Inflation forecasts,the expected real rate and information efficiency

This paper examines the inflation forecast accuracy and rationality of a time series predictor, an expected inflation series constructed from surveys undertaken by the University of Michigan's Institute for Social Research, and the yield on U.S. Treasury bills. A quadratic loss function is assumed, and Theil's inequality ratios are used to decompose the mean squared foreast error (MSE). Although it is the only unbiased forecast, the time series predictor does not appear to be optimal during the recent period of turbulent inflation. As for bias in the other series, the surveys are inconsistent with weak-form rational expectations and the Treasury bill is reflecting variations in more than one factor. In an examination of the latter under the assumption of no liquidity premium, the results suggest that the forecast error is in part attribute to moderate variation in the expected real rate. Given the minimal cost of observing the Treasury bill yield, the findings of this study suggest that the market, although imperfect, has performed reasonably well in forecasting inflation.     

Citizenship in transition: Globalization,postindustrial technology and education

This paper explores the changes associated with the move from an industrial to a postindustrial society and discusses the corresponding shifts in education. After reviewing a number of contemporary responses to the present crisis within society, the paper examines some of the implications for the concept of citizenship and suggests that, while much remains unknown, the task of education in a postindustrial society will still be to furnish knowledge and skills that articulate with the requirements of social life.This paper is adapted from Royal Bank Lecture presented as a keynote address at the Annual Colloquium of the MSTE Group, Queen's University, Kingston, Ontario, Canada, April 7th, 1995. Proceedings of the Colloquium are available as Hills, S. (ed.) Life after School: Education, Globalization and the Person, Kingston Ontario, MSTE Group, 1995.     

Applying marketing strategy to private source grantsmanship

As funding opportunities for research and program development continue to decrease, faculty and administrators must understand, to be competitive, that a large part of grantsmanship is marketing. This paper discusses the rationale for seeking grant support, how faculty can identify potential funding sources, and how to target the final submission of the proposal. Understanding these topics will assist faculty in developing those skills required for competing successfully in an increasingly competitive environment.     

Putting your company's whole brain to work

Innovate or fall behind: the competitive imperative for virtually all businesses today is that simple. Responding to that command is difficult, however, because innovation takes place when different ideas, perceptions, and ways of processing and judging information collide. And it often requires collaboration among players who see the world differently. As a result, the conflict that should take place constructively among ideas all too often ends up taking place unproductively among people. Disputes become personal, and the creative process breaks down. The manager successful at fostering innovation figures out how to get different approaches to grate against one another in a productive process the authors call creative abrasion. The authors have worked with a number of organizations over the years and have observed many managers who know how to make creative abrasion work for them. Those managers understand that different people have different thinking styles: analytical or intuitive, conceptual or experiential, social or independent, logical or values driven. They deliberately design a full spectrum of approaches and perspectives into their organizations and understand that cognitively diverse people must respect other thinking styles. They set ground rules for working together to discipline the creative process. Above all, managers who want to encourage innovation need to examine what they do to promote or inhibit creative abrasion.     

Term Structure of Interest Rates Under Recursive Preferences in Continuous Time

This paper proposes a testable continuous-time term-structure model with recursive utility to investigate structural relationships between the real economy and the term structure of real and nominal interest rates. In a representative-agent model with recursive utility and mean-reverting expectations on real output growth and inflation, this paper shows that, if (1) real short-term interest rates are high during economic booms and (2) the agent is comparatively risk-averse (less risk-averse) relative to time-separable utility, then a real yield curve slopes down (slopes up, respectively). Additionally, for the comparatively risk-averse agent, if (3) expected inflation is negatively correlated with the real output and its expected growth, then a nominal yield curve can slope up, regardless of the slope of the real yield curve.