Materials-product chains: Theory and an application to zinc and PVC gutters

A framework is presented for the analysis of economic and environmental impacts of policies applied to materials-product (MP) chains. This is based on materials flows, product flows, costs, prices and optimal management of an MP chain. The main differences compared with other studies focusing on materials flows is that here the link between products or services and materials is explicitly dealt with. The framework is developed on the basis of materials balance conditions, production functions allowing for substitution, and recycling of both materials and products. After presenting theoretical MP chain-models and analytical results, an application to the problem of choosing between zinc and PVC gutters is discussed. Here optimal MP chain management decisions are presented for various policy and strategy scenarios.     

Optimal design of pension funds: a mission impossible?

Summary. Nowadays many employers offer their employees the possibility of an insurance against too large losses in income when retiring or becoming disabled. This paper models the optimization problem of the employer when setting up such a so-called pension fund. Not surprisingly, it turns out that the optimal solution depends on the premium the employees are willing to pay at most for such an insurance. Since this is private information for an employee and hence not known to the employer, he needs to collect information regarding these maximum premiums. It is shown that if employees' characteristics only differ in the maximum premium they are willing to pay, the employer is unable to perfectly inform himself on these maximum premiums, i.e. he cannot create the right incentives for his employees to reveal their maximum premiums truthfully. Received: March 20, 2000; revised version: March 11, 2002 RID="*" ID="*" The authors acknowledge the helpful comments and suggestions of an anonymous referee. The research of J. Suijs is made possible by a fellowship of the Royal Netherlands Academy of Arts and Sciences (KNAW). Correspondence to: J. Suijs     

Growth and the Environment in Europe: A Guide to the Debate

Many articles on the compatibility between growth and environmental preservation provide one single view and use particular concepts. Indeed, debates between advocates and opponents of economic growth are usually unfruitful since people do not talk the same language. The aim of this paper is to provide some clarification in this debate by offering a systematic comparison of perspectives on the basis of a benchmark economic-environmental framework.     

A cautious note on the use of panel models to predict financial crises

Panel data framework has often been used to build Early Warning Systems for financial crises. This paper questions the implicit assumption that crises are homogenously caused by identical factors. It suggests a preliminary step aiming at forming optimal country clusters.     

Discretionary rewards as a feedback mechanism

This paper studies the use of discretionary rewards in a finitely repeated principal–agent relationship with moral hazard. The key aspect is that rewards have informational content. When the principal obtains a private subjective signal about the agent's performance, she may pay discretionary bonuses to provide credible feedback to the agent. In accordance with the often observed compression of ratings, we show that in equilibrium the principal communicates the agent's interim performance imperfectly, i.e., she does not fully differentiate good and bad performance. Furthermore, we show that small rewards can have a large impact on the agent's effort, provided that the principal's stake in the project is small.     

Central bank independence and financial instability

It has been argued that central bank independence (CBI) may not only be beneficial for reaching the objective of price stability, but also for maintaining financial stability. Greater independence from external pressure implies that central banks are less politically constrained in acting to prevent financial distress, while it also will allow them to act earlier and more decisively when a crisis erupts. We estimate the relation between CBI and a newly constructed measure of financial instability using a dynamic panel model for the period 1985–2005 with a large set of control variables. We find a significant and robust negative relation between CBI and financial instability, which is mostly due to political independence.     

Profit margins in Japanese retailing

Using a rich data source, we explain differences and developments in profit margins of medium-sized stores in Japan. We conclude that the protected environment enables the retailer to pass on all operating costs to the customers and to obtain a relatively high basic income. High service levels are positively related with high profit margins, illuminating the importance of service in Japan. Small store competition does not affect performance of medium-sized stores, because small stores operate under circumstances different from those of medium and large stores.     

Do Employers Prefer Overqualified Graduates? A Field Experiment

We test whether employers prefer overqualified to adequately qualified job candidates. To this end, duos of fictitious applications by bachelor's and master's graduates are sent to real job openings with a bachelor's degree as a minimum requirement. For the overall sample, we find that overqualified master's graduates are 19 percent more likely to be directly invited for a job interview and 11 percent more likely to get any positive reaction. This relative advantage for overqualified workers is found to be higher for bottleneck occupations. Relative preferences also differ across employers within labor‐market segments.     

Do central bank law reforms affect the term in office of central bank governors?

In this paper we confirm the hypothesis that central bank independence reforms reduce the likelihood that a central bank governor will be replaced. However, the strength of this effect depends on the rule of law and the degree of political polarization.