Unforeseen Contingencies and Incomplete Contracts

We scrutinize the conceptual framework commonly used in the incomplete contract literature. This literature usually assumes that contractual incompleteness is due to the transaction costs of describing—or of even foreseeing—the possible states of nature in advance. We argue, however, that such transaction costs need not interfere with optimal contracting ( i.e. transaction costs need not be relevant ), provided that agents can probabilistically forecast their possible future payoffs (even if other aspects of the state of the nature cannot be forecast). In other words, all that is required for optimality is that agents be able to perform dynamic programming, an assumption always invoked by the incomplete contract literature. The foregoing optimality result holds very generally provided that parties can commit themselves not to renegotiate. Moreover, we point out that renegotiation may be hard to reconcile with a framework that otherwise presumes perfect rationality. However, even if renegotiation is allowed, the result still remains valid provided that parties are risk averse.     

Governance with multiple objectives: Evidence from top executive turnover in China

We examine the relationship between Chief Executive Officer (CEO) turnover and the performance of listed Chinese firms and obtain two results. First, we find a negative relationship between the level of pre-turnover profitability and CEO turnover when firms are incurring financial losses, but no such relationship when they are making profits. Second, there is an improvement in post-turnover profitability in loss-making firms, but no such improvement in profit-making firms. These results indicate the existence of a time-varying objective function, whereby shareholders have a greater incentive to discipline their CEOs on the basis of financial performance when their firms are incurring financial losses rather than profits.     

Institutional positioning: A dynamic concept for retailing strategy

The importance of retail image, i.e., consumers' perceptions of retail institutions, is well known to retailers and to marketers alike. The popularity of the issues surrounding the actual measurement of consumer perceptions of various stores is evidenced by the large number of studies published during the last 15 years. A review of the published research, however, teveals that this increased interest in retail image research has not been matched with an increase in methodological sophistication. The indication is that, with few exceptions, retail image research has not progressed very far in the past 10 years. The major weaknesses of the current retail image studies are discussed, and suggestions for improving the quality and usefulness of image research are outlined.     

Crime Watch: Hurricanes and Illegal Activities

We investigate the relationship between hurricane strikes and crime for Jamaica. To this end, we construct hurricane damages and daily recorded criminal activity. Hurricanes are found to significantly increase crime by 35%, where the impact is stronger for more damaging storms, but this only lasts for the duration of the storm. Decomposing crime into its various subtypes, one finds that while aggravated assault, break‐ins, and shooting increase during a hurricane, murders, rapes, and robberies actually decline. The greatest increase is with shootings, whereas the greatest decline is with rape. Crucially, the impact of crime depends on the existence of a storm warning. Our results also show that high frequency data more accurately estimate the impact of hurricanes on crime.     

Is it time to reboot welfare economics? Overview

The contributions of economists have long included both positive explanations of how economic systems work and normative recommendations for how they could and should work better. In recent decades, economics has taken a strong empirical turn as well as having a greater appreciation of the importance of the complexities of real-world human behaviour, institutions, the strengths and failures of markets, and interlinkages with other systems, including politics, technology, culture and the environment. This shift has also brought greater relevance and pragmatism to normative economics. While this shift towards evidence and pragmatism has been welcome, it does not in itself answer the core question of what exactly constitutes ‘better’, and for whom, and how to manage inevitable conflicts and trade-offs in society. These have long been the core concerns of welfare economics. Yet, in the 1980s and 1990s, debates on welfare economics seemed to have become marginalised. The articles in this Fiscal Studies symposium engage with the question of how to revive normative questions as a central issue in economic scholarship.     

Do conditional cash transfers increase schooling among adolescents?

International Economics and Economic Policy - In several Latin American countries, conditional cash transfer programmes are a proven means of alleviating poverty in the short term and promoting...     

The Euro Crisis in the Mirror of the EMS: How Tying Odysseus to the Mast Avoided the Sirens but Led Him to Charybdis

Open Economies Review - Why was recovery from the euro area crisis delayed for a decade? The explanation lies in the absence of credible and timely policies to backstop financial intermediaries and...     

Gateway community resident perceptions of tourism development: Incorporating Importance-Performance Analysis into a Limits of Acceptable Change framework

Gateway communities serve as entry points to our nation's public lands and are desirable to live within, but commonly subject to indiscriminate growth. The researchers used a variation of Importance-Performance Analysis (IPA) to chart resident types and their evaluations of environmental, cultural and economic attributes to better understand perspectives on tourism development. IPA was chosen because it can serve as a simple evaluative tool for communities in gateway areas interested in employing a more comprehensive Limits of Acceptable Change (LAC) planning framework. Environmental attributes were found to be what make the area special with it considered both important and of real concern from each resident-type perspective. With the exception of a few items no other cultural or economic attributes were perceived the same in importance and concern as the environmental items with few meaningful differences found between resident types. In summary, IPA is a tool that can provide insight about resident perceptions while serving to inform a larger LAC tourism development framework.     

The effects of U.S. quantitative easing on South Africa

This paper investigates the impact of the Federal Reserve’s monetary policy on the economy of South Africa, particularly during the period of quantitative easing and thereafter from 2009 to 2018. A VAR model, including South Africa’s inflation, output, a stock market index, exchange rate, and South Africa’s policy rate is examined to determine the impact of the Federal Reserve’s actions. Our results show that the Federal Reserve’s quantitative easing programs had only slight overall effects on South Africa’s economy. However, the way monetary policy is measured appears to have important effects for studies of international monetary spillovers as the results differ depending on the type of monetary policy measure used.