The New Economics Tests for the College and Pre-college Levels: A Comment

The authors examine the recently revised Test of Understanding of College Economics (TUCE) available from the Joint Council on Economic Education. The article examines its reliability, validity, norms, and item statistics with attention to limitations.     

Do budget maximizing public officials increase the probability of property reassessment?

County governments in Pennsylvania face non‐binding limits on their property tax rates. These are considered non‐binding because they do not place a limit on tax levies or expenditures. Assuming local public officials have monopoly power, tax rate limits can be circumvented by reassessing the property tax base. A two‐stage process was hypothesized in which the probability of reaching tax rate limits first was determined and the probability of reassessment then was determined. The effect of budget maximizing government officials at each stage was tested for 66 Pennsylvania counties over the 1970–1995 period. The empirical results showed that variables associated with budget maximizing behaviour influenced the choice in each stage. Public expenditure growth increased the probability of reaching the tax rate limit in the first stage while reaching the tax rate limit increased the probability of reassessment in the second stage. The estimates also showed that economic, fiscal and taste variables were significant determinants of these probabilities.     

Collateral equilibrium,I: a basic framework

Much of the lending in modern economies is secured by some form of collateral: residential and commercial mortgages and corporate bonds are familiar examples. This paper builds an extension of general equilibrium theory that incorporates durable goods, collateralized securities, and the possibility of default to argue that the reliance on collateral to secure loans and the particular collateral requirements chosen by the social planner or by the market have a profound impact on prices, allocations, market structure, and the efficiency of market outcomes. These findings provide insights into housing and mortgage markets, including the subprime mortgage market.     

Forecasting technology diffusion: a new generalisation of the logistic model

The present research proposes a new generalisation of the logistic model aiming at technology diffusion forecasting. Regarding criticisms and failures reported in the literature to apply logistic function for long-term forecasting, in our work we focused on short-term accuracy of forecast. To formulate the model, based on mathematical approximation, at first the differential equation governing the diffusion process is found and then by solving the derived differential equation, the forecast function is obtained. In all steps, mathematical tools from numerical analysis are used. We compared the New Generalized Logistic Model with eight of the most renowned models in the literature. The model led to more accurate fits and forecasts than those obtained from other models we applied for comparison.     

The economics term paper as an effective teaching tool: Another approach

Summary and conclusion Combining the term paper with the format of a professional conference session provided a learning experience with a lasting positive impact. Students' role playing as chairperson, presenters, and discussants helped to enhance the learning process. Students were motivated go the extra mile not only for peer approval but also because of the impact on their final grade. This approach also helped to develop their oral and written communications skills. These skills are equally relevant for students planning academic and business careers.The presenter-discussant format encouraged critical thinking and provided students with immediate feedback on the success of their efforts. Students who have experienced the process are more knowledgeable about their topic. Most importantly, they are better prepared to succeed at future research projects on other topics.     

Hidden risks of hedge accounting in financial institutions: A study of Franklin Savings Association

The hedge accounting standards for financial institutions stipulated in SFAS No. 80 impose ambiguous guidelines whose enforcement can produce detrimental effects on the financial condition of institutions. Combining these standards with the interpretive authority of regulatory agencies can subject institutions to regulatory risk-the risk of an adverse regulatory ruling resulting from disparate interpretations of the accounting standards. The accounting regulations specified in SFAS No. 80 permit financial institutions to defer derivative-contract losses over the life of the underlying asset or liability. If the hedge designation is misused, however, the capital position of the institution may potentially be misstated prior to maturity of the derivative contracts. Further, when a hedging program goes awry, the current hedge accounting standards may actually encourage the shift to what is actually a speculation program by permitting a larger asset base on which to “earn back” a portion of the hedging losses. Thus, institutional programs initially designed to mitigate interest-rate risk can instead become risk-increasing, separate profit centers. Events leading to the RTC conservatorship of Franklin Savings Association are used to illustrate the opportunities and regulatory threats inherent in hedge accounting. Subsequent analysis indicates that similar ordeals could be avoided by a clarification of hedge accounting standards, the consistent application of standards by regulators, or by increasing capital requirements for those institutions that use derivatives as separate profit centers as opposed to hedging risk exposures.     

Monopoly and the problem of the economists

By any measure economists have played increasingly prominent roles in antitrust policy making, at least since the early 1970s. Indeed, the approach to the analysis of public policy toward business pioneered by Chicago school economists dominates the academic literature nowadays. According to the Chicago school's adherents, their insistence that antitrust be examined through the lens of price theory should have produced discernably ‘better’ (read pro-consumer) laws and ‘better’ law enforcement. This paper contends that economists have in fact not had a positive influence on antitrust policy, but have instead actively contributed to its use as a way of subverting competitive market forces.     

Banknotes And Economic Growth

Modern paper currency contributes little to productive investment. This shortcoming is not inherent to paper money. It stems from the fact that currency today is monopolistically supplied by public monetary authorities that are poor intermediaries. Commercial banknotes may, in contrast, support efficient intermediation, just as private bank deposits do. We demonstrate this advantage in an endogenous growth model, and use the model to simulate, for a sample of developing countries, steady‐state growth‐rate gains from various degrees of banknote deregulation. The simulated gains are generally large compared with those from conventional forms of financial liberalization.     

An empirically-derived multidimensional measure of expatriate success: reconciling the discord

This paper examines the discord surrounding how expatriate success, or effectiveness, is defined. We review the many ways that success has been conceptualized and then seek to reconcile these differences by presenting a multidimensional measure of success, based on data collected from 118 expatriate respondents worldwide. A series of factor analyses, along with reliability and item analyses yielded nine measurement scales which included cultural adjustment, work-related adjustment, career development, HQ-subsidiary coordination, assignment completion, professional/skill development, shaping and controlling the subsidiary, satisfaction and overall assignment effectiveness. The process by which these scales were developed is described in the paper and all items and scale reliabilities are presented.     

Security in a sea of insecurity: job security and intention to stay among service sector employees in Turkey

This article examines the association between job security and intention to stay for those who are employed in Turkey. There is a high level of unemployment in the country and many workers there are concerned about their job security. Job security refers to the objective dimensions of continuous contract, working full-time hours and paid and unpaid overtime. Job security also refers to the subjective dimension of perceived job security. We surveyed 407 employees in banking and related sectors' call centres, five-star hotel front-line staff and airline cabin crews. Results show that objective dimensions of job security are not associated with intention to stay. However, perceived job security is significantly and positively associated with intention to stay. We recommend that human resource managers focus on the perceived job security aspect of employment to keep valuable employees with the company.