The Phillips curve under state-dependent pricing

We derive a Phillips curve equation from the dynamic stochastic general equilibrium (DSGE) model with state-dependent pricing developed by Dotsey et al. [1999. State-dependent pricing and the general equilibrium dynamics of money and output. Quarterly Journal of Economics 114, 655-690]. This state-dependent Phillips curve encompasses the new Keynesian Phillips curve (NKPC) based on Calvo-type price setting as a special case. We analyze the effect of the state-dependent terms (that is, the variations in the distributions of price vintages) on inflation persistence, and we examine whether the hybrid NKPC (that is, the NKPC extended by a lagged inflation term) can adequately describe inflation dynamics generated in a calibrated state-dependent pricing economy.     

Use of mathematical models in automotive transportation policy analysis: A case study

Mathematical models are used widely in automotive transportation policy analysis. The limitations, benefits, and uses of a case-study model, the Sweeney Passenger Car Gasoline Demand Model, were examined. It was found that because of users' lack of awareness of the model's characteristics, the model has sometimes been misused, although the misuse appears to have had no major negative policy impact. However, the model use has had some impact on major automotive/energy policy decisions of the 1970s. Involvement by the model author in applications of the model contributed to effective use of the model in the policy process.     

Uncertainty and the arbitrage pricing theory

This paper tests the economic importance of income uncertainty in the context of a measured factor arbitrage pricing theory model. This provides a test of the importance of uncertainty using a different methodology and data set than are traditionally used. If income uncertainty affects the investment climate, a statistically significant risk premium will be associated with assets that are affected by uncertainty. The empirical work in this essay finds that a generalized autoregressive conditional heteroskedasticity measure of income uncertainty is a priced factor in a model of the arbitrage pricing theory. The risk premium between a baa-rated 10-year corporate bond and a 10-year government bond, as well as the term structure, also are priced factors.     

Some tests of analytical multiobjective decision-making methods

Many analytical methods have been developed for multiobjective decision problems. All attempt to achieve the same goal. This paper reports on tests of five decision rules and seven weighting methods applied by three different panels to determine whether or not they produce different results and to infer, where possible, the nature and origin of the differences.Different methods do produce different results. Lacking a definition of “goodness,” however, it is not clear how much these differences matter. Nevertheless, some methods have obvious problems, either in theoretical validity or in application, and they should be avoided.     

The influence of judges' attitudes on liability assessments related to failed audits exhibiting significant audit team over-time or significant use of off-shore auditors

This study provides evidence on how audit firms' decisions to use offshore (outsourced) auditors or to assign on-site (local) auditors extensive overtime affect judges' evaluation of auditor legal liability I conduct a behavioral experiment in which actual judges responded to a hypothetical audit lawsuit. The results suggest auditors may be penalized during the litigation process depending on the extent of overtime or off-shoring and judges' attitude toward the public accounting profession. Judges with a positive attitude toward public accounting assessed more liability for an audit firm that used offshore (outsourced) auditors than for the use of extensive overtime for on-site auditors or a control condition. However, judges with a negative attitude toward the auditing profession assessed higher liability for auditors except when on-site auditors bore significant overtime in the final weeks of the audit.     

Towards a fair degrowth-society: Justice and the right to a ‘good life’ beyond growth

A critical scrutiny is presented of the ethical assumptions of growth and degrowth theories with respect to distributive justice and the normative conditions for a ‘good human life’. An argument is made in favor of Sen's and Nussbaum's ‘capabilities approach’ as the most suitable theoretical framework for addressing these questions. Since industrialization economic growth has played a key-role as an attraction pole, around which issues of social justice, political stability, and welfare protection seemed to gravitate. Accordingly, it is considered as a necessary condition for both intragenerational and intragenerational justice. These assumptions have been subjected to substantial critique by degrowth-thinkers, according to which economic growth is rather a threat than a condition for intragenerational and intergenerational justice. However, a theoretical underpinning of these assumptions is missing so far. In the paper I analyze the ethical and moral assumptions in both approaches by focusing on the theories of justice that are implicitly laid down as a background for their arguments (welfarism, resourcism, and the capabilities-approach). In a detailed analysis of the main critical points formulated by degrowth advocates I take the capabilities approach perspective and show why it can offer a more adequate normative underpinning for the conceptualization of a degrowth society.     

Earnings conference calls and stock returns: The incremental informativeness of textual tone

Quarterly earnings conference calls are becoming a more pervasive tool for corporate disclosure. However, the extent to which the market embeds information contained in the tone (i.e. sentiment) of conference call wording is unknown. Using computer aided content analysis, we examine the incremental informativeness of quarterly earnings conference calls and the corresponding market reaction. We find that conference call linguistic tone is a significant predictor of abnormal returns and trading volume. Furthermore, conference call tone dominates earnings surprises over the 60 trading days following the call. The question and answer portion of the call has incremental explanatory power for the post-earnings-announcement drift and this significance is primarily concentrated in firms that do not pay dividends, illustrating differences in investor behavior based on the level of cash flow uncertainty. Additionally, we find that a context specific linguistic dictionary is more powerful than a more widely used general dictionary (Harvard IV-4 Psychosocial).