An agent-based model for financial vulnerability

This study addresses a critical regulatory shortfall by developing a platform to extend stress testing from a microprudential approach to a dynamic, macroprudential approach. This paper describes the ensuing agent-based model for analyzing the vulnerability of the financial system to asset- and funding-based fire sales. The model captures the dynamic interactions of agents in the financial system extending from the suppliers of funding through the intermediation and transformation functions of the bank/dealers to the financial institutions that use the funds to trade in the asset markets. The model replicates the key finding that it is the reaction to initial losses, rather than the losses themselves, that determine the extent of a crisis. By building on a detailed mapping of the transformations and dynamics of the financial system, the agent-based model provides an avenue toward risk management that can illuminate the pathways for the propagation of key crisis dynamics such as fire sales and funding runs.     

The effect of management changes on winning in professional sports: Analysis using a dynamic lag adjustment model

This paper examines whether coaching and general manager (GM) changes among three professional sports leagues—the National Football League (NFL), the Major League Baseball (MLB), and the National Basketball Association (NBA)—effect on‐field performance. Our empirical methodology uses team‐level data by season and adapts a lag adjustment econometric approach designed to resolve several statistical challenges that arise both in general managerial settings and in sports settings. Our main finding is that coaching changes in the NFL boost the number of wins per season by between 0.5 and 1.2 in each of the first five seasons. Coaching changes have smaller, but still positive, impacts in the MLB and NBA. For all the three leagues, we find that GM changes have no discernable impact on performance. A separate cross‐sectional analysis suggests that those small impacts stem from coaches and GMs having extremely compressed talent distributions. The data indicate that coaches and GMs, en masse, are important, but changing the people who occupy those positions rarely seems to move teams to different locations on the performance distribution.     

The costs of hospital at home: the case of the New Brunswick extra-mural hospital

Policy markers in number of countries have become concerned in recent years about steadily rising costs of hospital treatment. One approach which has been proposed involves moving some treatment out of traditional hospitals by making greater use of clinics and home care. The New Brunswick Extra Mural Hospital is a province-wide system designed to treat certain classes of patient at home rather than in hospitals. Its decentralized sturucture raises questions about coordination and control, and whether a single cost function can be said to exist for the whole system. This paper estimates a cost function for the Extra Mural Hospital and tests for structural differences across geographically separated delivery units. The results indicate that the system has been successful in maintaining a common cost sturcture, supporting the view that a decentralized hospital-at-home system can be run efficiently.     

Do asset sales lead to improvements in operating performance?

The changes in operating performance associated with asset sales are investigated for a sample of UK firms. Asset sales are followed by an improvement of 11% per annum in the level of operating performance relative to the pre-sale performance level. Further, improved abnormal operating performance is found, which is measured after controlling for the performance of the industry, the pre-sale performance of the firm and the level of competition in the market for asset sales. The abnormal operating performance of the remaining assets improve by 2.4% per annum, on average, for three years after the asset sales. This study also finds that the market for asset sales is imperfectly competitive.     

Incorporating contextual information in public sector efficiency analyses: a comparative study of NSW local government

Using the planning and regulatory function of 173 NSW local governments, several approaches for incorporating contextual or non-discretionary inputs in data envelopment analysis (DEA) are compared. Non-discretionary inputs (or factors beyond managerial control) in this context include the population growth rate and distribution, the level of development and non-residential building activity, and the proportion of the population from a non-English speaking background. The approaches selected to incorporate these variables include discretionary inputs only, non-discretionary and discretionary inputs treated alike and differently, categorical inputs, ‘adjusted’ DEA, and ‘endogenous’ DEA. The results indicate that the efficiency scores of the five approaches that incorporated non-discretionary factors were significantly positively correlated. However, it was also established that the distributions of the efficiency scores and the number of councils assessed as perfectly technically efficient in the six approaches also varied significantly across the sample.     

Annual Index

The author of this article expands the background theory of voting to incorporate the undergraduate majors of members of Congress. Examining nine votes on trade across the 109th and 110th Congresses reveals that economics majors are the only category of college major to vote in favor of free trade in a predictable way. Controls for a variety of factors including ideology, race, campaign contributions, and the inclusion of votes specifically on Cuba fail to diminish the effect. While economics majors are more likely to take a free trade position, not every vote that presupposes a free trade outcome is supported by economics majors. On the issue of sugar subsidies, being an economics major does not influence the direction of a congressional member's vote.     

Content and method: an epistemic perspective on some historical episodes

The double contrast between allocation and process and between formal proof and empirically based reasoning is selectively applied to the history of economics. Hume's rejection of provable knowledge led to Smith's psychological explanation of science and thence to his theory of growth through the division of labour. Marshall's cautious theorizing and cognitively based evolutionary perspective stimulated contrasting responses from Sraffa and Young. Robinson matched method to content but Chamberlin did not, and Andrews's attempt to develop a process-based price theory met more resistance than Penrose's reinvention of growth theory. We currently observe conflicting methods of handling evolution and business strategy.     

Political Economy and Organizational Leadership: A Hope-based Theory

Unlike other disciplines in the humanities and social sciences, economics has neglected leadership. This paper proposes that a distinctive leadership role is to facilitate the development of hope so that organizational members can sustain their commitments. The conceptual grounding for this approach can be found in the work of Amaryta Sen, Albert Hirschman and Jon Elster, who have tried to explain the effect of commitment and emotions on behavior. It is also proposed here that the authority organizational leaders have to call meetings gives them the capacity both to influence social interactions to carry out this role, and to gauge the organization's cultural strength and its members' receptiveness to inspirational information that can shape the choice of leadership styles.