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.     

Designing for Cost Transparency in Investment Advisory Service Encounters

Investment advisory services of financial service providers (FSPs) exhibit several characteristics that are detrimental to advisory quality. The interaction of advisor and client is strained by a lack of transparency regarding the advisory process (what activities are performed and why) and the information used therein (what information is used for what purpose and with what effect), as well as regarding the precise costs of the service and the recommended products. In prior research, we suggested that process and information transparency issues may be appropriately addressed with collaborative information technology (IT) artifacts. In this paper, we argue that collaborative, transparent artifacts may also be a premise of enabling cost transparency. To this end, we describe a complete research cycle of designing, implementing, and evaluating a shared cost-transparent IT artifact to support client-advisor interaction in investment advisory encounters. Evaluation results suggest the efficacy of our design in improving the clients?? perceived cost transparency as well as increase their satisfaction and their willingness to pay for the received investment advice. These findings may also challenge the common belief of FSPs that transparent, fee-based advisory services would neither be accepted by clients nor be economically viable. Practical implications of these findings for designing advisory encounters with supportive IT are discussed.     

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.     

Cross Sectoral Variation in the Volatility of Plant Level Idiosyncratic Shocks

We estimate the volatility of plant–level idiosyncratic shocks in U.S. manufacturing. We measure the variation in Revenue Total Factor Productivity not explained by either industry or economy–wide factors, or by establishments’ characteristics. We find that idiosyncratic shocks are much larger than aggregate shocks, accounting for about 80% of the overall uncertainty faced by plants. Plants in the most volatile sector are subject to about six times as much idiosyncratic uncertainty as plants in the least volatile. We provide evidence suggesting that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater.     

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.