The Stochastic Volatility of Short-Term Interest Rates: Some International Evidence

This paper estimates a stochastic volatility model of short-term riskless interest rate dynamics. Estimated interest rate dynamics are broadly similar across a number of countries and reliable evidence of stochastic volatility is found throughout. In contrast to stock returns, interest rate volatility exhibits faster mean-reverting behavior and innovations in interest rate volatility are negligibly correlated with innovations in interest rates. The less persistent behavior of interest rate volatility reflects the fact that interest rate dynamics are impacted by transient economic shocks such as central bank announcements and other macroeconomic news.     

INTEREST GROUPS, INFLUENCE AND WELFARE

This paper examines the social costs and benefits of special interest group political influence activities. It is commonly recognized that, to the extent that such activities induce legislators to choose policies that favor the interest group at the expense of society at large, they can reduce welfare. It may also be the case, however, that lobbying can convey information held by interest groups to policy-makers. When costless announcements would not be credible, interest groups can signal their private information through costly influence activities. To the extent that this information enables governments to choose better policies, lobbying can enhance welfare. A simple game between a special interest group and a policy-maker that captures this tradeoff between the distortionary costs and the informational benefits of political influence activities is developed. Welfare properties of the equilibria are analyzed, and conditions are derived under which social welfare is greater when lobbying occurs than it would be if lobbying were prohibited. In conclusion, the phenomenon analyzed in this paper is related to Bhagwati's taxonomy of DUP activities.     

Perceptions of United Kingdom exporters in transferring technology into the People's Republic of China

The objective of this study was to identify for UK firms active in transferring technology into the PRC, their perceptions of the market and their clients. The research was progressed by questionnaire and interview. The companies approached were selected on the basis of contracts listed in Chinese government publications and the financial press.
The main findings relate to the lack of awareness in the UK of the role of the Chinese research institutes, the poor quality of Chinese management, the inadequacy of infrastructure and training needed to support the new technology and the absence of problems arising from cultural differences or leakage of proprietary information. The Chinese are eager to obtain new technology although there is some difficulty in identifying suppliers.     

Measuring third world security expenditure: A research note

There is growing evidence that important amounts of security expenditure may not enter the budgets or the national accounts of many developing countries. This article outlines five of the most common mechanisms used by governments to obscure their security-related outlays: double bookkeeping, use of extra-budgetary accounts, highly aggregated budget categories, military assistance and governmental manipulation of foreign exchange. Delineating those countries which have used these — or other — mechanisms is difficult but some examples do exist and are used here to illustrate how countries have hidden security-related expenditure from public scrutiny.     

Using neo-institutionalism to advance social and environmental accounting

Neo-institutional theory can increase understanding of an organization's general response to social and environmental issues and social activism. More particularly, it can frame an organization's accounting responses. The analytical schema proposed by Lounsbury (1997) is deployed to explore social and environmental accounting issues that occurred in two local government authorities—one in Canada, one in England. Our analysis highlights possibilities for better and more complete theories of organizational transformation, and social and environmental accounting. We stress the importance of ethical values and ecological thinking if change (including accounting change) is to help institutions behave in a way that is conducive to achieving a sustainable future.     

The British economy: the way forward

The present government's commitment to economic stability and its depoliticisation of monetary policy are welcome. But saving has been penalised, the flexibility of the labour market has been reduced and so far there has only been tinkering with welfare provision. The government seems intent on joining the single currency but the arguments in favour are weak.     

Innovation in Process Plant: A Case Study of Ethylene

Successful companies in any industry recognize the importance of involving customers and suppliers in the design and development of products and services. When complex product and process technologies are involved, these relationships create a network of companies and industries, each of which is a potential source for technological innovation. At the same time, however, such interrelationships further complicate the already challenging task of analyzing the evolving nature and sources of innovation. Using ethylene manufacture as a case study, Peter Hutcheson, Alan Pearson, and Derrick Ball present a three-stage model of innovation. The model provides a framework for understanding the evolution of technological innovation in ethylene manufacturing, as well as the changing roles of the equipment suppliers, the process plant suppliers, and the operating companies througout this evolution. The applicability of this approach to other sectors of the chemical processing industry is also evaluated. In much the same way that a product's life cycle can be traced through distinct phases of creation, growth, maturity, and decline, technological innovation progresses through three main phases: uncoordinated, segmental, and systemic. The progression through these three phases is marked by changes in the relative levels of product and process innovation activity. In this three-stage model, innovative activity progresses from an extreme of high product and low process innovation during the uncoordinated phase, through the segmental period of low product and high process innovation, to the low product and medium process innovation levels of the systemic phase. In other words, as the industry matures, the focus of innovative activity gradually shifts from the product to the process. As illustrated by the example of ethylene manufacturing, companies operating in an industry that has reached the systemic stage will find little or no scope for innovation in the end product or the core manufacturing technologies. In such a mature market, the product is a commodity item, and the fundamentals of the manufacturing process are well known. At this stage, the quest for productivity improvements focuses on cost reductions from task structuring and specialization, task integration, and automation. As such, equipment manufacturers play an increasingly important role in refining existing technologies and improving equipment reliability and capabilities. Such efforts are facilitated by close cooperation with the operating companies, which can contribute process expertise that the equipment manufacturers might otherwise lack.