The Bank of England quarterly model of the UK economy

The Bank of England first acquired a macroeconomic model of the UK economy in early 1973, and used it for forecasting in June and July of that year. The initial model was obtained from the London Business School (LBS), but the last 14 years or so have, on the part of both the Bank and the LBS, led to developments which now make the models no closer to each other than to other large scale models of the UK. This article describes the structure and central properties of the current version of the Bank model, which has some 663 variables, 134 of which are modelled by behavioural equations, 153 by technical equations, 212 identities and 164 exogenous variables. In order to provide a transitional step between the kind of models with which most macroeconomists are familiar and the full scale version of the Bank model, one part of the article presents a very simple stylized version of the full model. This is a stepping stone to the full model which is described and analysed on a sectoral basis in Part 3, with a complete listing of equations in Part 4. Some of the simulation properties, and hence full model dynamic responses, are considered in Part 5.     

THE REAL WAGE GAP

Over the past year a gap has opened up between the growth of manufacturing productivity and that of real wages. This gap cannot persist indefinitely, but it can be closed in many different ways. The best that can happen is that wage settlements fall while output and productivity accelerate. The worst outcome would be continued stagnation of real output and no deceleration of wages, in which case the required productivity improvement would have to come about through renewed labour shedding. There are worrying signs that this has started to happen. An intermediate solution might involve a fall in the exchange rate, with some improvement in competitiveness boosting real output (so that UK producers get a larger share of buoyant consumer spending) and some rise in prices holding back real wages.
We continue to believe that the most likely outcome is a rise in output and a fall in the rate of wage settlements. In our June forecast this occurs despite a fall in the real exchange rate. In these circumstances we expect the growth of unit labour costs to fall back from its current high level so that the current 3 per cent inflation rate becomes a true "core" rate. But a moderate fall in the real exchange rate may prove hard to achieve, especially if the oil price continues to weaken. We therefore explore what would happen if the required depreciation happens more rapidly, so that interest rates have to remain high to prevent it getting out of control. In this case we would expect lower growth and higher inflation than we forecast in June.     

Employer Penalties for Failure to Provide Individual Employee Notification Under the Family and Medical Leave Act: “Clarifications” Following Ragsdale v. Wolverine Worldwide, Inc.

This article examines the Supreme Court's ruling in Ragsdale v. Wolverine Worldwide, Inc. (2002) and considers its implications for employer and employee rights and responsibilities relative to implementing the FMLA policies. We provide an overview of the pre-decision regulatory environment including the general leave provisions of the FMLA and DOL's regulations requiring employer notification of leave designated as FMLA leave. We also identify those provisions that the decision did not alter and provide a broader consideration of the issues and implication of this decision for employers and employees.     

Employee Share Ownership: Safeguarding Investments in Human Capital

Valuable investments in human capital, it has been argued, may be at risk in much the same way as shareholder equity capital. In this paper, we develop and test the hypothesis that employee share ownership (ESO) may be used to encourage and safeguard investments in human capital. Using the Workplace Employee Relations Survey 1998, we examine the empirical link between the likelihood of ESO and the presence of valuable human capital. Adjusted for possible structural influences, empirical evidence suggests considerable support for our hypothesis.     

The effects of social TV on television advertising effectiveness

Social TV is the use of communication devices to connect with family and friends watching other TV screens. Plausible arguments suggest both positive and negative effects of social TV viewing on ad-effectiveness. This study contributes by providing evidence for the direction of social TV's effects. The results of a controlled laboratory experiment suggest that the benefits of social TV, principally its association with live TV and therefore less ad-avoidance, come at the cost of negative distraction effects. Like normal coviewing, social TV viewing distracts from ad-processing, reducing unaided recall and brand attitude favorability, compared to individual (solus) viewing. However, social TV messaging about ads improved brand attitude. Perceived creativity increased the likelihood of ad-related messaging. Social TV also has an additional source of distraction, multitasking, but in this study, multitasking did not further reduce ad-effectiveness compared to coviewing. The paper concludes with implications for advertisers and future research.     

Worth waiting for: increasing satisfaction by making consumers wait

A truism in the marketing literature, and among many marketing practitioners, is that requiring consumers to wait negatively impacts quality evaluations, purchase intentions and a range of other important outcomes. However, it is also true that consumer waiting or queuing has historically been considered from an operations perspective. The present research takes a different approach and examines waits in the context of their ability to function as a signal of quality. Four experiments demonstrate a required wait can indeed signal quality to consumers and increase, rather than decrease, both purchase intentions and actual experienced satisfaction. Three moderators of this effect are examined: preexisting knowledge, consumption motivations, and the extent to which quality is difficult to objectively determine. The results suggest in situations where quality is important, unknown or ambiguous, managers may increase consumer satisfaction by making consumers wait.