The Kornai effect with partial bailouts and taxes

The model examines Kornai's observation that in the presence of bailouts, firms' demand for inputs will be greater than would otherwise be the case. This conjecture is examined in a model in which both revenue and cost uncertainty are present and in which firms making losses are partially subsidized and firms making positive profits are partially taxed. The Kornai effect is more prevalent the greater the subsidy rate, the smaller the tax rate and the greater the variance of the random variables through which uncertainty manifests itself. In the case of strongly positively correlated cost and revenue uncertainty, the absolute incidence of the Kornai effect is small.     

Introduction to the special issue on positive conflict—Conflict and employees: The right and processes to be heard

Conflict, defined as clash, competition, or mutual interference of opposing or incompatible forces or qualities, may be positive. The appropriate amount of conflict may be a delicate balance not easily achieved. Thus, a key issue is conflict management. The major charter of this special issue is the presentation of work which suggests or demonstrates that conflict can be a positive force in the modern organization. It also is pointed out that conflict, positive or otherwise, and its resolution involves a broad spectrum of inquiry into the rights and obligations of those involved in the conflict     

The damage costs of climate change toward more comprehensive calculations

It is argued that estimating the damage costs of a certain benchmark climate change is not sufficient. What is needed are cost functions and confidence intervals. Although these are contained in the integrated models and their technical manuals, this paper brings them into the open in order to stimulate discussion. After briefly reviewing the benchmark climate change damage costs, region-specific cost functions are presented which distinguish tangible from intangible losses and the losses due to a changing climate from those due to a changed climate. Furthermore, cost functions are assumed to be quadratic, as an approximation of the unknown but presumably convex functions. Results from the damage module of the integrated climate economy modelFUND are presented. Next, uncertainties are incorporated and expected damages are calculated. It is shown that because of convex loss functions and right-skewed uncertainties, the risk premium is substantial, calling for more action than analysis based on best-guess estimates. The final section explores some needs for further scientific research.     

Random coefficient regression and the long-run phillips curve for the U.S.

This research suggests that a random coefficient regression model is well-suited for analyzing long-run versus short-run movements in wages and unemployment and is an improvement over some empirical techniques typically used.     

Does support from government help firms survive? Evidence on financial and political assistance in China, 1998–2007

ABSTRACT

Using the National Bureau of Statistics data set over the period 1998–2007, this article examines the dual roles of financial assistance and strong political links on firm survival in China by applying a semi-parametric duration model. We find that generally either financial assistance or strong political links had a positive effect on the likelihood of firm survival. Furthermore, if firms received both types of support from government, their survival rate was around two times as high compared to only receiving a single support. The likelihood of survival depended on the amount of assistance a firm received. We also find firm ownership impacts on its survival pattern. Lastly, China joining the World Trade Organisation (WTO) coincided with (cet. par.) higher firm failure, especially with regard to state-owned firms; however, this period also saw the authorities targeting political and financial help on the ‘better’ firms (especially SOEs) with characteristics likely to increase their chance of survival.     

The Lifetime Distributional Impact of Government Health Outlays

This article examines the lifetime redistributive impact of government health outlays and finds that such outlays redistribute income from the lifetime rich to the lifetime poor and from men to women.     

Interpretive structural modeling—A useful tool for technology assessment?

Interpretive Structural Modeling (ISM) is a computer based technique for helping small groups develop graphical representations of complex systems. In this paper, the rationale for the use of Interpretative Structural Modeling in activities such as technology assessment is developed and the basic concepts underlying the technique are explored. Several applications of ISM are described and from these experiences some observations are made about the nature and effectiveness of the ISM process and product. ISM was found to provide its users with a systematic and comprehensive method for integrating group judgments in the development of “first-cut‘ structural models. At the same time, however, the technique was found to be relatively inflexible and may, in some instances, inhibit group processes. Possible directions for the development of less rigid methods are suggested.     

Corporate financial structure and the funding of private pension plans

One strand of the literature on the employment contract focuses on the role of the contract in the efficient sharing of risk between capitalists and workers. One way capitalists can shift risk to workers is to provide part of workers' remuneration in the form of an unfunded, deferred pension. Since bonds, in the event of bankruptcy or voluntary termination, are typically senior to unfunded pension liabilities, capitalists can also affect their risk by altering the firm's debt-to-equity ratio. These observations suggest that corporate financial structure and the employment contract are interdependent. The paper has two major goals. The first is to take a step towards integrating the theory of corporate financial structure with that of the employment contract. The second is to investigate possible consequences of legislation which regulates the funding of private pensions.     

How Useful Is the Genuine Savings Rate as a Sustainability Indicator for Regions within Countries? Australia and Queensland Compared

This article shows how macroeconomic indicators of sustainable development can be applied to the Queensland economy. While recognising the complex and contentious theoretical and practical issues in deriving the Genuine Savings Rate (GSR) to serve as such an indicator, we use the World Bank's methodology, which includes only mineral depletion, deforestation and carbon dioxide emissions as environmental terms, to estimate GSRs for Queensland for the period 1989 to 1999, and compare these to World Bank estimates of Australia's GSR for the same period. We find that Queensland has a higher rate of natural resource depletion and a lower GSR than the whole of Australia. We also examine how well the World Bank GSR performs as a ‘headline’ measure of overall sustainability, review criticisms of the GSR, and compare its implicit policy implications with those of net state savings, and of the GSR plus a suite of other indicators.