THE BEHAVIOUR OF CERTIFICATE OF DEPOSIT RATES IN THE UK

Using a number of maturities of up to one year and weekly highquality data on UK, CD rates, 1975–92, we provide a varietyof tests of the expectations hypothesis (EH) of the term structure.Our results appear to give more support to the EH than do earlierstudies, which often use longer maturities and data of a lowerfrequency on coupon paying bonds and yield data on ‘bundlesof bonds’. If one is willing to assume that noise traderspredominate in the bond market at very short horizons, we canprovide some insights into empirical results, found in the literature.     

对中国当前城市社会稳定性的实证研究

本文旨在通过个人对其生活各个方面满意度的自我评定来测定中国城市社会的稳定性及其决定因素。本文使用的数据具有中国城市社会的代表性。本研究所得的主要结论为,经济的持续稳定增长以及就业机会的增加会降低人们的不满情绪,从而减轻了社会政治的不稳定性;在收入可持续增长时,仅收入分配不均一项指标并不一定导致不稳定;给予人们一定的政治空间,鼓励人们提高社会与社区的参与意识亦会提高人们的满足感;良好的家庭生活与社会关系网络会化解人们的不满情绪;在控制诸种可观察到的变量后,共产党员依然具有较高的满足感。     

A Statistical Model of International Accounting Harmonization

This article shows how the difference between the observed frequencies of accounting policy choice and the outcome of a random policy choice, where each available method has an equal chance of being selected, may be fully explained with a statistical model. The process of harmonization is described in a way that identifies departures from equiprobable accounting policy choice as either: (a) the systematic effects of harmonization, or (b) the effects of systematic divergence from international harmony where the frequency of adoption of differing accounting methods varies across countries, or (c) the effects of company-specific accounting policy choices. The understanding of harmony that underlies previous attempts to measure harmonization is such that, with respect to a particular financial statement item, a situation of maximum harmony is reached when all companies in all countries use the same accounting method. From the standpoint of modelling the harmonization process. however, a different concept of harmony may be more useful. In this article, therefore, we posit a state of distributional harnzony in which, other things being equal, the expected distribution of accounting policy choices is the same in each country. In this theoretical state. the odds of selecting a given accounting method from those available for a particular financial statement item are identical for each country. A major advantage of this benchmark is that it provides a basis for distinguishing between two possibly conflicting components of the international harmonization process: between-country harmonization and within-country standardization. A hierarchy of nested statistical models is then used to describe accounting policy choices made by companies with an international shareholding and registered in Europe, where the European Union has been involved in a program of accounting harmonization. The accounting policies analysed in depth in this article comprise the treatment of goodwill and accounting for deferred taxation. The results are compared with the comparability index method used previously in harmonization research studies.     

Why the Pound Should be Devalued Inside the ERM

I believe the choice of DM2.95 as a central rate for sterling's entry into the ERM was a major mistake of macroeconomic policy, on a par with monetary targeting and underestimatingtlle late 1980s' consumer-led boom. Indeed it was a belief that we were about to make this mistake that led me to undertake, with colleagues at the National Institute of Economic and Social Research, a detailed and unique study of the choice facing policy makers. I shall have more to say on that study below. Shortly after entry I wrote: "The danger is that the government will attempt to defend the present exchange rate bands at all costs. As a result it may produce, or fail to prevent, a recession on the same scale as 1980-81. (Wren-Lewis, 1990, emphasis added). I fear that much of this has come to pass, but we still have a chance to retrieve something.
To propose a devaluation of sterling within the ERM requires three distinct arguments. The first is that we entered the ERM at a real exchange rate which was above a level required to produce a sustainable current account of the balance of payments. The second is that this matters, and in particular that it has prevented the government from taking steps to counteract the recession. The third is that the gains in adjusting, through a realignment, to a lower rate now outweigh the loss of credibility that would be involved. I shall consider each point in turn.¹     

Dividends and the Resolution of Uncertainty

Investors' alleged preference for current rather than future dividends cannot, it is argued, be explained by the hypothesis of a progressively higher discount rate for more distant dividends to reflect increasing riskiness. It is more likely to be caused by inadequate standards of disclosure by companies concerning their intended uses of the funds retained by them, as compared with the standards required for external sources of finance, and by the market's consequent lack of confidence in the productivity of the former.     

Influence Costs and Capital Structure

This paper analyzes the role of capital structure in the presence of intrafirm influence activities. The hierarchical structure of large organizations inevitably generates attempts by members to influence the distributive consequences of organizational decisions. In corporations, for example, top management can reallocate or eliminate quasi rents earned by their employees, while at the same time, they must rely on these employees to provide them with information vital to their decision making. This creates the opportunity for lower level managers to influence top management's discretionary decisions. As a result, divisional managers may attempt to inflate the corporate perception of their relative contributions to the firm, or to take actions that make the elimination of their rents more costly for the firm. This incentive to influence is especially acute when managers fear losing their jobs, for example in the event of a divestiture. Since the firm's capital structure can affect future divestiture decisions, it can be chosen to reduce or increase the divisional managers' incentives to influence top management's decisions. The control of influence activities arises at the expense of restrictions on future divestiture decisions. Hence, there emerges an optimal capital structure that trades off the costs of influence activities against the costs of making poor divestiture decisions. The findings suggest that capital structure can also be chosen to control influence activities that arise under less extreme motivations. We identify several key factors that determine the optimal capital structure: the top management's prior assessment of the likelihood that it will be optimal to divest a specific division; the costs of influence activities to the firm and to the divisional managers; and the difference in the valuation of the division's assets in the current firm and under alternative uses.     

Are Competitive Banking Systems More Stable?

Using the Panzar and Rosse H-statistic as a measure of competition in 45 countries, we find that more competitive banking systems are less prone to experience a systemic crisis and exhibit increased time to crisis. This result holds even when we control for banking system concentration, which is associated with higher probability of a crisis and shorter time to crisis. Our results indicate that competition and concentration capture different characteristics of banking systems, meaning that concentration is an inappropriate proxy for competition. The findings suggest that policies promoting competition among banks, if well executed, have the potential to improve systemic stability.