Nonlinear Aspects of Goods-Market Arbitrage and Adjustment: Heckscher''s Commodity Points Revisited

We propose that analysis of purchasing power parity (PPP) and the law of one price should explicitly take into account the possibility of “commodity points”—thresholds delineating a region of no central tendency among relative prices, possibly due to lack of perfect arbitrage in the presence of transaction costs and uncertainty. More than 80 years ago, Heckscher stressed the importance of such incomplete arbitrage in the empirical application of PPP. We devise an econometric method to identify commodity points. Price adjustment is treated as a nonlinear process, and a threshold autoregression offers a parsimonious specification within which both thresholds and adjustment speeds are estimated by maximum likelihood methods. Our model performs well using post-1980 data, and yields parameter estimates that appear quite reasonable: adjustment outside the thresholds might imply half-lives of price deviations measured in months rather than years, and the thresholds correspond to popular rough estimates as to the order of magnitude of actual transport costs. The estimated commodity points appear to be positively related to objective measures of market segmentation, notably nominal exchange rate volatility.J. Japan Int. Econ.December 1997,11(4), pp. 441–479. Department of Economics, University of California, Berkeley, California 94720-3880; and Department of Economics, Northwestern University, Evanston, Illinois 60208-2600.     

Knowledge production and publishing in Africa

This article explores the practice of ‘knowledge production’ and ‘publishing’ in Africa. Knowledge production and publishing in Africa has been and still is dominated by Western experts, most of whose interests do not serve Africa. Powerful social groups in post-colonial Africa construct knowledge about Africa from the sites of universities. Ordinary people also produce knowledge, most of which is elaborated through unwritten forms, and actually contest dominant modes of knowing. Publishing in Africa ought to be controlled by Africans if African states are to realise the dream of an African renaissance. African governments ought to invest in knowledge production and publishing. African intellectuals with university education should work with ordinary African intellectuals to create new sites of knowledge. Knowledge production and publishing is not an ideologically neutral phenomenon. Therefore, African governments should create, and not thwart, conditions conducive to knowledge production and publishing that is self-interrogating.     

Critical thinking and communication skills: Integration and implementation issues

This article describes issues associated with implementing an integrated approach to critical thinking and communication skills within accounting courses. The article builds on the work of Hirsch and Collins (1988) and discusses the following issues: (a) the collaboration of accounting and English faculty, (b) types of assignments, (c) assignment design, (d) the feedback process, (e) revisions in courses to accommodate a communication skills program, and (f) resources and motivation. The examples offered are from management/cost accounting courses, but our experience suggests that such an integrated approach to teaching critical thinking and both oral and written communication skills works well within most accounting and other business courses. However, individual programs will need to be tailored in order to address the issues defined here in ways that best fit their mission, goals, and resources.     

Issues in decentralizing the provision of education

This paper analyzes some of the problems that arise in decentralizing education to the private sector. We concentrate on the difficulties that result from the heterogeneity of students and competition among schools in a location setting. We analyze two main issues, the resources expended by schools and the mix of students in schools, and report on results for two others, the location of schools and their number. For each of these, we investigate the extent to which decentralizing the provision of schooling results in an efficient allocation of resources, and consider the use of vouchers to improve the situation. Our analysis draws on elements of three distinct methodologies: the theory of clubs, location theory, and the theory of monopolistic competition. We find that private schooling will typically be inefficient, but that inefficiency may sometimes be corrected by appropriately designed vouchers.We would like to thank Olivier Debande, Jean-François Wen, two anonymous referees, and seminar participants at the 1st meeting of the Canadian Public Economics Study Group and the 51 st congress of the International Institute of Public Finance for helpful comments. Stefan Buergi and Luc Savard provided useful research assistance. We are also grateful to the SSHRCC and the FCAR for financial support.     

A Forum for Issues in Advertising Education

Abstract

Advertising education is an established facet of higher education. It has developed, however, along two tracks—journalism and marketing. The result has been two different approaches to the study of advertising, neither of which may be the best approach. If the best education in advertising is to be offered, then the academic community must address itself to a resolution of these differences in the approaches to the teaching of advertising. Thus, a forum to consider the problems of advertising education is suggested.     

Who owns the long term? Perspectives from global business leaders

Day-to-day management is challenging enough for CEOs. How do they manage for the long term as well? We posed that question to four top executives of global companies. According to Maurice Levy, chairman and CEO of Publicis Groupe, building the future is really about building the present and keeping close to the front line--those who deal with your customers and markets. He also attributes his company's success in large part to knowing when to take action: In a market where clients' needs steer your long-term future, timing is everything. UPS Chairman and CEO Mike Eskew emphasizes staying true to your vision and values over the long run, despite meeting obstacles along the way. It took more than 20 years, and many lessons learned, to produce consistent profits in what is today the company's fastest-growing and most profitable business: international small packages. Wulf H. Bernotat, CEO of E.ON, examines the challenges facing business leaders and politicians as they try to balance energy needs against potential environmental damage. He calls for educating people about consumption and waste, and he maintains that a diverse and reliable mix of energy sources is the only way to ensure a secure supply while protecting our environment. Finally, Marianne Barner, the director of corporate communications and ombudsman for children's issues at IKEA, discusses how the company is taking steps to improve the environment and be otherwise socially responsible. For example, it's partnering with NGOs to address child labor issues and, on its own, is working to help mitigate climate change. IKEA's goals include using renewable sources for 100% of its energy needs and cutting its overall energy consumption by 25%.