The Face-to-Face Delivery of Downsizing Decisions in UK Public Sector Organizations: The envoy role

In the wake of current UK public sector retrenchment, this article introduces a role that may be important to successful restructuring management, referred to here as the ‘downsizing envoy’. It involves delivering the news of downsizing decisions, face to face, with the victims and then dealing with the repercussions. After a review of the relevant, but limited, literature the findings are presented from interviews with twenty-four envoys drawn from public sector organizations. They indicate that the envoy role is emotionally demanding and that the public sector context invokes additional pressures that may not occur in other sectors.     

Efficiency, Bond of Association and Exit Patterns in Credit Unions: Australian Evidence

Data envelopment analysis is used in this study to provide measures of the efficiency of individual credit unions in the Australian state of Victoria in the period 1992–5. The resulting measures are consistent with those reported in comparable studies. There is no evidence that over the period of the study, the 'average' credit union moved closer to the efficient frontier. Efficiency measures are analysed according to the bond of association and the results are consistent with the proposition that a tighter bond will tend to reduce operating costs. In the period of the study there were a large number of exits by merger, including exits by small credit unions with high efficiency measures. Possible explanations in terms of the expected benefits to the members of acquiring and exiting credit unions are suggested and evaluated.     

Does tax competition make mobile firms more footloose?

We examine a two‐period regional model with evolving economic geography, potentially creating incentives for firm relocation between periods. We argue that tax competition makes firms more footloose, but that this increases efficiency relative to the laissez‐faire outcome. We establish that: (i) tax competition leads to efficient investment outcomes and (ii) firm mobility is greater with tax competition than with a laissez‐faire regime. When relocation is costly, there can be too little mobility over time, as firms do not take into account the impact of FDI on social welfare in each country. With lump‐sum taxes or transfers, firms capture these benefits and internalize them, such that tax competition leads to the efficient outcomes. When more time periods are examined, tax competition induces firm relocation sooner than in its absence.     

Lambs to Slaughter: Potential for Crises in Smaller Nations of the European Union

The Minsky (1992) model links inflation during economic expansion to the potential for subsequent reversal. This model was tested in the European economic region using logistic regression, which indicated inflation had the greatest contribution toward potential for crisis. Three equations included inflation with other selected macroeconomic indicators tracked by the World Bank. GDP growth, GDP/GNI ratio, and adoption of the Euro demonstrated positive effects. Predictions based on the chosen indicators suggest that the newer members of the European Union may be vulnerable to crisis following periods of high inflation; recent slowing of economic activity in Europe has actually improved the predicted outcomes.     

Credit risk transfer and financial sector stability

In this paper, we study credit risk transfer (CRT) in an economy with endogenous financing (by both banks and non-bank institutions). Our analysis suggests that the incentive of banks to transfer credit risk is aligned with the regulatory objective of improving stability, and so the recent development of credit derivative instruments is to be welcomed. Moreover, we find the transfer of credit risk from banks to non-banks to be more beneficial than CRT within the banking sector. Intuitively, this is because it allows for the shedding of aggregate risk which must otherwise remain within the relatively more fragile banking sector. Therefore, regulators should act to maximize the benefits from CRT by encouraging the development of instruments favorable to the cross-sectoral transfer of aggregate credit risk (including basket credit derivatives such as collateralized debt obligations). Finally, we derive the optimal regulatory stance for banks relative to non-bank financial institutions. We show that a level playing field approach is sub-optimal. Regulatory stances should be set to actively encourage cross-sector CRT, first because of the higher fragility of the banking sector and second to induce banks to incur the costs of CRT which otherwise lead them to undertake an insufficient amount of CRT.     

The causal analysis of contingency tables: A return to first principles

Given the undoubtedly major advances in the analysis of contingency tables which have been achieved over the past ten years or so (see for example, Fienberg, 1980; Upton, 1978; Everitt, 1977; Haberman, 1978, 1979), it might seem rather unnecessary to want to return to first princples again. However, the need arises precisely because of these advances; for progress in the specifically causal analysis of contingency tables has not matched the other advances at all. Whilst Fienberg devoted a chapter to causal analysis, he made it clear that he views “the assignment of numerical values [to the arrows in a path diagram] as problematic, and [he] would limit [the analysis] to an indication of sign for causal relationships, in a fashion similar to that described by Blalock (1964)” (Fienberg, 1980, pp. 91–92). Considering how far quantitative-variable causal analysis has developed since Blalock (1964), it becomes clear that the causal analysis of qualitative data is still at a rather primitive stage. Indeed, Haberman (1978, 1979), in his two-volume survey of the analysis of qualitative data, does not mention it at all. The problem, I believe, is that log-linear and logit methodology are not particularly suited to the logic of causality in contingency tables. In order to derive a suitable method, it is necessary to uncover the logic underlying causality when applied to qualitative variables. A few others have taken seriously the idea that a direct analysis of the form of a contingency table can lead to fruitful results (see, especially, for example, Boudon, 1967), but their work has been overshadowed by the statistically more profound advances made in log-linear methods. This article is an attempt to provide a statistically rigorous analysis based on the direct interpretation of causality embodied in a contingency table.     

Introduction to special issue: Macroeconomics with frictions

This is an introduction and overview of the special issue on “Macroeconomics with frictions”.     

Directed search, unemployment and public policy

Abstract .  We examine the effects of public policy parameters in a simple directed search model of the labour market, and contrast them with those in standard random matching models with Nash bargaining. Both finite and limit versions of the directed search model are considered, and the value of the limit model as an approximation of the finite one is assessed. As with the random matching model, job creation is the key channel through which the policy parameters affect the equilibrium of the directed search model. Both comparative static effects of the policy parameters and optimal configurations are identified.