Government spending, capital accumulation and the optimal policy rule: The role of public service capital

In this paper, we modify the Djajić [Djajić, S., 1987. “Government Spending and the Optimal Rates of Consumption and Capital Accumulation,” Canadian Journal of Economics 20, 544–554.] model in such a way that government consumption expenditure provides utility to households via the total stock of government services rather than the government consumption flow alone. By using such a framework, we show that the optimality condition for the public service capital stock is the marginal rate of substitution between public service capital and consumption that equals the intertemporal marginal rate of transformation between the two goods. In addition, we show that the relationship between private consumption and public service capital in a household's utility plays an important role in determining the transitional behavior of relevant variables. We also examine the second-best government consumption expenditure policy. By contrast, in the standard flow specification, e.g., Turnovsky and Brock [Turnovsky, S.J. and Brock, W.A., 1980. “Time Consistency and Optimal Government Policies in Perfect Foresight Equilibrium,” Journal of Public Economics 13, 183–212.], Ihori [Ihori, T., 1990. “Government Spending and Private Consumption,” Canadian Journal of Economics 23, 60–69.], and Turnovsky and Fisher [Turnovsky, S.J. and Fisher, W.H., 1995. “The Composition of Government Expenditure and its Consequences for Macroeconomic Performance,” Journal of Economic Dynamics and Control 19, 747–786.], the second-best government consumption expenditure is decided on the basis that the marginal utility of consumption is equal to the discounted sum of the marginal utility of the government's flow spending.     

Price and Money-Back Guarantees as Signals of Product Quality

Why is it so common for the seller to provide guarantees that say “Satisfaction guaranteed or your money back” along with the sale of a product? Newly introduced goods and mail-ordered products are usually sold with such guarantees. In honoring money-back guarantees, why is it a common business practice to pay back exactly the purchase price rather than a portion of it? In this paper we study the informational role and optimality of the common business practice of money-back guarantees in a signaling model with quality uncertainty and risk-neutral buyers. We find that money-back guarantees and price together completely reveal a monopoly firm's private information about product quality, Moreover, the private information is revealed at no signaling cost. Furthermore, we show that in terms of the level of monetary compensation specified by a guarantee, price is the profit-maximizing level of monetary payback in case of product failure.     

Telehealth services evaluation: a combination of SERVQUAL model and importance-performance analysis

Telehealth services provide a means of monitoring a patient’s vital signs through the use of equipment or mobile devices and have the potential to extend clinical outreach to more patients regardless of geographical locations. However, patient acceptance is essentially important for the success of telehealth implementations. Thus, it is of interest to evaluate patients’ attitudes and perceptions toward the use of telehealth services. This study combines service quality model and importance-performance analysis to evaluate telehealth services provided by a case hospital. The results show that six items belong to major weaknesses, which should be addressed immediately in order to reduce patients’ complaints. In contrast to major weaknesses, there are seven items classified as major strengths, which should be maintained to provide telehealth service excellence in order to establish better and longer relationships with patients in the long-term perspectives.     

Cost Efficiency of International Tourist Hotels in Taiwan: A Data Envelopment Analysis Application

This paper uses the data envelopment analysis approach to measure cost, allocative and overall technical efficiencies of international tourist hotels (ITHs) in Taiwan during 1997–2006. There are three outputs, three inputs, three input prices and four environmental variables in the empirical model. The cost inefficiency of these hotels is from overall technical inefficiency. International tourist hotels in Taiwan have an average efficiency of 57%. Chain systems, non-metropolitan areas and occupancy rate have significantly positive impacts on all efficiency scores of Taiwan's ITHs. The distance from the nearest international airport significantly worsens their efficiency scores.     

Growth, welfare and transitional dynamics in an endogenously growing economy with abatement labor

This paper sets up a simple endogenous growth model that highlights the importance of the endogenous labor-leisure choice and the allocation between production labor and abatement labor. We show that, in contrast to the common notion (e.g. [Bovenberg, A.L., Smulders, S., 1996. Transitional impacts of environmental policy in an endogenous growth model. International Economic Review 37, 861–893] and [Bovenberg, A.L., de Mooij, R.A., 1997. Environmental tax reform and endogenous growth. Journal of Public Economics 63, 207–237]), the existence of an environmental production externality is a sufficient (but not necessary) condition for environmental policies to stimulate economic growth if the labor-leisure choice is endogenously determined. In particular, since there are complementarities between public abatement and private abatement, the public abatement expenditure will have a more powerful enhancing effect on economic growth when it is accompanied by more efficient private abatement. This result also leads to a corollary to the effect that it is easier to achieve double dividends in terms of enhancing both growth and welfare if the endogenous labor-leisure choice is taken into account.In our dynamic analysis, we show that if public abatement is substantially large, dynamic indeterminacy may occur despite the absence of a positive labor externality and interestingly, this is more likely to be the case when abatement labor plays a more significant role. Besides, the transitional effects of an increase in public abatement are also investigated.     

Transportation rates, market structure and the production-location decision : A note

This note examines the effects of market structure on production and location decisions of an oligopolistic firm. It shows that if transportation rates are a function of quantity shipped and distance traveled, a linearly homogeneous production function is not sufficient to ensure independence between the optimum location and market structure unless (i) the elasticities of transportation rates with respect to quantity shipped are constant and identical, and (ii) the ratios of marginal products to the marginal transportation costs are equal for each input. This results is significantly different from Hwang and Mai's in the constant transportation rates case.     

The transmission from equity markets to commodity markets in crises periods

This article investigates the transmission from equity markets to commodity markets during two major financial crises, namely the Subprime Mortgage and the Sovereign Debt Crises. We perform an analysis on sub-stages from 3 January 2003 to 31 October 2013 to capture the price behaviour of both equity and commodity markets. Two financial crises indicators, VIX and CDS, are used to represent fear of a crisis. We find that correlations between commodity and equity markets are time-varying and highly volatile during a financial crisis. While sharing some common features, commodities cannot be considered a homogeneous asset class. Segmentation characteristics of commodity markets disappear in times of financial crises, reducing their substitutability as an investment portfolio for asset diversification purposes. Through our test for Granger causality, we find the existence of transmission during a financial crisis. Volatility spillover effect also plays a major role as transmission mechanisms. After the collapse of Lehman Brothers, commodities decoupled from the VIX rather soon, and there is an increase in correlation with the CDS. In addition, we find the decoupling effect of most commodities show insignificant correlations with the Dow Jones, VIX and CDS after the Greek debt restructuring.     

Applying importance-performance analysis to compare the changes of a convenient store

This study applies importance-performance analysis to examine how the services provided by the convenient store (Hi-Life) located in Asia University have been changed when a competitor of a 7–11 convenient store opens nearby the university. In this case study, the performance for each item in the survey was measured by the average value, while the importance was evaluated by the variance-based methods. With the use of importance- performance analysis, a comparison of provided services at Hi-Life can be evaluated by two four-quadrant matrices to see how the services have been changed when the 7–11 becomes the competitor nearby the university.