Social decisions and public investment

If society adopts a Pareto-optimal sharing rule, it will, under some strong assumptions, be able to make risky investment decisions with unanimity.     

Does it Pay to be Flexible?

This paper addresses the determinants of price-cost margins inU.S. 4-digit industries. Margins are larger in capital intensive andconcentrated industries with high growth rates and R & D andadvertising to sales ratios. They also fluctuate significantly overthe business cycle. We go beyond the existing literature byconsidering an issue which is a dominant topic in the businessliterature, the flexibility of firms to adjust to exogenous shocks.In particular, we find a significant positive relationship betweenthe flexibility of labour demand and price cost marginssuggesting that it pays to be flexible.     

Einzelbesprechungen

Ohne Zusammenfassung     

An iterative approach to item-level tactical production and inventory planning

In this paper, we propose an iterative approach to jointly solve the problems of tactical safety stock placement and tactical production planning. These problems have traditionally been solved in isolation, even though both problems operate in the same decision making space and the outputs of one naturally serve as the inputs to the other. For simple supply chain network structures, two stages and one or many products, we provide sufficient conditions to guarantee the iteration algorithm’s termination. Through examples, we show how the algorithm works and prove its applicability on a realistic industrial-scale problem.     

Expectation driven business cycles with limited enforcement

We explore shocks to expected future productivity in a model with limited enforcement of financial contracts. A microfounded collateral constraint implies that good news about future productivity yield an increase in stock prices, available credit and a general economic expansion.     

Specialization and concentration: a note on theory and evidence

We study the prediction of the theory in Rossi-Hansberg [Rossi-Hansberg E (2005) Am Econ Rev 95(5):1464–1491] that, under quite general circumstances, lower transport costs increase specialization of regions or countries and decrease (regional) concentration of industries. This prediction contradicts the contention of other models and many empirical papers that specialization and concentration should move in parallel. We use two data sets on manufacturing industries across US States and EU member countries to show specialization and concentration do not develop in parallel. The empirical data replicates some of the features of the divergence predicted in the model.     

Voluntary agreements in environmental protection: experiences in Germany and future perspectives

A trend towards ‘softer’ regulation, especially in the form of negotiated environmental agreements, is observable in national and international environmental policies. Such agreements are controversial, because there are fears that government will relinquish its responsibility for environmental protection. This paper analyses recent experiences with voluntary agreements in Germany. Proponents of voluntary agreements argue that they provide incentives to business for the development of efficient, innovative and environmentally‒friendly solutions. Analysing some topical Germany examples, we conclude that it is hard to detect solutions deserving such attributes. These agreements are unlikely to produce results that go beyond what industry would have done in any case and they avoid using economic incentives; they are unenforceable, with the negotiating process leading to a watering down of the environmental goals government had originally aimed at. The Federal Government of Germany's, current preference for negotiated solutions on principle seems to be ‘counterproductive’. Government needs to be ‘in control’ to leave its choice of policy instruments open and to be flexible. Finally, we derive some general conclusions concerning reasonable strategies and applications of voluntary agreements within the EU. © 1997 John Wiley & Sons, Ltd and ERP Environment.     

Conditional convergence and the dynamics of the capital-output ratio

Output per worker can be expressed as a function of technological efficiency and of the capital-output ratio. Because technology is exogenous in the Solow model, all of the endogenous convergence dynamics take place through the adjustment of the capital-output ratio. This paper uses the empirical behavior of the capital-output ratio to estimate the speed of conditional convergence of economies towards their steady-state paths. We find that the conditional convergence speed is about seven percent per year. This is somewhat faster than predicted by the Solow model and is significantly higher than reported in most previous studies based on output per worker regressions. We show that, once there are stochastic shocks to technology, standard panel econometric techniques produce downward-biased estimates of convergence speeds, while our approach does not. The views expressed in this paper are our own, and do not necessarily reflect the views of the Central Bank and Financial Services Authority of Ireland or the ESCB.