What Economists Do about Values

The paper explores the way the work of classic institutionalist authors can inform modern nonprofit economics. From the Veblenian perspective, nonprofit organization is explained as an institutional consequence of the pecuniary-industrial dichotomy. The Ayresian theoretical system is used to highlight nonprofit organization as a particular form of the progressive weakening of the institution of private property in response to technological imperatives. Based on these arguments, the societal meaning of nonprofit organization is shown to be in realizing instrumental value that is unattainable through pecuniary ceremonial behavior embodied in the for-profit sector. At the same, in line with the Veblenian analysis of American universities, the ability of nonprofit firms to attain instrumental value is recognized as potentially limited by the corrupting effects of the embedding pecuniary culture.     

What does Monetary Policy Reveal about a Central Bank's Preferences?

The design of monetary policy depends on the targeting strategy adopted by the central bank. This strategy describes a set of policy preferences, which are actually the structural parameters to analyse monetary policy making. Accordingly, we develop a calibration method to estimate a central bank's preferences from the estimates of an optimal Taylor–type rule. The empirical analysis on US data shows that output stabilization has not been an independent argument in the Fed's objective function during the Greenspan's era. This suggests that the output gap has entered the policy rule only as leading indicator for future inflation, therefore being only instrumental (to stabilize inflation) rather than important per se .
(J.E.L.: C61, E52, E58).     

Why a new malpractice crisis is coming

This article predicts escalating premiums and a greater risk of malpractice suits based on the increasing frequency and cost of claim payouts. The number of insurance claims increased by 12% in 1978 after a decrease of 11% in 1976 and by 2% in 1977. The percentage of premium income paid out has followed the same pattern. It was a high of 66.5% in 1975 and then fell into the 40% range in the next two years. Last year it bounced back to 60.6%. Some insurance authorities view the 1976-77 drop in claims as artificial and attribute it to a reluctance to file suits during the period immediately following new malpractice laws. The reluctance to sue has apparently relaxed. About 16% of the cases actually go to court. Out of those, 90% of the verdicts favor doctors. The rise in cases going to court shows that reform! legislation passed in several states to reduce malpractice litigation is not yet working. The average payout was up 20% between 1976 and 1978 with the greatest rise in large awards; million-dollar settlements are not uncommon. Escalating payouts are attributed to general inflation anf rising medical costs. In addition, the public has become better medically informed and been taught that for every wrong ther is a remedy.     

What do Russians think about transition?1

We use data from the 2006 round of the Russian Longitudinal Monitoring Survey to describe perceptions of the Russian population about the transition process and the role of the state compared with that of free markets. We find that about one‐half of the Russian population is disappointed with transition and a large majority is in favour of high state regulation and state provision of goods and services. High demand for government regulation and increased state intervention coexists with a low level of trust in government institutions and recognition of high and rising levels of corruption. The findings are consistent with the theory developed by Aghion et al. (2009) . In an environment with poor social capital, private business imposes negative externalities on the society and society chooses to demand more state regulation and tolerate corruption to reduce these externalities. We also find that individual perceptions of social capital and corruption co‐vary with the demand for regulation, as predicted by the theory.