Quantity restrictions and endogenous quality choice

In a vertical product differentiation model under Cournot competition both foreign and domestic firms respond by lowering their investment in long-run quality for a quantity restriction at, and in the neighborhood of, the free trade import level. Average quality increases only when the low-quality foreign firm faces a substantially restrictive quota/voluntary export restraint. The change in quality depends on whether the foreign firm is of high or low quality and upon the restrictiveness of the quota. The imposition of quantity restrictions has important strategic effects on the long-run choice of quality.     

Achieving the Millennium Development Goals in Sub‐Saharan Africa: A Macroeconomic Monitoring Framework

This paper presents a macroeconomic approach to monitoring progress toward achieving the Millennium Development Goals (MDGs) in Sub‐Saharan Africa. At the heart of our framework is a macro model which captures key linkages between foreign aid, public investment (disaggregated into education, infrastructure and health), the supply side and poverty. The model is then linked through cross‐country regressions to indicators of malnutrition, infant mortality, life expectancy and access to safe water. A composite MDG Indicator is also calculated. The functioning of our framework is illustrated by simulating the impact of an increase in foreign aid to Niger at the MDG horizon of 2015, under alternative assumptions about the degree of efficiency of public investment. Our approach can serve as the building block for Strategy Papers for Human Development (SPAHD), a more encompassing concept than the current ‘Poverty Reduction’ Strategy Papers.     

The Relative Efficiency of Private and Public Schools: The Case of Thailand

Cost-effectiveness is a key consideration in the policy debateon the appropriate role of private schools in predominantlypublic school systems. This article analyzes the relative performanceof public and private schools in Thailand in enhancing eighthgrade student scores in standardized mathematics tests, givenstudent background and school characteristics. Its main conclusionis that private schools are, on average, more effective andless costly than public schools in improving student performancein mathematics.     

Performance and Merton-type default risk of listed banks in the EU: A panel VAR approach

This paper provides empirical evidence that sheds new light into the dynamic interactions between risk and efficiency, a highly debated issue. First, we estimate three alternative measures of bank performance, by employing a directional distance function framework, along with a cost frontier and a profit function. As a second step, we calculate a Merton-type bank default risk. Then, we employ a panel VAR analysis, which allows the examination of the underlying relationships between efficiency and risk without applying any a priori restrictions. Most evidence shows that the effect of a one standard deviation shock of the distance to default on inefficiency is negative and substantial. There is some evidence of a reverse causation. As part of a sensitivity analysis, we extent our study to investigate the relationship between efficiency and default risk for banks with different types of ownership structures and across financial systems with different levels of development.     

Institutionalization of Tipping as a Source of Managerial Control

This paper explores, investigates and analyses the rationale, approach and outcomes of the attempts by management to control the behaviour of front–line service workers through the institutionalization of customer tipping. It presents evidence generated from an in–depth case study of a highly successful UK restaurant group to suggest that the management of tipping is a way of controlling the behaviour of front–line service workers. However, rather than view such control as purely exploitative and one–sided, it is argued that there is a degree of 'mutual instrumentality', in that the findings suggest that workers voluntarily and consciously submit to subjugation for purely instrumental benefits.     

THE PUBLIC SUBSIDIZATION OF EDUCATION AND HEALTH IN DEVELOPING COUNTRIES: A Review of Equity and Efficiency

The public sector in developing countries has traditionallyplayed an important role in the financing of educational andhealth services. This review finds, however, that the shareof public subsidies in these two sectors is not progressive,that is, proportionately higher for individuals in the lowersocioeconomic groups. This distribution persists despite explicitpolicies of universal free provision in many countries. Thearticle argues that the extent and pattern of public spendingcontribute to underinvestment and to a misallocation of scarceresources within the education and health sectors.      

The fundamental theorem of asset pricing under transaction costs

This paper proves the fundamental theorem of asset pricing with transaction costs, when bid and ask prices follow locally bounded càdlàg (right-continuous, left-limited) processes. The robust no free lunch with vanishing risk condition (RNFLVR) for simple strategies is equivalent to the existence of a strictly consistent price system (SCPS). This result relies on a new notion of admissibility, which reflects future liquidation opportunities. The RNFLVR condition implies that admissible strategies are predictable processes of finite variation. The Appendix develops an extension of the familiar Stieltjes integral for càdlàg integrands and finite-variation integrators, which is central to modelling transaction costs with discontinuous prices.     

Forecasting UK consumer price inflation using inflation forecasts

The inflation rate is a key economic indicator for which forecasters are constantly seeking to improve the accuracy of predictions, so as to enable better macroeconomic decision making. Presented in this paper is a novel approach which seeks to exploit auxiliary information contained within inflation forecasts for developing a new and improved forecast for inflation by modeling with Multivariate Singular Spectrum Analysis (MSSA). Unlike other forecast combination techniques, the key feature of the proposed approach is its use of forecasts, i.e. data into the future, within the modeling process and extracting auxiliary information for generating a new and improved forecast. We consider real data on consumer price inflation in UK, obtained via the Office for National Statistics. A variety of parametric and nonparametric models are then used to generate univariate forecasts of inflation. Thereafter, the best univariate forecast is considered as auxiliary information within the MSSA model alongside historical data for UK consumer price inflation, and a new multivariate forecast is generated. We find compelling evidence which shows the benefits of the proposed approach at generating more accurate medium to long term inflation forecasts for UK in relation to the competing models. Finally, through the discussion, we also consider Google Trends forecasts for inflation within the proposed framework.