Communication by Central Bank Committee Members: Different Strategies, Same Effectiveness?

The paper assesses the communication strategies of the Federal Reserve, the Bank of England, and the European Central Bank and their effectiveness. We find that the effectiveness of communication is not independent from the decision-making process. The paper shows that the Federal Reserve has been pursuing a highly individualistic communication strategy amid a collegial approach to decision making, while the Bank of England is using a collegial communication strategy and highly individualistic decision making. The European Central Bank (ECB) has chosen a collegial approach both in its communication and in its decision making. Assessing these strategies, we find that predictability of policy decisions and the responsiveness of financial markets to communication are equally good for the Federal Reserve and the ECB. This suggests that there may not be a single best approach to designing a central bank communication strategy.     

Should Tariff Reductions be Announced? An Intertemporal Computable General Equilibrium Analysis

In this paper the macro and structural implications of three alternative tariff-reduction strategies are examined. Under the first strategy, which is similar to that adopted in Australia in 1973, the tariff cut is implemented without warning. The second strategy is consistent with the current approach of phasing in tariff cuts according to a previously announced schedule. Under the third strategy the tariff cut is implemented several years after it is announced. Our results suggest that if tariffs are to be reduced then it is preferable to implement the policy without warning.     

A Simple Econometric Approach for Utility-Based Asset Pricing Models

Utility-based models of asset pricing may be estimated with or without assuming a distribution for security returns; both approaches are developed and compared here. The chief strength of a parametric estimator lies in its computational simplicity and statistical efficiency when the added distributional assumption is true. In contrast, the nonparametric estimator is robust to departures from any particular distribution, and it is more consistent with the spirit underlying utility-based asset pricing models since the distribution of asset returns remains unspecified even in the empirical work. The nonparametric approach turns out to be easy to implement with precision nearly indistinguishable from its parametric counterpart in this particular application. The application shows that log utility is consistent with the data over the period 1926–1981.     

WILL ELECTRIC UTILITIES COMPETE EFFECTIVELY WITHOUT A PROFIT MOTIVE?

This paper reviews the factors leading to the decline of utility participation in the energy conservation market over the past decade in California. The analysis finds that California's regulatory focus on mandating conservation program funding levels, rather than on measuring and rewarding the achievement of energy savings from utility conservation programs, has contributed to a decline in both program scope and program effectiveness. Other major reasons for this decline include potential revenue losses resulting from conservation programs on the generation side, a preoccupation with identifying winners and losers using benefit-cost tests, and a regulatory focus on "system" impacts from conservation programs that precluded a more direct marketing focus on utility customers' values and needs. The paper concludes that both regulators and utilities should work to develop new indicators of success in the conservation market. These should focus on achieving energy conservation results and rewarding the results with increased profits as opposed to rewarding just effort with expense recovery.     

Measuring the Performance Drivers of a Pilot Implementation of a Purchasing Card System

Corporate purchasing cards have been offered as an efficient means of maintaining control over purchasing while reducing the administrative cost associated with the acquisition of low-dollar items. However, despite its growing popularity, there has been little systematic research on the use of this technology. This study uses archival data and a survey of users from a single large organisation to describe the nature of purchasing card technology and to investigate the consequences of its implementation. The card was found to be more positively accepted by younger, more committed employees who had shorter periods of tenure at the organisation studied, but who had received higher levels of supervisory encouragement, and who had more experience with credit cards.     

The Quality Delivery Option in Treasury Bond Futures Contracts

This paper uses three methods to estimate quality option values for CBOT Treasury bond futures contracts. It presents evidence regarding: (1) payoffs from exercising this option at delivery, (2) estimates from a T-bond futures pricing model that incorporates this option, and (3) estimates obtained from an exchange option pricing formula. The results indicate that this option is worth considerably less than reported by Kane and Marcus (1986a) . For example, payoffs obtained by switching from the bond cheapest to deliver three months prior to delivery to the one cheapest at time of delivery average less than 0.30 percentage points of par.     

Les effets de la note de planification,des pressions temporelles et des caractéristiques individuelles du vérificateur sur l'estimation du temps de révision par le chef de groupe en vérification*

Résumé. Cette étude se penche sur l'effort en terme de temps de révision des chefs de groupe en vérification (tel que reflété par leurs estimations du temps requis pour la révision du dossier de vérification) et la mesure dans laquelle cet effort est orienté par une autre activité importante du chef de groupe: la planification initiale de la mission de vérification. La planification initiale de la vérification est conditionnée par l'identification de certaines zones critiques dans la note de planification. Les pressions temporelles et les caractéristiques individuelles du vérificateur sont également étudiées, car les recherches antérieures en vérification semblent indiquer qu'elles sont susceptibles d'influencer la révision du chef de groupe. Cette analyse est fondée sur les réponses, provenant de soixante-treize chefs de groupe de dix grands cabinets d'experts-comptables, à un cas de vérification. Les résultats indiquent que: 1) les chefs de groupe font preuve d'un consensus raisonnable en budgétisant plus de la moitié du temps de vérification pour la révision, 2) le plan initial de vérification oriente leur révision ultérieure, 3) les pressions au niveau du temps n'influencent pas de façon significative leurs estimations relatives au temps de révision, et 4) l'appartenance à un cabinet, le niveau d'expérience de vérificateur, et l'effort de planification initiale sont reliés aux différences des pratiques et des perceptions de la révision par le chef de groupe. La fin de cet article comporte une discussion des conséquences de ces résultats en regard de la pratique et des recherches ultérieures.