When does coordination pay?

In a continuous-time model of two symmetric open economies, with a floating exchange rate, we find that the pay-off to macroeconomic policy coordination depends systematically on how heterogeneous is their inflation experience. While monetary policy coordination improves welfare in handling a common rate of underlying inflation, it exacerbates the ‘time consistency’ problem arising when there are differences (as is illustrated diagrammatically). Since the principle of ‘certainty equivalence’ applies to time-consistent policy in linear quadratic models, we are also able to give a stochastic interpretation of the deterministic results.     

Strategic job analysis

The application of job analysis techniques makes the implicit assumption that information about a job as it presently exists may be used to develop programs to recruit, select, train, and appraise people for the job as it will exist in the future. Given a rapidly changing internal and external world it is likely that many jobs will change in the future. This article reviews some new techniques that, when added to traditional job analysis procedures, may facilitate strategic planning for the development of personnel procedures such as selection and training. Examples of the new technique are presented, followed by a discussion of some topics requiring future thought and research.     

The deterrent to dubious corporate behavior: Profitability,probability and safety recalls

In response to findings of abnormal stock market reactions following such dubious corporate behaviors as bribery, fraud, and the production of hazardous products, some researchers have argued that the stock market reaction is a sufficient deterrent to these behaviors so that additional regulation is not necessary. In this paper we examine stock market returns as a deterrent to dubious behavior in the production of defective automobiles. Relying on a broader range of assumptions about managerial behavior than are used in previous studies, we question the efficacy of the market as an instrument of social control.     

Sharpen your bargaining skills

As the health-care revolution continues, bargaining skills have become more crucial for doctors than ever before. If you want your practice to thrive, you must regularly negotiate with colleagues, practice administrators, allied health professionals, managed-care plans, business groups, hospitals, and the government. Yet medical schools and residency programs devote little if any time to negotiating skills. The "golden days," when physicians could afford to be mavericks, are over. Doctors must develop a new collaborative outlook to be successful and happy in their careers, says Leonard J. Marcus, Ph.D., lead author of the book "Renegotiating Health Care: Resolving conflict to Build Collaboration." He and his co-authors often conduct seminars for health professionals on improving bargaining skills. The following excerpt concerns the role of conflict in negotiation, and how to resolve it.     

Joining a capitated IPA: should you, or shouldn't you?

The "bygone" doctor practiced in the good old days under a relatively uncomplicated, clearly defined system. Physicians could afford to be independent. To survive in practice today, say the authors of "Renegotiating Health Care: Resolving Conflict to Build Collaboration," physicians must adapt to change or the health-care market will pass them by. Today's "evolving" doctor is a partner, contributing to and deriving benefit through collaborative patient-care networks, physician practice organizations, and medical services organizations. Historical rivalries have been forgotten as hospitals, insurers, and physicians seek and achieve innovative alliances. Still, resistance to these plans runs strong. The following story typifies one dilemma that faces physicians today. It concerns a hypothetical group practice that must decide whether to form a capitated individual practice association.     

Stress scenario generation for solvency and risk management

We derive worst-case scenarios in a life insurance model in the case where the interest rate and the various transition intensities are mutually dependent. Examples of this dependence are that (a) surrender intensities and interest rates are high at the same time, (b) mortality intensities of a policyholder as active and disabled, respectively, are low at the same time, and (c) mortality intensities of the policyholders in a portfolio are low at the same time. The set from which the worst-case scenario is taken reflects the dependence structure and allows us to relate the worst-case scenario-based reserve, qualitatively, to a Value-at-Risk-based calculation of solvency capital requirements. This brings out perspectives for our results in relation to qualifying the standard formula of Solvency II or using a scenario-based approach in internal models. Our results are powerful for various applications and the techniques are non-standard in control theory, exactly because our worst-case scenario is deterministic and not adapted to the stochastic development of the portfolio. The formalistic results are exemplified in a series of numerical studies.     

Editors’ introduction transitional economies: Progress and pitfalls

Many Asian countries are undergoing transition from centrally planned to market-oriented economies. The People's Republic of China (PRC) and Viet Nam have been going through this transition since the 1980s, while Mongolia and the former Soviet republics of Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan began their transition in the 1990s with the dissolution of the Soviet Union in 1991. On the other hand, Cambodia, the Lao People's Democratic Republic, and Myanmar, while they have begun reforms, are still in the early stages of transition. North Korea has probably made the least progress in this regard. This Special Issue on Transitional Economies aims to provide valuable insights for Asia's developing countries still in transition and to provide them with policy recommendations for avoiding the pitfalls of transition experienced in the 1990s.