Peru in the 21st century : Challenges and possibilities

The Peruvian 21st century study, initially conceived in 1981 and still going on, is a large programme consisting of several interlinked projects. Simulations have been done on the future of 10 key national sectors, and these simulations have then been integrated to produce scenarios describing alternative feasible futures. At the same time, a group of desired scenarios has been constructed using personal interviews and a consultation process. There has been initial work on a third project examining key external factors affecting Peruvian development. Still to be undertaken are projects identifying specific development strategies and analysing the national planning process. Especially noteworthy products of the study are the user-friendly spreadsheet models, which make the feasible futures component of the study highly accessible to interested decision makers.     

Short‐term monitoring of fiscal policy discipline

Under the Maastricht Treaty and the Stability and Growth Pact (SGP), European Union (EU) Member States commit themselves to avoid excessive deficits over 3% of GDP and to pursue the medium‐term objective of budgetary positions close to balance or in surplus. The SGP also provides regulation for the surveillance of budgetary positions. An analysis of tools for the surveillance of budgetary positions is the focus of this paper. In particular, it addresses two open issues in the empirical public finance literature which are crucial for monitoring fiscal policy discipline in the EU. First, the estimation of the structural component of the fiscal balance ratio. Second, the computation, when only annual fiscal data are available, of quarterly budget balance ratios, using relevant information from quarterly measured macroeconomic series. An econometric model that addresses both issues is presented and estimated. Additionally, this modelling framework allows us to answer questions such as: what is the safety margin that will prevent a particular country from reaching, with certain probability, a budget deficit that breaches the 3% upper bound? Copyright © 2004 John Wiley & Sons, Ltd.     

Variance swaps,non-normality and macroeconomic and financial risks

This paper studies the determinants of the variance risk premium and discusses the hedging possibilities offered by variance swaps. We start by showing that the variance risk premium responds to changes in higher order moments of the distribution of market returns. But the uncertainty that determines the variance risk premium – the fear by investors to deviations from normality in returns – is also strongly related to a variety of macroeconomic and financial risks associated with default, employment growth, consumption growth, stock market and market illiquidity risks. We conclude that the variance risk premium reflects the market willingness to pay for hedging against these financial and macroeconomic sources of risk. An out-of-sample asset allocation exercise shows that the inclusion of the variance swap reduces the modified value-at-risk with respect to a portfolio holding exclusively the equity market portfolio.     

An evaluation of the management of the Finnish employment service

This paper analyses the efficiency of the Finnish Employment Service's management in selecting unemployed individuals who are offered a job. The database used considers short-term unemployed individuals who face the same labour market conditions in 1996. Duration analysis with a Weibull model has been performed in order to study the determinants of the transition probability from unemployment into employment and the impact of receiving job offers through the Employment Service (ES). In order to carry this out, it has been taken into account that the reception of such job offers may be endogenous because the ES selects the individuals who will receive the offers. The empirical results suggest that the decisions made by the ES are adequate in the sense that they increase the benefit of society, compared with a random assignment of the vacancies offered through the ES. Moreover, the effects of the other determinants depend on whether the individual receives offers. The results also point out that individuals who receive no offers through the ES are more likely, as time passes by, to be discouraged in searching for a job than those who do.     

Different Pathways that Suggest Whether Auditors’ Going Concern Opinions are Ethically Based

Several critics have reopened the continuing debate regarding the credibility of the auditing profession in part because of auditors’ reluctance to issue warning signals to investors. At the root of auditors’ lack of independence issues are conflicts of interest resulting from the structural features of auditor–client relationship. The Throughput Model (TP) is advanced to illustrate how ethical issues may be influenced by conflicts of interest. In the first stage, the TP provides an isolation of auditors’ ethical positions from six ethical different perspectives. In the second stage, previous TP theory is built upon by arguing a simultaneous analysis of how conflicts of interests may induce auditors’ behavior. We conclude that in the current low litigation risk environment, auditors’ ethical behavior (both conscious and unconscious) is clearly ‹unbalanced’ favoring the reluctance to issue warning signals. Finally, we offer a discussion of potential solutions to improve ethical issues.

Transforming Human Resource Management Systems to Cope with Diversity

The purpose of this study is to examine how workgroup diversity can be managed through specific strategic human resource management systems. Our review shows that ‘affirmative action’ and traditional ‘diversity management’ approaches have failed to simultaneously achieve business and social justice outcomes of diversity. As previous literature has shown, the benefits of diversity cannot be achieved with isolated interventions. To the contrary, a complete organizational culture change is required, in order to promote appreciation of individual differences. The paper contributes to this discussion by exploring the implications of this change for human resource management, and explaining how the systems of practices should be changed when they are directed to diverse groups. The model designed to test this notion includes: (1) demographic and human capital diversity as independent variables, (2) group performance (measured as innovation outcomes) as the dependent variable and, (3) the orientation of the strategic human resource management system as a potential moderator of this relationship. The main conclusion of the empirical analysis developed is that different patterns of human resource management practices can be used, depending on the type of diversity that the organization faces, and the specific effects that it wishes to manage. Concretely, three alternative management systems are identified in this paper, with different moderating effects. This result has interesting implications for human resource management professionals, explained in the last section. The limitations of this study are also discussed, as well as some issues that future research in this field should address.     

Preventing rather than punishing: An early warning model of malfeasance in public procurement

Is it possible to predict malfeasance in public procurement? With the proliferation of e-procurement systems in the public sector, anti-corruption agencies and watchdog organizations have access to valuable sources of information with which to identify transactions that are likely to become troublesome and why. In this article, we discuss the promises and challenges of using machine learning models to predict inefficiency and corruption in public procurement. We illustrate this approach with a dataset with more than two million public procurement contracts in Colombia. We trained machine learning models to predict which of them will result in corruption investigations, a breach of contract, or implementation inefficiencies. We then discuss how our models can help practitioners better understand the drivers of corruption and inefficiency in public procurement. Our approach will be useful to governments interested in exploiting large administrative datasets to improve the provision of public goods, and it highlights some of the tradeoffs and challenges that they might face throughout this process.     

The potential of international coastal mass tourism destinations to generate creative capital

This paper introduces a new line of research in international coastal mass tourism destinations. Such destinations have started to function in a more complex and potentially beneficial way, acting as transitional areas between the global city and local territory while at the same time developing their own unique characteristics. From this perspective, such destinations can potentially become environments for creativity and innovation, two factors that act as economic driving forces in the so-called “knowledge society”, thereby promoting the sustainable development of the destination from a socioeconomic perspective.

The methodology used herein develops 10 indicators that are calculated and mapped out for two case studies which examine the same geographical context and comparable populations in order to demonstrate the creative capacity of a location whose economy is heavily reliant on tourism. The results show that tourist destinations have greater potential for generating creative capital than non-tourist destinations. Therefore, the consolidation of international mass tourism destinations as creative and innovative spaces which are capable of generating creative capital without losing their competitiveness as tourist destinations merits a reconception of their current role in global–local networks.     

The Value of Territory: Towards a Marxist Geopolitics

The article argues for a Marxist geopolitics that moves beyond both critical geopolitics and the discredited classical geopolitics. It underlines the valorisation of territory by capital across three levels of abstraction: that of social infrastructure, class conflict and ground-rent proper. The recent Russian-Ukrainian gas wars are briefly analysed by way of illustrating the application of this distinctive approach to geopolitics.     

Smiles, Bid‐ask Spreads and Option Pricing

Given the evidence provided by Longstaff (1995), and Peña, Rubio and Serna (1999) a serious candidate to explain the pronounced pattern of volatility estimates across exercise prices might be related to liquidity costs. Using all calls and puts transacted between 16:00 and 16:45 on the Spanish IBEX‐35 index futures from January 1994 to October 1998 we extend previous papers to study the influence of liquidity costs, as proxied by the relative bid‐ask spread, on the pricing of options. Surprisingly, alternative parametric option pricing models incorporating the bid‐ask spread seem to perform poorly relative to Black‐Scholes.