REPAIRING THE CRACKS: THE SUPERVISORY ROLE OF THE BANK OF ENGLAND POST-NORTHERN ROCK

Last autumn's run on Northern Rock was arguably of more political than economic importance. However, it is significant that most of the deposits were lost from internet and postal accounts rather than withdrawn by the picturesque queues of small investors, which attracted so much media attention, making it possibly the first cyber run on a bank. More can be learnt from failures than successes, and it now seems appropriate to consider the longer-term implications of the Northern Rock affair for the supervisory responsibilities of the Bank of England.     

HOMO DEMOCRATICUS: OR WHY DEMOCRACY SHOULD NOT BE THE OBJECTIVE OF US FOREIGN POLICY

This article argues that government efforts to support democratisation in other countries are often counterproductive because they further strengthen government institutions over and above a responsible, active, citizenry and often target the wrong recipients because of government aversion to risk. Foreign assistance programmes would do better to support individual liberties rather than democracy.     

EMPLOYEE PARTICIPATION IN OCCUPATIONAL HEALTH AND SAFETY: SHOULD UNION-APPOINTED OR ELECTED REPRESENTATIVES BE THE MODEL FOR THE UK?

Peter Kidger, Lecturer in Human Resource Management at the new Salford Management School, considers whether the offshore health and safety system, under which employees have the statutory right to elect safety representatives irrespective of union membership, could serve as a model for an elective system applicable in all workplaces. He reviews the conditions necessary for representation to be effective, the arguments for restricting representation to union appointments, and some of the criticisms of the 1977 SRSC Regulations. He concludes that there is a case for having safety representatives in all workplaces, but draws attention to enforcement and implementation problems which an elective system would face.     

WHY STUDENTS SHOULD PAY THE FULL COSTS OF THEIR EDUCATION

The community as a whole, including students, would be best served by a system under which those who benefit from higher education pay the full costs involved. An optimal student population would emerge (much lower than at present), the tax burden would be reduced and universities would become solvent and independent. Moreover, 'bizarre and outlandish' courses would dwindle.     

THE PATIENT AS CONSUMER: THE ADVERTISING OF PHARMACEUTICALS DIRECTLY TO CONSUMERS SHOULD BE ALLOWED AND ENCOURAGED

The pharmaceutical industry, with few exceptions, is not permitted to advertise its products directly to consumers (DTCA). It is the author's opinion that DTCA should be allowed and encouraged and that it is only a matter of time before this happens. Support for this view comes from reviewing the substantial amount of research undertaken in this controversial area of health policy.     

THE ECONOMETRICS OF THE HOLY GRAIL — A REVIEW OF ECONOMETRICS: ALCHEMY OR SCIENCE? ESSAYS IN ECONOMETRIC METHODOLOGY

Books reviewed in this article: David F. Hendry (1993) Econometrics: Alchemy or Science? Essays in Econometric Methodology     

BANK CAPITAL REQUIREMENTS, BUSINESS CYCLE FLUCTUATIONS AND THE BASEL ACCORDS: A SYNTHESIS

Abstract.  In order to survey the mechanisms through which the introduction of Basel II bank capital requirements is likely to accentuate the procyclical tendencies of banking, this paper brings together the theoretical literature on the bank capital channel of propagation of exogenous shocks and the literature on the regulatory framework of capital requirements under the Basel Accords. We conclude that the theoretical models that revisit the bank capital channel under the new accord generally support the Basel II procyclicality hypothesis and that the magnitude of the procyclical effects essentially depends on (i) the composition of banks' asset portfolios, (ii) the approach adopted by banks to compute their minimum capital requirements, (iii) the nature of the rating system used by banks, (iv) the view adopted concerning how credit risk evolves through time, (v) the capital buffers over the regulatory minimum held by the banking institutions, (vi) the improvements in credit risk management and (vii) the supervisor and market intervention under Basel II. The recent events and instability in financial markets all over the world have led the procyclicality issue to enter the agendas of several political international  fora  and some measures to mitigate procyclicality are being put forward. The bank capital channel literature should now play an important role in evaluating their effectiveness.     

PLANNING GAIN OR MISSED OPPORTUNITY? THE BARKER REVIEW OF LAND USE PLANNING

The Barker review of land use planning makes various recommendations, notably the introduction of Planning-gain Supplement. If implemented, this proposal will have the effect of reinstating formal betterment taxation for the first time since 1985. It is argued below that there may be better ways of siphoning off economic rent associated with land development. In addition, some suggestions are made for the more effective treatment of third-party interests.     

THE ECONOMICS OF NETWORKS: A SURVEY OF THE EMPIRICAL LITERATURE

Abstract.  Network effects, the increase in value of consuming a product if many other consumers use the same product, are a feature of many markets and in particular of many high-technology products. This paper surveys the burgeoning empirical literature that has developed especially during the last years. After theoretical work dominated the earlier years of research in this area, newer research has combined theoretical models with empirical studies and applied work with direct implications for public policy, marketing and company strategies. Furthermore, insights from the study of social networks have been applied to analyse how consumers interact with each other. The paper argues that a closer analysis of the network structure of consumer interaction promises fruitful future research avenues and advances in our understanding of how network effects operate.     

A SURVEY OF THE EFFECTS OF THE MINIMUM WAGE ON PRICES

Abstract.  It is well established in the literature that minimum wage increases compress the wage distribution. Firms respond to these higher labour costs by reducing employment, reducing profits, or raising prices. While there are hundreds of studies on the employment effect of the minimum wage, there are merely a handful of studies on its profit effects, and only a couple of dozen studies on its price effects. Furthermore, a comprehensive survey on minimum wage price effects is not available in the literature. Given the policy relevance of this neglected issue, in this paper we summarize and critically compare the available evidence on the effects of minimum wages on prices.     

LOCAL ECONOMIC REVITALIZATION OR NATIONAL INDUSTRIAL GROWTH? A COMPARATIVE OVERVIEW OF SMALL BUSINESS POLICY IN JAPAN AND THE U.S.

Contrasts in small business policy are examined for Japan and the United States. The author argues that Japan's small business policy has been part of an industrial growth-oriented policy, while comparatively the U.S. small business policy has been mainly part of locally-based economic revitalization schemes. Recent trends in policy development indicate that the policies in the two countries are converging. The U.S. policymakers have become increasingly concerned with the small business sector becoming competitive in global markets, while widespread offshoring of large firms have prompted Japanese policymakers to focus on supporting small businesses in order to prevent further loss of manufacturing jobs.     

TIME IS OF THE ESSENCE: THE IDEA OF THE COROLLARY OF THE COASE THEOREM AND A POSSIBLE APPLICATION

Extant theories on the application of the Coase Theorem to the development market have focused on the effects of zoning on the environment or upon property prices. As an original contribution to the Coasian research on the interface between the development market and the statutory planning machinery, this article seeks to develop a Coasian proposition informed by what has been called the corollary of the Coase Theorem, which allows for an empirical examination of the impact of property prices on decisions to use resources under different institutional arrangements. Our proposition is that the procedural steps taken to consume resources are not contingent on property prices unless the associated transaction costs are positive or property rights ambiguous.     

A SURVEY OF THE EVOLUTION OF QUEUEING THEORY

The evolution of queueing theory is sketched from its origin in Teletraffic, via its growth to maturity as a mathematical discipline in Operations Research, to its present position as an indispensable tool in the performance analysis of complex computer—and communication networks. The Dutch postwar contributions to this evolution receive some special attention, on the occasion of the celebration of the Dutch Society for Statistics and 'Operations Research' fourth decennium.