Discretely adjusted option hedges

This paper analyses the distribution of returns on a hedged portfolio, consisting of a European call option and its associated stock, when the portfolio is rebalanced at discrete time intervals. Under the assumptions of the Black-Scholes model this distribution is particularly skew. In tests of the average return on a hedged portfolio this skewness leads to biased t-statistics. The paper explores the nature and extent of this bias and suggests procedures for overcoming it. Other aspects of discrete hedging are also discussed.     

MODELLING FERTILISER DEMAND IN THE REPUBLIC OF IRELAND: A COST FUNCTION APPROACH

A translog cost function was used to obtain estimates of the own- and cross-price demand elasticities for nitrogen, phosphorus and potassium. The results indicated a mean value for the own-elasticities of —1.0, —0.6, —0.5 for N, P and K respectively. A test of the hypothesis of nutrient substitution was attempted. The test indicated that P and K were substitutable for N but not for each other. This result was corroborated by a zero elasticity of substitution estimate between phosphorous and potassium. A corollary of the results was the rejection on empirical grounds of the Cobb-Douglas specification for the input demand functions. The latter function has traditionally been used in analyses of this nature.     

Classical economics and the Great Irish Famine:A study in limits

The Great Irish Famine resulted from two massive failures: the blight that destroyed the potato crop and the non-interventionism of the English government. The first failure, which also occurred in other European countries, was devastating for the Irish who depended on the potato as their main source of nourishment. The second failure was a human failure because English government policy was instructed by classical economics to let the market clear the surplus population from the land and was reinforced by the anti-Irish racism common in England at the time, even among classical economists, notably Nassau Senior and J.S. Mill. For most of the 19th century, the English answer was to ignore the hate and crush the crime which [the land system] produced. In the forty years before 1870 forty-two Coercion Acts were passed. During the same period there was not a single statute to protect the Irish peasant from eviction and rack-renting.—Winston Churchill, The Great Democracies,p. 343. It is commonplace in economic research to assume that the investigator has removed all traces of personal values from his/her work. As Becker (1961, p. 10) implies, that could be a serious error. For that reason, let me state at the outset that I am a first-generation Irish-American, holding dual citizenship in the United States and the Republic of Ireland. My mother and father both were born and raised in County Mayo—the poorest county in western Ireland, where the toll in human lives lost during the Great Famine was staggering. I do not know how many of my own Irish ancestors suffered and died during the Great Famine. What I do know and acknowledge is that my selection of this topic clearly is related to that family background which also very likely influenced the way I have interpreted the evidence presented herein. I concede that someone else sifting through the evidence might come to different conclusions, but I know of no other way to proceed. Supportive comments by Hans Jensen and Peter Danner on earlier drafts are gratefully acknowledged, as are the suggestions made by the editor and an anonymous referee. Any remaining errors are entirely mine.     

Higher education in flight: a new direction for international assignments research

This paper draws attention to the significant internationalisation of the higher education sector and role of international assignments in supporting and driving this. The paper then proceeds to identify the similarities and unique features of the sector in the context of international assignments which we argue, primarily revolve around alternative forms, namely international frequent flyers and short-term assignments. Finally, a model is proposed that may facilitate higher education institutes in more effective international assignment utilisation.     

Societal costs of multiple sclerosis in Ireland

Aims: This paper evaluates the impact of multiple sclerosis (MS) in Ireland, and estimates the associated direct, indirect, and intangible costs to society based on a large nationally representative sample.

Materials and methods: A questionnaire was developed to capture the demographics, disease characteristics, healthcare use, informal care, employment, and wellbeing. Referencing international studies, standardized survey instruments were included (e.g. CSRI, MFIS-5, EQ-5D) or adapted (EDSS) for inclusion in an online survey platform. Recruitment was directed at people with MS via the MS Society mailing list and social media platforms, as well as in traditional media. The economic costing was primarily conducted using a ‘bottom-up’ methodology, and national estimates were achieved using ‘prevalence-based’ extrapolation.

Results: A total of 594 people completed the survey in full. The sample had geographic, disease, and demographic characteristics indicating good representativeness. At an individual level, average societal cost was estimated at €47,683; the average annual costs for those with mild, moderate, and severe MS were calculated as €34,942, €57,857, and €100,554, respectively. For a total Irish MS population of 9,000, the total societal costs of MS amounted to €429m. Direct costs accounted for just 30% of the total societal costs, indirect costs amounted to 50% of the total, and intangible or QoL costs represented 20%. The societal cost associated with a relapse in the sample is estimated as €2,438.

Limitations and conclusions: The findings highlight that up to 70% of the total costs associated with MS are not routinely counted. These “hidden” costs are higher in Ireland than the rest of Europe, due in part to significantly lower levels of workforce participation, a higher likelihood of permanent workforce withdrawal, and higher levels of informal care needs. The relationship between disease progression and costs emphasize the societal importance of managing and slowing the progression of the illness.     

Inspirational leadership,positive mood,and team innovation: A moderated mediation investigation into the pivotal role of professional salience

Multidisciplinary teams are increasingly advocated for in healthcare policy consequent to their capacity to develop innovative solutions to seemingly intractable service and care challenges. Recent arguments that inspirational leadership styles may foster innovation in multidisciplinary teams point to their potential value in this effort. However, inconsistency in the capacity of such leaders to engender innovation highlights the need to understand the mechanisms and boundary conditions that determine when such leadership generates positive effects. We argue that follower positive mood acts to mediate the path between inspirational leadership and innovation and may account for its variable effects. By increasing positive team mood, inspirational leaders can potentially bring about more flexible thinking and enhance innovation but can also increase reliance on less effortful information processing, undermining innovative potential. In an effort to address the dilemma posed by these contrasting effects, we propose that professional salience acts as an important boundary condition of this relationship such that only when profession is salient do inspirational leaders enhance multidisciplinary team innovation through positive mood. An analysis of survey data from 60 UK‐based multidisciplinary healthcare teams, investigating the inspirational leadership of practice‐based innovation, supports our moderated mediation model. Finally, the implications for HRM are considered, specifically for leader development and work team design.     

Association for Social Economics ASE newsletter

Bill Waters’ dissertation “Entrepreneurship, Dualism, and Causality: An Appreciation of the Work of Joseph A. Schumpeter” completed at Georgetown University in 1952 is significant for two reasons. The first is clear enough from the very beginning: Schumpeter and the entrepreneur. The other comes to light through hindsight: Bill brings to bear an understanding of economic affairs which is personalist rather than individualist or collectivist in nature. In short, Bill sees as the main activating force in economic affairs not the impersonal forces of the market, not the central planning board, but the person who innovates, who acts bolding in economic affairs, the banker who creates credit, and the capitalist who supplies old funds. Thus the Waters’ dissertation says much not only about Schumpeter but also about Bill himself. His dissertation is his only book-length publication.