MONEY,OUTPUT AND INFLATION IN AFRICAN ECONOMIES1

This paper examines the long‐run money‐inflation relation for 36 African countries using cross‐section and panel data analysis. The focus is on the recent claim by De Grauwe and Polan that the common finding in multi‐country studies of a strong positive link typically reflects the presence of high‐inflation countries in the sample and on Nelson's criticisms of the data and methodology employed in that study. Adjusting the De Grauwe and Polan methodology to take account of many of Nelson's criticisms, I confirm a weak long‐run relation between money growth and inflation for countries when money growth and inflation are below 10%, but a strong relation when money growth and inflation move much above that number. This result is not dependent on the inclusion of high inflation countries in the cross‐section and panel data samples.     

Investment decisions and internal capital markets: Evidence from acquisitions

In this paper, we examine the workings of internal capital markets in diversified firms that engage in related and unrelated corporate acquisitions. Our evidence indicates that bidders invest outside their core business (diversify) when the cash flows of their core business fall behind those of their non-core lines of business. However, bidders invest inside their core business (i.e., undertake non-diversifying investments) when their core business experiences superior cash flows. We also find that bidders whose core business are in industries with low growth prospects engage in diversifying acquisitions while bidders whose core business are in high growth industries undertake non-diversifying acquisitions. The pre-acquisition evidence, then, suggests that firms tend to diversify when the cash flows and the growth opportunities of their core business are considerably lower than those of their non-core business. Subsequent to acquisitions we find that diversifying bidders continue to allocate financial resources from less profitable business segments (i.e., core business) to more profitable business segments (i.e., non-core business). Given the low profitability of diversifying bidders’ core business, this capital resource allocation suggests that diversification increases do not result in capital allocation inefficiencies. The evidence for non-diversifying bidders, however, supports the existence of “corporate socialism” in the sense that there is transfer of funds from the profitable (core) to the less profitable (non-core) business segments in multi-segment bidders. We find that the capital expenditures of bidders’ non-core business segments rely on both core and non-core cash flows.     

Agency Costs in Apartment Property Management Contracts

Because fees for property management services are based on gross rental collections rather than on net operating incomes, property managers may not always act in the best interest of property owners. This study is an examination of the agency costs that result from the conflict of interests between owners and managers. A nationwide proprietary sample of 242 apartment properties is analyzed to compare agency costs of four distinct types of ownership structures. Agency costs, measured as operating expenses per square foot, are found to be significantly higher for institutional owners than for noninstitutional owners, but not significantly higher in cases where no competition for property management services exists. We conclude that agency costs of property management contracts are significant and the fee provisions of standard property management contracts should be changed to better align the interests of managers and owners.     

Reviews

“THE POLL TAX” Flannery, Kate, 1987: More than Just a Poll Tax. Centre for Local Economic Strategies, £5.00. MacGregor, Susanne, 1988: The Poll Tax and the Enterprise Culture. Manchester: Centre for Local Economic Strategies, £3.95.

“ECONOMIC THEORY AND THE LOCAL ECONOMY” Smith, D., 1987: The Rise and Fall of Monetarism: The Theory and Politics of an Economic Experiment. Penguin, £3.95.

Holland, S., 1987: The Market Economy: From Micro to Mesoeconomics and The Global Economy: From Meso to Macroeconomics, Weidenfeld, £12.95 each.

Green, F. and Sutcliffe, B., 1987: The Profit System: The Economics of Capitalism. Penguin, £5.95.

“THE SERVICES REVOLUTION?” Rajan, A., 1987: Services: The Second Industrial Revolution? London: Butterworths, £27.50.

“ENVIRONMENT AND ECONOMY IN EUROPE” Joyce, F. E. and Schneider, G. (editors), 1988: Environment and Economic Development in the Regions of the European Community. Aldershot: Avebury/Gower, £18.50 hb.

“POLITICS OF PRIVATISATION” Ascher, K., 1987: The Politics of Privatisation: Contracting Out Public Services. London: Macmillan Education Ltd. £30.00 cloth, £8.95 paper.

“RECRUITMENT AND TRAINING POLICY” Davies, T. and Mason, C., 1986: Shutting out the Inner City Worker. University of Bristol, School for Advanced Urban Studies, £4.30.

Chapman, P. G. and Tooze, M. J., 1987: The Youth Training Scheme in the United Kingdom. Avebury: Gower Publishing Company, £22.50.

“JOB GENERATION RESEARCH” Storey, D. J. and Johnson, S., 1987: Job Generation and Labour Market Change. London: Macmillan.     

A COMPARATIVE ANALYSIS OF AGRICULTURAL TRACTOR INVESTMENT MODELS

An implicit rental price approach is used to analyse the determinants of farm tractor investment at the aggregate level. Three models, based on different assumed factor substitutabilities, are compared. Variations in the rental price of tractors appear to have less effect on demand than variations in factors affecting the profitability of the cropping enterprise as a whole. The implications for forecasting and for policy instruments, such as the investment allowance, are discussed.     

British and French shipbuilding: the industrial relations of decline

The merchant shipbuilding industry in Western Europe has been unable to withstand the pressure of overwhelming international competition. This article examines and contrasts the varying consequences of decline for the British and French industries.     

The Effect of Subsidized Housing on Values of Adjacent Housing

This is a case study of the effect of subsidized housing on the value of adjacent non-subsidized housing. Four townhouse clusters in Fairfax County, Virginia, were selected for study because of the high degree of homogeneity between clusters. The clusters are all in the same community but vary in distance from subsidized housing. Sale prices were analyzed using a regression model which included distance from subsidized housing as an independent variable. Based on the results of the regression analysis, the authors conclude that the subsidized housing had a negative impact on the values of adjacent properties.     

An investigation of the relative efficacy of four alternative approaches to importance-performance analysis

Journal of the Academy of Marketing Science - Importance-performance analysis is a tool which has been used in several contexts to transform research results into practical marketing actions. The...     

Consumer profiles section: Consumer profiles for conventional bed and waterbed owners in Canada

This study examines consumer profile data on waterbed and conventional bed consumers. Five hundred conventional and waterbed consumers in Canada were randomly selected from two national lists of waterbed/mattress purchasers from 1981 to the present. A 73-item questionnaire was sent by mail to all of the selected respondents. The cover letter stated the purpose of the project; to study why people bought the bed that they are presently using. One hundred and sixty-two completed, useable questionnaires were returned, yielding a response rate of 37%. Following a series of multivariate analyses, a consumer profile for the two bed users was developed. Both groups tended to be married. The conventional bed consumers had: (a) either no children or one child at home; (b) a mean age of 44; and, (c) an average income in the $30,000-$40,000 range. Waterbed consumers had: (a) a mean age of 36, (b) one child living at home; and, (c) an average income in the $20,000-$30,000 range. On the Adorno F scale, the conventional bed user was found to be more conservative and authoritarian as compared to the waterbed user. The results did not support the notion that waterbed users are abnormally sexually-oriented or “kinky”. For both groups, the price paid for the purchased bed fell in the $600 to $650 range. Implications for retailers were discussed.