zero effective taxes sell blocks, subsequent dividend payments are significantly more likely to decrease. This provides evidence that large shareholders are adjusting dividends for their individual tax situations.     

Analyst Coverage,Market Liquidity and Disclosure Quality: A Study of Fair-value Disclosures by European Real Estate Companies Under IAS 40 and IFRS 13

Disclosures in notes have been criticized by practitioners for being unwieldy and contributing little to the quality of the financial information. This study presents evidence on the association between disclosure quality, analyst following and liquidity in the real estate sector. More specifically, we study the disclosure of the methods and significant assumptions applied in determining fair values of investment properties under IAS 40 and IFRS 13. We find that disclosure quality is significantly higher under IFRS 13. Furthermore, we show that the quality is associated with analyst following and bid-ask spreads. However, the improved disclosures following the adoption of IFRS 13 are not associated with any significant positive economic consequences. This result indicates that the revised disclosure requirements in IFRS 13 did not solve any market imperfections.     

Contract Complexity, Incentives, and the Value of Delegation

In settings where the revelation principle applies, delegation arrangements are frequently inferior to centralized decision making, and at best achieve the same level of performance. This paper studies the value of delegation when organizations are constrained by a bound on the number of contingencies in any contract. For a principal-agent setting with asymmetric information, we compare centralized mechanisms where the principal retains sole responsibility for contracting and coordinating production, with delegation mechanisms where one agent (a manager) is delegated authority to contract with other agents and coordinate production. Relative to centralization, delegation entails a control loss, but allows decisions to be more sensitive to the manager's private information. We identify circumstances under which the flexibility gain outweighs the control loss, so that delegation emerges superior to centralized contracting.