THE CHINA MODEL: IS IT A GOLDEN FORMULA?

The economic crisis is an opportunity for governments to face the fact that Keynesian interventionist policies are not the path to success. However, support for such policies is being sustained by misperceptions of China's remarkable economic progress in recent years. Its success is commonly attributed to government‐led initiatives, labelled as ‘The China Model’, which divert credit away from the true source of growth: its experience of the free market. This article examines the development of the free market in China and explains why the government's recent behaviour threatens to undermine the gains of recent decades.     

MORE NONSENSE ON STILTS: MR BENTHAM IS AT IT AGAIN

Lord Layard recently suggested in a series of lectures at the LSE that economists should be concerned with developing policies to maximise human happiness. His bold resurrection of the Benthamite school invites the most forceful criticism that can be levelled against naïve utilitarianism.     

HOW USEFUL IS THE ECONOMIC MODEL OF CRIME IN ASSISTING THE WAR AGAINST TERRORISM?

This article considers whether the economic model of crime can be applied to terrorist activity. It concludes that the model does explain both secular and religiously motivated terrorism: policy-makers wishing to reduce terrorist activity should aim at devising policies which increase costs and/or decrease benefits to change terrorist incentives. The 'war' should continue as long as the probable costs to society incurred by terrorist activity are greater than the costs of abatement.     

DISASTER CRISIS MANAGEMENT: A SUMMARY OF RESEARCH FINDINGS

The crisis management of disasters does not follow automatically from disaster planning. Research has shown that successful disaster management results primarily from the activities of emergency organizations. In particular, there are management problems with respect to the communication process, the exercise of authority, and the development of co-ordination. There are at least five different areas of difficulties in the communication process, namely, intra- and inter-organizational behaviours between organizations, from organizations to the public, from the public to organizations, and within systems of organizations. Exercise of authority difficulties stem from losses of higher echelon personnel because of over-work, conflict regarding authority over new disaster tasks, and clashes over organizational jurisdictional differences. Co-ordination difficulties come from lack of consensus among organizations, working on common but new disaster-related tasks, and difficulties in achieving overall co-ordination in any community disaster that is of any magnitude. Prior planning can limit these management difficulties but cannot completely eliminate all of them.     

BALANCE SHEET ECONOMICS OF THE SUBPRIME MORTGAGE CRISIS

As Copeland (1947; 1952) demonstrated with his money-flows accounts more than half a century ago, the balance sheets of economic entities are closely interrelated through a lender–borrower relationship. This paper is an attempt to describe the US subprime mortgage crisis in the framework of ‘balance sheet economics’, which was originally proposed by Stone (1966) and Klein (1977; 1983). Since it is almost impossible to collect all the balance sheets of economic entities, we use flow-of-funds accounts instead to simulate the negative consequences resulting from home mortgage delinquencies. We show that the pass-through sequence converges when the original delinquency is made up by loss of net worth in any of the economic entities. Most of the eventual loss is incurred by ‘Households and Nonprofit Organizations’ and ‘Rest of the World’. A portion of pass-through loss is eventually incurred by foreign countries with excess external assets, such as Japan, Ireland, etc.     

COMMODITY MARKET REGULATION AFTER FINANCIAL CRISIS: A COMPARATIVE APPROACH

The United States Federal Government has imposed remarkably similar regulations on commodity markets after financial crises, particularly after the Great Depression and the recent financial crisis beginning in 2007. A comparison of these two great economic recessions will help identify the changes in commodity regulation policy over the past century.     

JUSTIFYING A POLICY MIX FOR POLLUTION CONTROL: A REVIEW OF ECONOMIC LITERATURE

Abstract This paper provides a review of economic studies analysing the use of multiple policies – a so‐called policy mix – to cope with single pollution problems. To guide and structure the review, an analytical framework is developed and applied. The framework integrates transaction costs into the analysis of pollution problems and policies to overcome them. Moreover, it understands a pollution externality not only as a market failure but more generally as the failure of private governance structures. Based on this insight, two rationales for using a policy mix are identified. First, a policy mix may help to correct for multiple reinforcing failures of private governance structures, such as pollution externalities and technological spillovers. Second, a policy mix can be employed if the implementation of single first‐best policies brings about high transaction costs, e.g. when marginal pollution damages are heterogeneous or polluters are unlikely to comply with the policy. For each rationale, the relevant literature is presented. Based on the review, avenues for future research are identified.     

A Bayesian approach to optimal monetary policy with parameter and model uncertainty

This paper undertakes a Bayesian analysis of optimal monetary policy for the U.K. We estimate a suite of monetary-policy models that include both forward- and backward-looking representations as well as large- and small-scale models. We find an optimal simple Taylor-type rule that accounts for both model and parameter uncertainty. For the most part, backward-looking models are highly fault tolerant with respect to policies optimized for forward-looking representations, while forward-looking models have low fault tolerance with respect to policies optimized for backward-looking representations. In addition, backward-looking models often have lower posterior probabilities than forward-looking models. Bayesian policies therefore have characteristics suitable for inflation and output stabilization in forward-looking models.     

A City Divided by Political Philosophies: Residential Development in a Bi-Provincial City in Canada

This paper examines the impact of two distinct political ideologies on the development of residential dwellings, particularly single-family residences, in Lloydminster, a bi-provincial city in Canada. Lloydminster is a city of about 22,000 which straddles the provinces of Alberta and Saskatchewan. The two provinces are recognized for the dissimilarities in their political orientations. These dissimilarities are reflected in different taxation policies, different Medicare and health insurance policies and different auto insurance policies, which have given rise to a quantitative and qualitative split in the market for single-family residences in Lloydminster. This duality of the housing market is manifested in Saskatchewan's "affordability" and Alberta's "desirability." Alberta's tax policies have attracted "place entrepreneurs" to build upscale residences on its side for homeowners in high income brackets, who benefit from its tax policies. Saskatchewan's health care and auto insurance advantages have attracted those with such priorities and with moderate incomes. It is contended here that while distinct policies may have contributed to an uneven bi-provincial housing market, the disparity between the markets has been sustained and reinforced by all players who construct the housing reality through myths and perceptions as well as interpretations of policies and their underlying ideologies.     

THE AUSTRIANS AND THE CRISIS

The Austrian economists' analysis of the trade cycle and the Great Depression has relevance for the current global economic crisis. Excessive bank lending leads to unsustainable distortions in the economy causing the recession, which government spending can do little to mitigate. The long-run solution is a banking system with a high reserve ratio or competition in currencies.     

A re-evaluation of the effort to alleviate poverty and hunger

This paper re-examines the broad public policies implemented in the developing countries to alleviate poverty and hunger. The analysis is carried out through computer simulation experiments using a generic system dynamics model of an agrarian economy which determines income distribution and food adequacy endogeneously but treats government policy as exogenous. It is suggested that policies such as agricultural development, financial and technical assistance for the poor and population control, that directly address the symptoms of the problems of poverty and hunger, may be defeated in the long run since socio-technical arrangements of the system favor persistence of poverty and vulnerability to food shortage. These policies will, however, be successful if concomitant efforts are also made to discourage absentee ownership through fiscal measures and to build up a food slack in the system through adopting staples with high cereal/edible calories conversion ratios.     

Interpreting IS alignment: A multiple case study in professional organizations

This paper centers on the interpretation attributed by organizational members to the information systems (IS) alignment concept. Its objective is to study IS alignment in professional organizations. Specifically, it reports on an interpretive study conducted in five Chilean organizations; four professional and one entrepreneurial, of which two are private and three are public. The theoretical background of our study is derived from three IS strategic alignment conceptualizations: managerial, emergent and critical. These concepts formed our theoretical framework that guided data collection and analysis. The study centers on the meanings organizational members assigned to IS strategic alignment, as well as their views on the barriers that hinder achieving this level of organizational integration. The analysis results are summarized in seven hermeneutic themes that point out the different connotations the organizations assigned to IS alignment. The significance of the findings are summarized in four insights that formulate theoretical and practical implications. These insights refer to: (1) the difficulties of achieving alignment for professional organizations, particularly public ones, (2) the limitations these organizations have in being agile, (3) the rationale for acquiring technology and determining IT skills, and (4) the imperative meaning that CIOs attribute to IS alignment. The paper concludes with a reflection on the limitations and relevance of the research.     

FINANCIAL CRISIS RESOLUTION – THE STATE AS A LENDER OF LAST RESORT?

What is the theoretical basis for spending billions of dollars to fight the financial and economic crisis? Neither the model of an omnipotent state nor that of a welfare‐maximising state seems appropriate. We propose a model of a contractual state resulting from an exchange of protection against systemic risks against regulation of the banking sector. During the years of globalisation governments have neglected to install institutions to reduce systematic risks and currently pay the price for their laxity. We evaluate what can be undertaken in both the short and long run and how far a framework can be enforced internationally.     

A multi-level model for studying the context and impact of work–family policies and culture in organizations

The purpose of this paper was to provide an integrative multi-level framework that could help scholars study the impact of work–family policies on individual employees as well as assist practitioners in making informed decisions regarding the adoption, design, implementation, and allowance of these policies. This multi-level model illustrates the various macro- and mesolevel factors that may influence individual perceptions (i.e., equity perceptions, negotiation power, sense of entitlement) regarding work–family policies. By providing such a model, a common language may be developed for researchers from various disciplines studying this issue and better insight into the various linkages that are involved. Additionally, the framework can provide HR practitioners with a deeper understanding of the contextual factors that may influence the effectiveness of work–family policies in their organizations.     

A note on data corruption and monetary-fiscal policy regimes

It is shown that statistical tests of the effectiveness of alternative monetary fiscal policies may be inconclusive because the policies themselves may influence the observed time-series in such a way as to cause regression coefficients to differ from their true values. It is established that simple rules such as a constant rate of monetary growth have no “corrupting” effect on the data, but this is not true for sophisticated policies designed to go beyond naive model relationships.     

THE PROCESSING OF CRISIS AND NON-CRISIS STRATEGIC ISSUES

This paper asserts that organizations process different types of strategic issues in systematically different ways, proposing that organizational decision-makers expend greater resources, centralize authority and generate a greater volume of causal explanations during the processing of crisis versus non-crisis strategic issues. Data from comparative tracings of several crisis and non-crisis issues in a single organization lend preliminary support to the propositions. By conceptualizing the process of issue resolution both from an instrumental and symbolic perspective, this type of response to crisis issues can be interpreted. The theoretical and practical implications of the findings are discussed.     

Political Rescaling and Municipal Cultural Public Policies: A Comparison of France and Québec

Do territories change public policies? This would appear to be a rather unusual research orientation. It is even a reversal of the most commonly accepted approaches to the study of territorial public action, which tend to look at this issue from the opposite perspective, that is, in examining how public policies affect territories. The municipal reforms that have simultaneously occurred in Québec and France since the late 1990s afford an excellent opportunity to consider this inversion of the issues. To do so, we take as our theme culture and municipal cultural policies. We try to define and understand to what extent there exist in Québec and France retroactive links between municipal restructuring and municipal decisions about cultural facilities and activities and, more generally, municipal cultural intervention in the urban milieu. This comparative analysis of the cases of France and Québec focuses on discourse as well as achievements. First, we look at the changes arising from institutional reforms in the supply of cultural activities, budgets devoted to culture, and cultural policies. We then consider culture as a vector in the construction of a new municipal institution and a new municipal territory.     

IS ECONOMIC RECOVERY A MYTH? ROBUST ESTIMATION OF IMPULSE RESPONSES

We estimate the impulse response function (IRF) of GDP to a banking crisis using an extension of the local projections method. We demonstrate that, though robust to misspecifications of the data‐generating process, this method suffers from a hitherto unnoticed bias which increases with the forecast horizon. We propose a correction to this bias and show through simulations that it works well. Applying our corrected local projections estimator to the data from a panel of 99 countries observed between 1974 and 2001, we find that an average banking crisis yields a GDP loss of just under 10% in 10 years, with little sign of recovery. Like the original local projections method, our extension of it is widely applicable. Copyright © 2013 John Wiley & Sons, Ltd.     

A duality theory of payment systems

We model the Central Bank’s management of intraday liquidity in modern real-time gross settlement systems as a linear programming problem parameterized by different intraday monetary policies, such as reserve requirements, net debit caps and Lombard loans. We then use duality theory to determine the shadow-prices of constraints of each bank. These shadow-prices can be used by the Central Bank to set personalized intraday monetary policies in order to reduce idleness of money and to give a microfoundation of the too-big-to-fail policy.     

Rent Division, Restructuring, and Managerial Risk Taking: A Strategic Bargaining Model

This paper demonstrates that, when the manager of a poorly performing firm generates firm-specific rents, strategic considerations associated with anticipated future restructuring may lead to the adoption of risky operating policies. Furthermore, this bias toward risky policies may be exacerbated by increases in managerial entrenchment. This is the case even when the manager does not have an ownership stake in the firm. On the other hand, a manager of a firm that is performing well will prefer safer policies. These results are driven by endogenously determined management-borne costs of financial distress, and obtain under both restructuring regimes that enforce the priority of creditor claims as well as restructuring regimes that induce deviations from absolute priority.