Central Bank Independence and Budget Constraints for a Stable Euro

This paper looks at what economic theory and empirical evidence have to offer about the institutional conditions that are most likely to lead to a stable currency. Both theory and evidence suggest that an independent central bank with the explicit mandate to pursue price stability provides an effective solution to the time-inconsistency problem. The EMU institutional set-up is well-equipped to support a stability-oriented monetary policy. The ECB appears to be the most independent central bank in the world. An added protection of monetary policy from the influence of unsound budgetary policies enhances the prospects of price stability. The Maastricht Treaty and the Pact for Stability and Growth provide effective constraints against excessive deficits and encourage an environment of balanced budgets. The argument that both strong institutional arrangements and sound economic policy-making stem from a conservative attitude of the public is not dismissed altogether in this paper. We note, however, that this hypothesis is not formulated in a testable form and has ambiguous practical consequences. The hypothesis, nonetheless, serves as a useful reminder that the ECB should endeavor to draw its legitimacy not only from the text of the Treaty, but also from society as a whole.     

An American-Style Transfer Union in Europe,A First Glance at How Much It Might Cost

Since 1992, the European Union has been reallocating resources among its members through, among others, so-called cohesion funds. However, there is a growing perception among economists and politicians that the scope and magnitude of those transfers is inadequate. In this paper we compare the degree of fiscal transfers in the EU to those in the U.S. and estimate the changes needed to make the EU more like the U.S. Data on American inter-state fiscal transfers show that, on average, the most affluent states consistently make significantly larger payments to the federal government than they receive from it and that the opposite is true for the less affluent states. Our research shows that, unlike in the U.S., fiscal transfers in the EU are not closely related to a member state’s standard of living. We also find that, compared to the U.S., the least affluent nations in the EU receive disproportionally small net payments from the common budget. An American-style fiscal union would require more affluent EU members to make net contributions many times over their actual net payments.     

Density Nowcasts and Model Combination: Nowcasting Euro‐Area GDP Growth over the 2008–09 Recession*

Combined density nowcasts for quarterly Euro‐area GDP growth are produced based on the real‐time performance of component models. Components are distinguished by their use of ‘hard’ and ‘soft’, aggregate and disaggregate, indicators. We consider the accuracy of the density nowcasts as within‐quarter indicator data accumulate. We find that the relative utility of ‘soft’ indicators surged during the recession. But as this instability was hard to detect in real‐time it helps, when producing density nowcasts unknowing any within‐quarter ‘hard’ data, to weight the different indicators equally. On receipt of ‘hard’ data for the second month in the quarter better calibrated densities are obtained by giving a higher weight in the combination to ‘hard’ indicators.     

Selecting stochastic mortality models for the Italian population

The future revision of capital requirements and a market-consistent valuation of non-hedgeable liabilities lead to an increasing attention on forecasting longevity trends. In this field, many methodologies focus on either modeling mortality or pricing mortality-linked securities (as longevity bonds). Following Lee–Carter method (proposed in 1992), actuarial literature has provided several extensions in order to consider different trends observed in European data set (e.g., the cohort effect). The purpose of the paper is to compare the features of main mortality models proposed over the years. Model selection became indeed a primary task with the aim to identify the “best” model. What is meant by best is controversial, but good selection techniques are usually based on a good balance between goodness of fit and simplicity. In this regard, different criteria, mainly based on residual and projected rates analysis, are here used. For the sake of comparison, main forecasting methods have been applied to deaths and exposures to risk of male Italian population. Weaknesses and strengths have been emphasized, by underlying how various models provide a different goodness of fit according to different data sets. At the same time, the quality and the variability of forecasted rates have been compared by evaluating the effect on annuity values. Results confirm that some models perform better than others, but no single model can be defined as the best method.     

Retaliatory Equilibria in a Japanese Ascending Auction for Multiple Objects

We construct a family of retaliatory equilibria for the Japanese ascending auction for multiple objects and show that, while it is immune to many of the tacitly collusive equilibria studied in the literature, it is not entirely immune when some bidders are commonly known to be interested in a specific object.     

Consumer (goal) satisfaction: A means‐ends chain approach

This study investigates the role that service attributes, customer subgoals, and goals play in forming the satisfaction judgment. Drawing on means‐ends chain theory, and on satisfaction research, satisfaction is conceptualized as the result of a process in which customers activate multiple comparative referents. In a pilot study, a paper‐and‐pencil laddering technique was used to collect attributes and goals connected to the satisfaction judgment. These elements were then used as items in a satisfaction survey of 200 customers. A mixture regression model revealed that both attribute‐related dimensions and goal‐related dimensions determine overall satisfaction, albeit not homogeneously among customers. Two customer segments were identified: Socializers, whose satisfaction is driven primarily by the goal of well‐being, and Achievers, whose satisfaction is generated mainly by the goal of efficiency. Two directed graphs describe the satisfaction path of the two groups of customers, illustrating how service attributes are connected to the satisfaction of lower‐order and higher‐order goals. © 2011 Wiley Periodicals, Inc.     

The Fort McMurray demonstration project in social marketing: Health- and safety-related behaviour in a prosperous industrial community

Abstract

This is the first in a series of surveys conducted in Fort McMurray, Alberta, Canada, as part of the Fort McMurray Demonstration Project in Social Marketing. The Project is a community-based, cooperative program designed to demonstrate and to evaluate the application of social marketing and community animation to health- and safety-promoting interventions. This baseline survey was for the purpose of planning specific interventions and to support evaluation of the impact of these interventions. In 1992, a survey of Fort McMurray residents was conducted by telephone. Respondents to the survey tended to be disproportionately women (60%) and aged 30 to 44 (men 55%, women 54%). Most of the findings reported describe a generally affluent community with good self-reported health status and satisfaction in the quality of life. Occupational and personal health-and safety-related behaviours showed some contradictions. Both hearing protection and eye protection are much more frequently practiced at work than at home by both men and women. Protection from ultraviolet radiation, in the form of sunscreens or clothes cover, is practiced with about the same frequency at home or at work, suggesting that this behaviour is conditioned by lifestyle attitudes. Warm-up exercises are much more commonly practiced by both men and women before exertion at home than at work. We conclude that safety-related practices at home and at work are often at variance. The strategy of encouraging generalization of safety-related behaviours, to be practiced consistently both at home and at work, seems to hold promise for achieving greater compliance and promoting both community and workplace safety.