The Euro: Reflections on the first three years

In the first three years of its (virtual) existence, the euro has seen a general decline in its value (notably against the dollar). In this paper we look at this issue and reflect on the implications of the decline for the future of the euro.The paper begins by briefly reviewing some of the explanations that have been put forward for the weakness of the euro, which might be seen as temporary factors or factors that do not arise from the creation of the eurozone per se. These explanations include the decline in the value of the euro as being a reaction to previous rises, interest rate differentials as favouring the dollar and the decline in the euro as being the obverse of a rise in the value of the dollar reflecting the strength of the US economy. These explanations are found to be unconvincing, and the view is advanced that there are serious weaknesses within the eurozone itself and in the construction of the eurosystem, along with its operation, that could be undermining the value of the euro. The divergent euro area may be one of the more significant factors contributing to the euro decline.     

Fiscal policy under New Labour

This paper seeks to provide an evaluation of fiscal policy underNew Labour in the decade from its election in May 1997 to date.It begins with a brief review of macroeconomic performance overthat period. It outlines the main features of the approach ofthe Labour government to fiscal policy including the ‘goldenrule’ of public finance, and provides a critique of thatrule and the general approach to fiscal policy. It considershow far the policy rules have been observed in practice. Finally,it argues that the relative macroeconomic stability since 1997has not resulted from the fiscal policy pursued, but ratherthat changes in the fiscal stance have fortuitously offset variationsin private expenditure.     

Seeing the Wood for the Trees: A Critical Evaluation of Methods to Estimate the Parameters of Stochastic Differential Equations

Maximum-likelihood estimates of the parameters of stochasticdifferential equations are consistent and asymptotically efficient,but unfortunately difficult to obtain if a closed-form expressionfor the transitional probability density function of the processis not available. As a result, a large number of competing estimationprocedures have been proposed. This article provides a criticalevaluation of the various estimation techniques. Special attentionis given to the ease of implementation and comparative performanceof the procedures when estimating the parameters of the Cox–Ingersoll–Rossand Ornstein–Uhlenbeck equations respectively.     

Cost-effectiveness of stent-retriever thrombectomy in combination with IV t-PA compared with IV t-PA alone for acute ischemic stroke in the UK

Objective: To evaluate the cost-effectiveness of neurothrombectomy with a stent retriever (Solitaire**Solitaire Revascularization Device is a registered trademark of Medtronic (Irvine, CA).View all notes Revascularization Device) in treating acute ischemic stroke patients from the UK healthcare provider perspective.

Methods: A Markov model was developed to simulate health outcomes and costs of two therapies over a lifetime time horizon: stent-retriever thrombectomy in combination with intravenous tissue-type plasminogen activator (IV t-PA), and IV t-PA alone. The model incorporated an acute phase (0–90 days) and a rest of life phase (90+ days). Health states were defined by the modified Rankin Scale score. During the rest of life phase, patients remained in the same health state until a recurrent stroke or death. Clinical effectiveness and safety data were taken from the SWIFT PRIME study. Resource use and health state utilities were informed by published data.

Results: Combined stent-retriever thrombectomy and IV t-PA led to improved quality-of-life and increased life expectancy compared to IV t-PA alone. The higher treatment costs associated with the use of stent-retriever thrombectomy were offset by long-term cost savings due to improved patient health status, leading to overall cost savings of £33 190 per patient and a net benefit of £79 402. Deterministic and probabilistic sensitivity analyses demonstrated that the results were robust to a wide range of parameter inputs.

Limitations: The acute and long-term costs resource use data were taken from a study based on a patient population that was older and may have had additional comorbidities than the SWIFT PRIME population, resulting in costs that may not be representative of the cohort within this model. In addition, the estimates may not reflect stroke care today as no current evidence is available; however, the cost estimates were deemed reasonable by clinical opinion.

Conclusions: Combined stent-retriever neurothrombectomy and IV t-PA is a cost-effective treatment for acute ischemic stroke compared with IV t-PA alone.     

Recovering the production technology from the cost function

An alternative technique for recovering the technology from the cost function is investigated. The recovery method uses an optimization problem with a finite number of constraints that, under appropriate conditions, has, the equations of Shephard's lemma among the first order conditions. Hence, a justification is provided for the technique of recovering the production function from the cost function by solving the system of equations generated by Shephard's lemma. The alternative technique also recovers the output distance function from the cost function in the multioutput case.The editor for this paper was R. Robert Russell.     

THE RELATIONSHIP BETWEEN CAPITAL STOCK, UNEMPLOYMENT AND WAGES IN NINE EMU COUNTRIES

The focus of this paper is to investigate the importance of the capital stock in the determination of wages and unemployment in a range of EMU countries and to compare the results across countries. A time‐series analysis is conducted in the case of nine euro area countries, which were selected solely on the basis of data availability and consistency: Austria, Belgium, Finland, France, Germany, Italy, Ireland, the Netherlands and Spain. The paper begins with a short review of the literature on capital stock and unemployment, before it deals with the theoretical model. This is followed by estimation and testing of the theoretical model put forward, using both time‐series and panel data. The results are supportive of the main hypothesis of the paper: capital stock is an important determinant of unemployment and wages in the countries considered for the purposes of the paper.     

International Marketing of Organic Foods: Consumers,Standards, and Harmonization

Differing technical standards can be barriers to international trade. Harmonizing standards is one means of removing barriers to trade. It is argued in this article that international harmonization may not be welfare enhancing if consumers have a strong attachment to their domestic standards. Standards for organic products differ among countries and act as a barrier to trade. International harmonization has been proposed. Consumers were surveyed in the United States, United Kingdom, and Canada to determine their likely attachment to existing domestic organic standards. The results suggest that consumers, even those with a preference for organic foods, have little understanding of their domestic standards and only weakly identify with them. As a result, harmonization could be pursued. Agribusiness firms that are interested in harmonization to expand their access to export markets should promote the development of a new international standard rather than harmonization to one of the existing domestic standards.     

FINANCIAL STATEMENT USERS‘ PERCEPTIONS OF FACTORS AFFECTING THE ABILITY OF AUDITORS TO RESIST CLIENT PRESSURE IN A CONFLICT SITUATION

This study investigates the perceived effects of four factors on the likelihood that an auditor will acquiesce to the demands of a client when a dispute arises over a significant financial reporting issue. A repeated measures experiment was conducted using 49 security analysts and 69 bankers as subjects. Analysis of Variance results indicate that an auditor is perceived as being more likely to acquiesce to his client's demands when the accounting issue in dispute is not dealt with clearly by an accounting standard. Auditors also are viewed as being more likely to acquiesce when: (1) competition in the audit environment is aggressive; (2) the audit firm is small; and (3) the audit firm provides management consulting services to its audit client.