Institutional changes and shifting ideas: a constitutional analysis of the Euro

This paper uses the logical tools of Constitutional Economics to analyze the creation of the Euro, considering the entire process as the outcome of a conflict between different rules or, if you will, between different monetary systems, moving from the system of flexible exchange rates to a system of fixed exchange rates and ultimately to the single currency. The conflict between monetary systems has been acted out according to the single states’ collective preference functions, with both full employment and price stability figuring among the weights of said preference functions. The “solution” of the single currency was conceived when the body of information available to the policymakers was “simplified” by the new classical macro-economy taking a hegemonic role.     

ASSESSING THE ASSESSMENT OR,THE RAE AND THE OPTIMAL ORGANIZATION OF UNIVERSITY RESEARCH

The UK Research Assessment Exercise (RAE) is assessed as an incentive scheme affecting the allocation of research talent of varying ‘quality’ across departments. The ‘centres of excellence’ policy implicitly pursued through the RAE is an optimal allocation strategy only if all departments in all disciplines are of the generalist variety, i.e. each pursues a research path through all its stages. Conversely, the RAE‐induced research allocation minimizes efficiency if applied to specialist departments, when resources are concentrated on one specific research obstacle. It is argued that the RAE should not take the organization of University research as exogenous, but rather should encourage specialization. All results are obtained by applying to University research concepts and solutions borrowed from the mathematical theory of systems reliability.     

Enlarging and/or deepening the community

Developments in Eastern Europe have forced the EC to reconsider its goal of European union. German reunification and the end of East-West conflict and the division of Europe have given rise to two antagonistic schools of thought. One argues in favour of strengthened integration in order to accommodate a united Germany in the EC; the other implies an opening up of the EC to those countries wishing to join the Twelve. In order to pass beyond the enlargement/deepening dilemma the EC has attempted to implement a strategy whose success is still uncertain. The debate over enlargement is highlighting differences of opinion between and within member states over the objectives of European union.     

Monitoring Accounts Payables

In creating shareholder value, one objective of management is to increase the speed of cash inflows and reduce the speed of cash outflows. To accomplish this task, management must understand the relationships that cause accounts receivable and accounts payable to change. The paper expands a receivable monitoring model by Gentry and De La Garza to incorporate the causes of changes in payables. Several examples are developed to show the operation of the model. The three primary contributions of the paper are (a) developing algorithms that measure the causes of changes in payables, plus an interpretation for each set of conditions; (b) showing that a present value approach to monitoring payables is superior to a recommended accounting approach based on variance analysis; (c) finally, presenting an approach for ranking the performance of payable and receivable strategies.     

A note on the notion of “theory”

Quality & Quantity -     

Market analysis with rational expectations: Theory and estimation

In a dynamic market structure the rational expectations hypothesis implies the existence of a ‘fixed point’ or‘equilibrium’ price sequence. For a prototype market structure we develop the This approach displays the relationships between exogenous structure, expectations, and behavior. The resulting framework suggests effective estimation procedures and clarifies analysis. Results for an application are presented and discussed.     

The distributive impact of terms of trade shocks: The case of the oil price changes in Russia

The halving of oil prices, during a short period between 2014 and 2015, has generated major terms of trade losses for oil exporting countries. This terms of trade shock has economy‐wide effects and significant distributive impacts. This paper, using a macro‐micro simulation model, describes and quantifies the channels of transmission from the drop of oil prices, to changes in welfare distribution at the household level for the case of the Russian Federation. The oil price reduction generates a reverse Dutch disease impacting sectoral employment, factor returns and consumption prices. It causes a contraction of employment and wages in more skill‐intensive (non‐tradable) sectors, and a reduction in consumption prices that is more pronounced for non‐food than for food goods. When these shifts are mapped to changes in incomes at the micro level, all households are affected. Poverty rates increase by 1 to 4 percentage points, depending on the poverty line used. At the US$ 10 a day threshold, 4.1 million additional people fall into poverty. Along the consumption distribution, richer people are affected more than those in the bottom 40%. However, this minor progressive impact may be reversed due to increases in unemployment and cuts in social programmes.