Benefit-cost analysis and resource allocation decisions

Concern over the U.S. federal government's deteriorating infrastracture and large budget deficits has recently resulted in much attention being focused on the subject of federal capital expenditures (investments). At the same time, the Office of Management and Budget has recently taken steps to aggressively pursue a policy of requiring federal government managers to use benefit-cost (B-C) analysis techniques in preparing requests for certain types of capital expenditures. More specifically, OBM now requires the use of benefit-cost analysis techniques for major initiatives concerning the acquisition of information technology systems. In this paper it is argued, and empirically verified, that the federal government's use of B-C analysis technique affects the resource allocation process differently at different organizational levels (i.e. different decision strategies are appropriate at different organizational levels).     

SYSTEMATIC RISK IN A PURELY RANDOM MARKET MODEL: SOME EMPIRICAL EVIDENCE FOR INDIVIDUAL PUBLIC UTILITIES

A minimum norm quadratic (MINQU-) type of OLS estimator is derived. The estimator is used to test if the betas of the single factor market (SFM) model are random for a sample of utilities for two contiguous periods. The estimated betas for individual utilities vary considerably over time. The statistical significance of such nonstationarity depends on both the utilities and period studied. The relative reduction in the mean square error (MSE) from using a GLS (and not OLS) estimator of beta, when beta is purely random, can be substantial for some utilities but is modest on average.     

Interstate banking in rural markets: The evidence from the corn belt

This report studies the causes and effects of interstate expansion into the rural banking markets of the Corn Belt. A logit analysis indicates the prior characteristics attracting out-of-state organizations to specific rural banks include lower loan-to-deposit ratio, greater market share of deposits, and less initial exposure to agricultural lending. Consistent with previous research on the more traditional forms of geographic market expansion, there is as yet no evidence the out-of-state organizations are abandoning local lending or competing unfairly. We do find significant increases in the loan-to-deposit ratios after purchase, due primarily to increases in the non-agricultural loan holdings on the portfolios. The results suggest the possibility the rural affiliates are serving as warehouses for loans originated elsewhere.     

Economic forces and seasonality in secirity returns

This article finds strong seasonal behavior in the innovations for three Canadian macroeconomic variables (industrial production, unexpected inflation and GDP). An APT model is estimated as a restricted nonlinear multivariate regression system using seven macroeconomic variables, various residual market factor (RMF) proxies, and the returns on fifty size related portfolios of equities that traded on the Toronto Stock Exchange (TSE). As in Chen, Roll and Ross (1986), five macrofactors (lagged industrial production, lagged GDP, term structure, unexpected inflation, and risk premium) have significantly priced risk premia. The risk premia are insignificant for RMF based on two value weighted indices, and marginally significant (0.10 level) for the RMF based on an equally weighted index, which is somewhat consistent with McElroy and Burmeister (1988) and Brown and Otsuki (1989). The significance of the RMF risk premium appears not to be robust to whether portfolios or individual securities are used in the estimations. The significance of the estimated risk premia for the macrofactors also appear not to be robust to the number of portfolios (equations) used in the estimations. Unlike the risk premia estimates for the RMF, those for the other macrofactors are generally unaffected by the inclusion of a January dummy. This implies that the January seasonal remains a market phenomenon that requires further study.     

Reducing Child Malnutrition: How Far Does Income Growth Take Us?

How rapidly will child malnutrition respond to income growth?This article explores that question using household survey datafrom 12 countries as well as data on malnutrition rates in across-section of countries since the 1970s. Both forms of analysisyield similar results. Increases in income at the householdand national levels imply similar rates of reduction in malnutrition.Using these estimates and better than historical income growthrates, the article finds that the Millennium Development Goalof halving the prevalence of underweight children by 2015 isunlikely to be met through income growth alone. What is neededto accelerate reductions in malnutrition is a balanced strategyof income growth and investment in more direct interventions.     

Vegetable conservation

The conservation of vegetables is a neglected topic. Owing to the unreasonable pressures put on tropical forests, botanical inventories are incomplete. In the UK, however, the use of heritage sites for the conservation of vegetables is rare. The creative endeavour of establishing a vegetable sanctuary can engage the unemployed and others with more developed skills. Environmental reclamation and the better use of botanic and soil resources are questions which do not sufficiently figure in planning.