Scaling‐up Foreign Aid: Will the ‘Big Push’ Work?

International donors are substantially scaling‐up aid programmes. At the same time, there are widespread reservations over how much aid recipient countries can use effectively. Such concerns are supported by the aid effectiveness literature which finds that there are limits to the amounts of aid recipients can efficiently absorb. This article demonstrates that a ‘big push’ in foreign aid will not lead to diminishing returns as long as donors get the inter‐country allocation of aid right. This is true even if donors provide aid at levels equal to the well‐known target of 0.7 per cent of their gross national income.     

Human Capital, Growth, and Inequality in Russia

Our model captures the fact that Russia has both much human capital and an education system that produces the wrong skills for a market economy. We define a rule for the timing of educational restructuring that is Pareto optimal and that dominates all later times in a Paretian sense while simultaneously reducing inequality. We demonstrate that failure to implement restructuring early in the transition process is likely to produce a very long delay that will significantly reduce Russia's human capital. A retreat from subsidizing public education is likely to be counterproductive. We argue that early educational restructuring should be emphasized in Russia's transition strategy. J. Comp. Econom., December 1999, 27(4), pp. 618–643. Lingnan University, Tuen Mun, N.T., Hong Kong, People's Republic of China; University of Colorado, Denver, Denver, Colorado 88217; and Royal Holloway College, University of London, Egham, Surrey TW20 OEX, United Kingdom.     

Welfare Consequences of Tight Price-Cap Regulation

This paper analyses the welfare effects of price-cap regulation of a multi-product monopolist when the price index has fixed weights. A tight cap can result in welfare below the level associated with an unregulated monopoly. This does not occur if the weights are based on lagged quantities and the level of the cap exceeds the previous period's total cost. In a two-period model the welfare problem is alleviated in the second period but first-period performance can be worse if the firm is not myopic.     

The Personal Development Plan Practice Questionnaire: the development and validation of an instrument to assess the employee's perception of personal development plan practice

Confronted with the speed of technological advancements and increasing global competition, organizations have come to realize that their employees' continuous learning drives business success. A popular tool to support and enhance continuous learning is the personal development plan (PDP). Despite its popularity, empirical evidence of the effectiveness of the PDP is scarce. To date, most of the research on the practice of the PDP is conducted within educational (students) and health (general practitioners) settings and not within business environments. Moreover, research methodology is restricted to qualitative methods and survey research is rare. For that reason, we developed and validated a questionnaire to assess PDP practice. To develop the questionnaire, we relied on literature on portfolio assessment in the educational context and the workplace (health and education); to validate it, we collected data in three independent organizations. To assess the factor structure of the questionnaire, exploratory principal component factor analyses with direct oblimin rotation were conducted on data sets from two organizations. Factor reliability was computed using Cronbach's alpha coefficient. The principal component analysis resulted in a 35‐item questionnaire containing five factors each with high internal validity. Cronbach's alphas ranged between 0.63 and 0.91. Next, a confirmatory factor analysis was conducted on an independent sample of 287 employees, working in a third organization. The results from this analysis were used to further refine the instrument. The present instrument provides a reliable and valid measure of the employee's perception of the PDP practice in the workplace, consisting of four scales and 19 items.     

Judicial interpretation of the will of the state: A Hegelian perspective in the context of taxation

This paper draws upon Hegelian dialectic theory to understand the nature of the interrelationship between state, taxpayer, and the accounting profession. The paper proposes that this has been reconstructed from one founded upon neo-Kantian liberalism towards one in which components of political and civil society are co-opted by the state to minimize tax avoidance. Empirical evidence in the form of general anti-avoidance rules, court decisions, and judicial statements is provided to illuminate a process of fundamental redefinition of the roles of the judiciary and the accounting profession vis a vis the state. One of the principal functions of critical accounting theory is to question the political legitimacy of regimes of accounting; the implications of this redefinition are hypothesized in terms of this function, critiquing the changing relationship between the state and the taxpayer in the context of tax policy. The paper theorizes the consequences of this process for the accounting profession.     

A regime-switching term structure model with observable state variables

The paper proposes in a regime-shift framework, an arbitrage-free term structure model based on the target and Fed Funds Rates. Empirical observations suggest that a three-state regime-shift environment associated with FOMC monetary actions is justified. Then, a closed-form solution for zero-coupon bonds is derived where regime-shift risk is priced. The solution is flexible enough to incorporate additional state variables.     

Teaching tax principles and policy: comparing the single textbook and wider reading approaches

This study set out to test the relative merits and desirability of teaching tax principles and policy based either on a single textbook, or by using the more traditional UK social science method of wider reading and a more individualistic approach to learning. The method employed was to teach taxation using the two approaches on two parallel public finance courses and to assess the outcomes in the form of student course essays and examination answers together with a questionnaire survey of students' opinion. The balance of advantage appeared to lie with the single textbook approach.     

Misallocation and financial market frictions: Some direct evidence from the dispersion in borrowing costs

Financial frictions distort the allocation of resources among productive units—all else equal, firms whose financing choices are affected by such frictions face higher borrowing costs than firms with ready access to capital markets. As a result, input choices may differ systematically across firms in ways that are unrelated to their productive efficiency. We propose an accounting framework that allows us to assess empirically the magnitude of the loss in aggregate resources due to such misallocation. To a second-order approximation, the framework requires only information on the dispersion in borrowing costs across firms, which we measure—for a subset of U.S. manufacturing firms—directly from the interest rate spreads on their outstanding publicly-traded debt. Given the observed dispersion in borrowing costs, our approximation method implies a relatively modest loss in efficiency due to resource misallocation—on the order of 1 to 2 percent of measured total factor productivity (TFP). In our framework, the correlation between firm size and borrowing costs has no bearing on TFP losses under the assumption that financial distortions and firm-level efficiency are jointly log-normally distributed. To take into account the effect of covariation between firm size and borrowing costs, we consider a more general framework, which dispenses with the assumption of log-normality and which implies somewhat higher estimates of the resource losses—about 3.5 percent of measured TFP. Counterfactual experiments indicate that dispersion in borrowing costs must be an order of magnitude higher than that observed in the U.S. financial data, in order for misallocation—arising from financial distortions—to account for a significant fraction of measured TFP differentials across countries.