The Austrian theory of the cooperative firm

This paper draws on Wicksell's Value, Capital and Rent. The (comparative-statics) response of the cooperative to a change in its parameters (capital stock, rate of interest paid on capital stock, and production function) is examined. Severe employment problems may be expected if, in a cooperative setting, the rate of interest is, by macroeconomic management, kept at a relatively low level. Technological progress also may lead to a contraction in employment and even, under some circumstances, cause a decline in output per man. The cooperative is throughout contrasted with its capitalist counterpart.     

Valuing Mortgage Insurance Contracts in Emerging Market Economies

We develop a new option-based method for the valuation of mortgage insurance contracts in closed form in an economy where agents are risk neutral. While the proposed valuation method is general and can be used in any market, it may be particularly useful in emerging market economies where other existing methods may be either inappropriate or are too difficult to implement because of the lack of relevant data. As an application, we price a typical Serbian government-backed mortgage insurance contract.     

Price Endogeneity and Food Demand in Urban China

Price endogeneity has been ignored in previous analyses of food demand in urban China. We exploit data provided by the China National Bureau of Statistics on agricultural commodity supply shifters and use reduced‐form price equations to account for price endogeneity. Applying our unique econometric approach to the analysis of provincial‐level food demand in China, we find strong statistical evidence of price endogeneity. Models that ignore price endogeneity result in substantially biased elasticities and misleading estimates of future food demand in China.     

A short history of global inequality: The past two centuries

Using social tables, we make an estimate of global inequality (inequality among world citizens) in early 19th century. We then show that the level and composition of global inequality have changed over the last two centuries. The level has increased reaching a high plateau around 1950s, and the main determinants of global inequality have become differences in mean country incomes rather than inequalities within nations. The inequality extraction ratio (the percentage of total inequality that was extracted by global elites) has remained surprisingly stable, at around 70% of the maximum global Gini, during the last 100 years.     

Social costs of public service obligation routes—calculating subsidies of regional flights in Norway

In this note we describe an iterative procedure of how to estimate unit costs per leg of a public service obligation (PSO) route network if certain data is publicly available. The aim of this approach is to make judgments in benchmarking and in regulation if revenues, costs and profits (or losses) per flight and its distribution among these route networks are typical compared to carriers serving networks under a competitive regime. Particularly this note aims to set a reference for the question, if market or bargaining powers are abused and to which extent. This work is thus especially important for PSO cases where a particular network cannot be operated in a profitable manner; therefore, its routes are offered to monopoly providers in a bidding competition and (in most cases) the service needs to be publicly subsidized. We shall apply the procedure on origin-destination matrices from tender documents published by the Norwegian Ministry of Transport and Communications. The Ministry covers incurred losses produced by the bidding and winning carrier. As a first result we can observe that the PSO allocations show indications of an inefficient allocation process reflected in more than three-fold quoted costs on PSO routes above estimated market levels.     

Context-Sensitive Access Control Model for Government Services

During the past two decades, e-government information systems have become less paper-based and more computer-based. Those information systems usually take the form of workflow systems. Due to the large social impact of e-government systems, computer security plays a pivotal role in ensuring its efficiency and effectiveness. Access control is one of the key aspects of computer security. Current access control models do not take into account the context of the system and its environment. In this article, we argue that a formal context-sensitive access control model can improve the development of e-government workflow systems and present a particular context-sensitive access control model. The subject of the article is a specification of the context-sensitive access control model for business processes (COBAC). By using a context-sensitive access control, it is possible to define more sophisticated access control policies that cannot be implemented by existing access control models. The COBAC's context is modeled using Web Ontology Language (OWL) in order to provide formal representation of context, rich representation of diverse contextual information, semantic interoperability between various context-aware systems, and a high degree of inference making. The presented model is applicable in different e-government systems, and supports the definition of access control policies for both simple and complex business processes. The model's prototype is verified by a case study on a real e-government business process—the national petty offense trial proceedings.     

Explaining the increase in inequality during transition

This paper attempts to explain the increase in inequality that has been observed in all transition economies by constructing a simple model of change in composition of employment during the transition. The change consists of the 'hollowing-out' of the state-sector middle class as it moves into either the 'rich' private sector or the 'poor' unemployed sector. The predictions of the model are contrasted with the empirical evidence from annual household income surveys from six transition economies (Bulgaria, Hungary, Latvia, Poland, Russia and Slovenia) over the period 1987-95. We find that the most important factor driving overall inequality upwards was increased inequality of wage distribution. The non-wage private sector contributed strongly to inequality only in Latvia and Russia. Pensions, paradoxically, also pushed inequality up in Central Europe, while non-pension social transfers were too small everywhere and too poorly focussed to make much difference.     

Russian Roller Coaster: Expenditure Inequality and Instability in Russia, 1994–98

This paper uses the second phase of the Russian Longitudinal Monitoring Survey to investigate the changes in expenditure inequality and instability in Russia between the autumn of 1994 and the autumn of 1998. The expenditure distribution is stable in spite of the economic and political turmoil Russia is going through. However, that does not imply much stability. Households experienced considerable fluctuations in their expenditure, with over 60 percent of the population's expenditure either more than doubling or falling to less than half their previous levels. Only about 6 percent of all households experienced an expenditure shock of less than 10 percent. The inquiry in expenditure mobility suggests high levels of transitory variation in the expenditure and high levels of instability.     

Fixed capital cost,depreciation multiplier and the rate of interest

Suppose in an economy with zero interest rate five new trucks are bought and afterwards the fleet is renewed by investing the annual depreciation quotas. The service life of a truck is four years. What will be the stationary size of the fleet? The assumed answer is four trucks. The correct answer is eight trucks. The difference is measured by a coefficient called depreciation multiplier. The value of the depreciation multiplier is examined for three typical time profiles of fixed assets, and its limits are found to be 1 ?μ?2. It is then shown how the rate of interest can be interpreted as a rate of growth in an economy with unchanged technology. If the rate of interest is made equal to the rate of growth of the economy, the ratio of discounted values of brand new fixed assets and fixed assets of balanced age-distribution is equal to the ratio between gross and net capital in the growing economy with no interest rate.