Relative Capital Shortage and Potential Output Constraint: A Gap Approach

Focusing on core‐infrastructure capital vis‐à‐vis productive capital, we propose a macroeconomic method to estimate their optimal utilisation ratio in production and their relative shortage in any period. The method is based on an adapted two‐gap model, estimated via linear programming, with application to Chile and Mexico over the 1950–2000 period. Core infrastructure appears to support a variable level of productive investment, relative capital shortage alternating and imposing constraints on potential output over time. This suggests an optimal investment trade off, based on a social opportunity cost that derives from the prevailing gap in any period.     

A Hotelling model with a ceiling on the stock of pollution

Environmental agreements such as the Kyoto Protocol aim to stabilize the amount of carbon in the atmosphere, which is mainly caused by the burning of nonrenewable resources such as coal. We characterize the solution to the textbook Hotelling model when there is a ceiling on the stock of emissions. We consider both increasing and decreasing demand for energy. We show that when the ceiling is binding, both the low-cost nonrenewable resource and the high-cost renewable resource may be used jointly. A key implication is that if energy demand were to decline in the long run, we may supplement energy supply through ‘clean’ renewables to meet the environmental standard, but then revert back to using only ‘dirty’ fossil fuels in the future when the ceiling has become non-binding. That is, the much heralded societal ‘transition’ to clean energy resources may be short-lived.     

POSSIBLE SOCIAL POLICY DEVELOPMENTS AND CORRESPONDING STATISTICAL REQUIREMENTS

Production maximization, together with an appropriate distribution of income and wealth, can no longer be considered as the exclusive objective of socio-economic policies. Economic and social life is accompanied by numerous hardships, constraints and damages which demand to be minimized. Combining these dual aims is not easy as no single model has yet been set up taking into account all these inter-relations. However, one may try to reduce the uncertainty about the statistical material that could be required for decision-making in this new context.     

A Note on Risk Aversion,Prudence and Portfolio Insurance

This paper examines some properties of portfolio insurance that are linked to the risk aversion and the prudence of the investor. We provide explicit conditions to measure portfolio sensitivity to downside risk. We also characterize the degree of portfolio insurance by means of the ratio of absolute prudence to absolute risk aversion.     

Mythical representations of trust in auditors and the preservation of social order in the financial community

The present paper investigates financial practitioners’ use and perception of audited financial statements. In-depth interviews, which we conducted with Canadian institutional investors, financial analysts and bankers, indicate: (1) a firm tendency to favour the quality of management over the content of financial statements in investment decisions and recommendation processes; and (2) a fundamental scepticism regarding the work of auditors. However, representations of auditor trustworthiness abound in formal texts surrounding the financial analysis domain—as if audited financial statements and the trust they convey towards numbers are indispensable to the work of financial analysts. Based on the work of Roland Barthes, we argue that financial practitioners’ trust in auditors constitutes a mythical representation whose main function is to maintain order and reproduce status quo within the financial system.     

Bounded Rationality Modeling

This paper deals with bounded rationality as a way to describe behavior and focuses on the question of how to build such boundedly rational models. The first part is a discussion of the reasons why such models are needed and on the situations in which they can be regarded as more particularly useful. The second part examines three strategies of research towards bounded rationality modeling which have emerged in the last ten years and weights them. The concluding remarks offer a first link between the respective typologies of strategies and of situations and calls for additional experimental work by marketing scientists and economists together.     

The creation of complicity a semiotic analysis of an advertising campaign for Black & White whisky

A qualitative pre-test study, employing the structured semiotic methodology of Greimas and the Paris school, was conducted on four print advertisements conceived for a Black & White whisky campaign, and this article presents the major findings. Both the content and expression of the advertisements are examined, in terms of elementary oppositions, of narrative organization, of cultural values, and of linguistic and plastic manifestations. Finally, the ironic quality of the enunciation, playing on cultural stereotypes, is shown to demonstrate an equivalence between the ‘author’ of the campaign and the target public envisaged.     

Corporate governance and firm value during a financial crisis

The main purpose of this paper is to evaluate the effects of management ownership and other corporate governance variables on Hong Kong firms’ stock performance following the onset of the Asian Financial Crisis (1997–98). Our results show that Hong Kong firms with a more concentrated management (executive board) ownership displayed better capital market performance during the 13-month period of the Crisis. We also find that firms with more equity ownership by non-executive directors, and in which the positions of CEO and board chairperson were occupied by the same individual experienced a smaller stock price decline. Our findings are consistent with the notion that there is a greater alignment of insiders with outside owners, rather than the expropriation by insiders who have the opportunity to divert value, for firms with higher levels of management ownership during an unexpected capital market crisis.