Oil supply projection techniques: Past developments and future requirements

This paper presents a critical assessment of the development of economic models of oil supply projection over the last two decades. The survey illustrates the fact that although most models have stressed the significance of the economic variables in the supply function, few attempts have been made to incorporate technology as a variable. Although such an approach can be justified under certain special circumstances, it is considered unsuitable as a supply forecaster in the increasingly numerous marginal fields where operations approach the technology frontier. In this connection, the latter part of the paper discusses the possibility of and problems associated with incorporating technology as a variable in the projection of supply.     

Optimal Climate Change Policies When Governments Cannot Commit

We analyse the optimal design of climate change policies when a government wants to encourage the private sector to undertake significant immediate investment in developing cleaner technologies, but the relevant carbon taxes (or other environmental policies) that would incentivise such investment by firms will be set in the future. We assume that the current government cannot commit to long-term carbon taxes, and so both it and the private sector face the possibility that the government in power in the future may give different (relative) weight to environmental damage costs. We show that this lack of commitment has a significant asymmetric effect: it increases the social benefits of the current government to have the investment undertaken, but reduces the private benefit to the private sector to invest. Consequently the current government may need to use additional policy instruments—such as R&D subsidies—to stimulate the required investment.     

Estimating The Price Impact of the Victorian Terminal Gate Pricing Scheme

The Victorian terminal gate pricing scheme commenced in August 2001. This paper will quantify the impact of the scheme on relative Melbourne and country Victoria retail petrol prices. This is done through autoregressive integrated moving average modelling coupled with intervention analysis using weekly price data. For Melbourne it was found the scheme was associated with an increase of around 2.2 cents per litre from late October 2001. For country Victoria it was associated with an increase of around 2.1 cents per litre from early November 2001. Claims the increase in relative Melbourne retail petrol prices was part of some wider trend across mainland capital cities was tested and found to be without empirical support. It is concluded terminal gate pricing made Melbourne and country Victoria motorists unambiguously worse off.     

Regulating Providers' Reimbursement in a Mixed Market for Health Care

Hospitals can be reimbursed for their costs in many ways. Several authors have investigated the effects of these reimbursement rules on physician incentives and, therefore, on the quantity of services provided to patients. A form of (linear) cost-sharing tends to emerge as the socially efficient reimbursement policy. We present a model of hospital reimbursement, based on Ellis and McGuire (1986). The new feature is that physicians can supply private health care services to a patient, as well as public sector ones; a common institutional arrangement in many health care systems. We investigate the optimal public sector reimbursement rule given that private market incentives must now be taken into account. Public sector cost-sharing remains socially efficient, but it is generally non-linear: the precise details depend on whether public and private services are substitutes or complements and on the degree of social efficiency achieved in the private sector. Other reimbursement schemes exhibit optimality properties not present in Ellis and McGuire's work.     

A metaphorical analysis of The Love Song of J. Alfred Prufrock by T. S. Eliot

Using the theory of conceptualisation of metaphor, this study analyses the imagery created by accounting metaphors of The Love Song of J. Alfred Prufrock. The paper applies a typology of metaphors as the basis of metaphorical analysis for the detection of accounting in Eliot’s poem. The results of the study suggest that the poem relies on accounting metaphors that use either unstated vehicle concepts, unstated tenor concepts or both to convey dense messages of accounting. An implication arising from the results is that considerable transfers of meaning from one epistemic element to another are needed to unlock Eliot’s accounting messages.     

Fabricating budgets: A study of the production of management budgeting in the national health service

This paper examines the processes by which a form of responsibility accounting system emerges in an organizational context. The paper utilizes recent approaches to the understanding of how science and technology is created (Latour, Science in Action, Harvard University Press, 1987) to investigate the processes by which a management budgeting initiative in the U.K. hospital system takes hold (or not) in specific hospitals. The approach is critical of the notion that accounting systems are well-defined technologies which are designed and then implemented (or face resistance). Instead, the study shows that management budgeting is fabricated, put together in a changing and fragile manner. Emerging accounting systems are not fixed technologies with well-defined purposes which reflect patterns of responsibility but changing constructions. Management budgeting systems are initiated with loose characteristics, purposes and uses. In the process of their design and implementation, new possibilities for decision making and definitions of responsibility emerge. Through this study of accounting in action, the paper explores the processes by which accounting and budgeting systems bring economic logic into hospital management. It is also relevant to debates about the role of budgeting and accounting in health care organizations in many countries.     

Skewness of Returns, Capital Adequacy, and Mortgage Lending

We calibrate a simulation model of credit value-at-risk for mortgage lending to UK experience. Simulations to capture the skewness of returns that might arise in the context of a financial crisis suggest that the IRB calculations of the new Basel Accord can substantially understate prudential capital adequacy. The same model shows that raising capital requirements has only a small impact on bank funding costs. We conclude that Pillar 2 supervisory review should increase capital requirements above IRB levels for secured bank assets—those whose returns can potentially fall furthest, relative to other, normally “riskier” assets, in extreme outcomes. JEL classification: G21, G28, R31. Presented at the December 2003 conference at the University of Tor Vegata, Rome. We are grateful for comments from William Lang, Mario Onarato, Larry Wall, and from an anonymous referee. All errors and omissions are our own responsibility. “The lady doth protest too much, methinks. The Queen's response to the players in Hamlet, Act 3, scene 2.     

Testing competing models of loss aversion: an adversarial collaboration

This paper reports an ‘adversarial collaboration’—a project carried out by two individuals or research groups who, having proposed conflicting hypotheses, seek to resolve their dispute. It describes an experiment which investigates whether, when individuals consider giving up money in exchange for goods, they construe money outlays as losses or as foregone gains. This issue bears on the explanation of the widely observed disparity between willingness-to-pay (WTP) and willingness-to-accept (WTA) valuations of costs and benefits, which has proved problematic for contingent valuation studies. The results of the experiment are broadly consistent with the hypothesis that money outlays are perceived as losses.     

Optimal regulation of deposit taking financial intermediaries: A correction

This paper corrects a paper of David Miles, published in the European Economic Review in 1995, reversing some of the conclusions he draws. Solving his model correctly it turns out that, because depositors are unable to monitor the default risk of individual banks, moral hazard gives banks an incentive to increase risky lending. Prudential capital requirements reduce incentives to hold risky loans.