PER UNIT COST ALLOCATION OF INVESTED CAPITAL WITH ANTICIPATED NON-LEVEL PRODUCTION: THE CASE OF EXTRACTIVE INDUSTRIES

The concept of equivalent annual annuity (EAA) has long been used as a method of costing recovery of invested capital and the required return on invested capital over the productive life of a capital project. Academic texts almost universally use EAA methodology with level payment streams (annuities) to allocate capital costs. We develop a methodology for allocating capital costs evenly over each unit of production for projects with anticipated non-level production. This methodology uses a modified EAA approach that allows non-level annuity payment streams. Capital cost allocation is an important component in computing the value of extracted minerals for severance tax purposes; however, many firms and state and federal agencies use ad hocdepreciation schedules to allocate these costs. Ad hocdepreciation methods such as modified accelerated cost recovery system (MACRS) may be appropriate for income tax purposes but are inconsistent with commonly found requirements that severance taxes “shall be assessed on the wellhead or mine mouth fair market value.” The modified EAA approach provides a straightforward alternative that is based on sound financial methodology.     

On the asymptotic optimality of the LIML estimator with possibly many instruments

We consider the estimation of the coefficients of a linear structural equation in a simultaneous equation system when there are many instrumental variables. We derive some asymptotic properties of the limited information maximum likelihood (LIML) estimator when the number of instruments is large; some of these results are new as well as old, and we relate them to results in some recent studies. We have found that the variance of the limiting distribution of the LIML estimator and its modifications often attain the asymptotic lower bound when the number of instruments is large and the disturbance terms are not necessarily normally distributed, that is, for the micro-econometric models of some cases recently called many instruments and many weak instruments.     

Role Playing,Collective Bargaining,and the Measurement of Attitude Change

Using what scholars have identified as the major explanations of industrial unrest in the United States, Lloyd measures changes in attitudes of students engaged in mock collective bargaining negotiations. By testing before and after the bargaining sessions, he is able to show the influence of role playing upon perception.     

WAS THE GOLD STANDARD REALLY DESTABILIZING?

This paper investigates the extent to which the high macroeconomic volatility experienced in the classical Gold Standard era of US history can be attributed to the monetary policy regime per se as distinct from other shocks. For this purpose, we estimate a small dynamic stochastic general equilibrium model for the classical Gold Standard era. We use this model to conduct a counterfactual experiment to assess whether a monetary policy conducted on the basis of a Taylor rule characterizing the Great Moderation data would have led to different outcomes for macroeconomic volatility and welfare in the Gold Standard era. The counterfactual Taylor rule significantly reduces inflation volatility, but at the cost of higher real‐money and interest‐rate volatility. Output volatility is very similar. The end result is no welfare improvement. Copyright © 2012 John Wiley & Sons, Ltd.     

Supplier satisfaction and commitment: The role of influence strategies and supplier development

Although considerable research is dedicated to influence strategies and supplier development, a lack of empirical support exists of their effects on supplier satisfaction and commitment. This exploratory study aims to fill this gap by investigating first-tier suppliers in the German automotive industry. Supplier reactions to three different influence strategies and two types of supplier development efforts are examined. Results indicate that supplier commitment is affected by the use of promises and both human- and capital-specific supplier development, while supplier satisfaction is affected by indirect, other direct influence strategies and capital-specific supplier development.     

Processing and Retrieval of Inferences and Descriptive Advertising Information: The Effects of Message Elaboration

Abstract

Two issues make advertising effectiveness difficult to assess: (1) advertising effects occur both during ad processing and when ad information is retrieved, and (2) the information that consumers derive from advertisements is likely to be some combination of explicit information and inferences. The study reported in this paper addresses these issues, examining the effects of encoding and time delay on advertising processing. Results indicate that while some types of inferences (product features) are more likely to be made under strong than weak encoding conditions, other types of inferences (consumption situation) are not affected by encoding. In addition, at the time of a decision (after a time delay), memory information use depends both upon individual brand accessibility and the relative accessibility of alternative brands in the memory set. Implications for both advertising researchers and managers are offered.     

Erhöht Solvency II den Bedarf an Rückversicherung im Schaden-/Unfallgeschäft in Deutschland?

Reinsurers and reinsurance brokers are often of the opinion that the introduction of Solvency II will lead to changes in how re-insurance is purchased. Our analysis of these assumptions for the German property and casualty insurance market lead to a market survey. This survey revealed that overall the participating insurance companies expect no significant changes for their companies, although they do anticipate changes in buying patterns of the rest of the market and in the overall market environment. This paper examines the reasons for this difference in expectations between those of individual companies and those of the overall market.     

Analysis of Investment Returns by Computer

This paper concerns itself with providing the means by which a decision-maker may choose among competing projects and arrive at the optimal allocation of the firm's scarce dollar resources. The problem is handled in the mathematical programming framework. The model holds with or without the assumption of capital rationing and permits the incorporation of the effects of growth and of alternative financial mixes on the cost of capital for the firm. When iterated, the model equates marginal revenue to marginal cost, thus yielding the optimal investment level for the firm. Several investment alternatives not considered in the existing literature on the subject are examined, and some novel interpretations of the constraints and results are offered.