The Impact of EMU on Inflation Expectations

This paper analyses the impact of the monetary regime change from the Bundesbank to the ECB on inflation expectations. In the theoretical part, the Barro-Gordon model is used to derive the potential effect of a new central bank on inflation and inflation expectations. The econometric investigation is based on a flexible specification of expectation formation which allows both for rational and adaptive elements. The results indicate that the monetary regime change did not have a strong and lasting impact on the formation of inflation expectations and that the credibility of both central banks is not perceived to differ significantly anymore. JEL Classification Numbers: E 58, E 31     

Hedge fund liquidity and performance: Evidence from the financial crisis

We investigate how share restrictions affect hedge fund performance in crisis and non-crisis periods. Consistent with prior research, we find that in the pre-crisis period more illiquid funds generate a share illiquidity premium compensating investors for limited liquidity. In the crisis period, this share illiquidity premium turns into an illiquidity discount. Hedge funds with more stringent share restrictions invest more heavily in illiquid assets. While share restrictions enable funds to manage illiquid assets effectively in the pre-crisis period, they seem insufficient to ensure effective management of illiquid portfolios in the crisis. In a crisis period, funds holding illiquid portfolios experience lower returns and alphas, also when share restrictions are controlled for. Funds with an asset–liability mismatch perform particularly poorly and experience the strongest outflows. Share restrictions are also a proxy for incentives as investors cannot immediately withdraw their money after poor performance. We show that higher incentive fees can offset the share illiquidity discount in the crisis period.     

The short- and long-run relationship between the illicit drug business and terrorism

We study the effect of the illicit drug business on terrorism for a sample of 58 countries for the 1984–2007 period. Consistent with the notion of a crime-terror nexus, we find that in the long run, higher drug prices are associated with more terrorism. In the short run, however, increases in drug prices lead to less terrorism, potentially because terrorist groups respond to higher drug business attractiveness by prioritizing criminal over terrorist activity.     

Rethinking the policy of contracting out Social Services to non-governmental organizations

The article describes, analyzes and evaluates the lessons and dilemmas resulting from the Government's policy of contracting out with non-governmental organizations for the provision of three types of services: foster care, adoption and home care services for the elderly. The dilemmas are: structural tension between governmental control and autonomy of provider organizations; power?–?dependence relations between the Government and the providers, the choice option available to clients; the ethical, moral and professional aspects of contractualism; the myth of innovative programs initiated by provider organizations; service quality versus price of services; and accountability of provider organizations to their stakeholders. Based on the lessons learned, the article highlights the need to rethink the strategy of contracting out and reassess the role of the Government in providing social services.     

Fads and Trends in Business and Information Systems Engineering and Information Systems Research – A Comparative Literature Analysis

The business and information systems engineering (BISE) discipline, dominating in the German-speaking countries, where it is called“Wirtschaftsinformatik”, is currently undergoing a phase of increasing internationalization and the U.S.-based Information Systems (IS) discipline is often considered an ideal. Studies show that BISE has often dealt with fads in the past – for IS there are no findings reporting on the diffusion of fads. The objective of the paper is to close this research gap. The authors conducted a literature analysis to investigate the development of topics and terms in BISE and IS from 1994 to 2007. Titles, abstracts and keywords of 2,564 articles in three BISE journals and 5,647 articles in five IS journals were analyzed. The results show that BISE is topically more diverse and concrete than IS. In addition, the rate of fads is higher in BISE than IS. Being engaged in fads is not necessarily negative – rather, it may considerably contribute to the relevance of research. However, it has to be considered that an overly intense orientation on fads may negatively influence a cumulative research progress. Hence, the authors conclude that for BISE and IS, which both have a theoretical and pragmatic mission, a balanced ratio of short- and long-term topics seems appropriate.     

Tax evasion, tax avoidance and shadow economy: introduction

This introduction summarizes the content of the papers published in this volumes.     

Shadow economies around the world: novel insights, accepted knowledge, and new estimates

This paper is a first attempt to study the impact of enforcement on the shadow economy. Using a MIMIC model, we find that a higher share of sub-national government employment and the aspiration of public employees to follow rules significantly deter shadow economic activities. Our results also confirm previous findings: Increased burdens of taxation and regulation as well as the state of the “official” economy are important determinants of the shadow economy. The estimated weighted average informality in 162 countries around the world, including developing, Eastern European, Central Asian, and high-income OECD countries, is 17.1% of “official” GDP.