Book Reviews

Richard Robison, Indonesia: The Rise of Capital, Allen and Unwin, Sydney, 1986 pp. xxv + 425. Indexed. $19.95.

W.L. Korthals Altes, Changing Economy in Indonesia: Volume 7: Balance of Payments, 1822–1939, Amsterdam: The Royal Tropical Institute. pp. 167.

Trade Statistics, Java, 1823–73: Trade Statistics, Indonesia 1874–1937. Mededeelingen van het Centraal Kantoor voor de Statistiek nos 160 and 161

Om Prakash, The Dutch East India Company and the Economy of Bengal, 1630–1720, Princeton: Princeton University Press, 1985 pp. xii + 291, map, tables. graphs, glossary, index. Cloth $38.50.

Sediono M.P. Tjondronegoro, Social Organization and Planned Development in Rural Java, Singapore, Oxford University Press for the Institute of Southeast Asian Studies, 1984, pp. xv + 326.

A. Fujimoto and F. Matsuda (eds), An Economic Study of Rice Farming in West Java, Tokyo: NODAI Research Institute, Tokyo, University of Agriculture, 1986.

A. Fujimoto and T. Matsuda (eds), A Comparative Study of the Structure of Rice Productivity and Rural Society in Southeast Asta Two Village Studies in Indonesta and Thailand, Tokyo: University of Agriculture, 1985. Reviewed by C.L J. van der Meer (1986) Bulletin of Indanesian Economic Studies, 22(2) pp. 124–27

David Jenkins, Suharto and His Generals: Indonesian Military Politics, 1975–1983, Ithaca: Cornell Modern Indonesia Project, Monograph Series No. 64, 1984, pp. xiii + 280. US$12.50. David Bourchier, Dynamics of Dissent in Indonesia Sawito and the Phantom Coup, Ithaca: Cornell Modern Indonesia Project, Interim Reports Series, 1984, pp. 128. US$9.00.

Linda G. Martin (ed), The ASEAN Success Story: Social, Economic, and Political Dimensions, East-West Center, distributed by the University of Hawaii Press, Honolulu, 1987, pp. xviii + 253. $15.00.

Mubyarto and Edy Suandy Hamid (eds), Kredit Pedesaan di Indonesia, Badan Penerbit Fakultas Ekonomi, U.G.M., 1986 pp, 160.

Ron Hatley, et al., Other Javas Away from the Kraton, Melbourne: Monash University, 1984, pp. 60.

K.S. Nathan and M. Pathmanathan (eds), Trilateralism in Asia: Problems and Prospects in US-Japan-ASEAN Relations, Antara Book Company, Kuala Lumpur, 1986, pp. xviii + 205. $18.00 (cloth): $12.00 (paper).     

The identification of South African technological innovations: A proposed methodology

Technological innovations represent significant indicators of scientific and economic vigour in any society. They are however, extremely difficult to both identify, and to evaluate in terms of their importance.

This paper addresses itself to the problems of identification and measurement. As such it forms a necessary prerequisite to a survey of technological innovations in South Africa, and, in the process, seeks to contribute to the general field of technological enquiry.     

The Status of Econometrics in the Economics Major: A Survey

In this article, the authors describe the place of econometrics in undergraduate economics curricula in all American colleges and universities that offer economics majors as listed in the U.S. News & World Report “Best Colleges 2010” guide (U.S. News & World Report 2009). Data come from online catalogs, departmental Web sites, and online course syllabi. About one-third of the schools require econometrics of all students majoring in economics, about half require it of none, and a sixth require it of some, but not all, economics majors. Among universities with economics PhD programs and liberal arts colleges, almost all those ranked in the top 10 require it. Below the top 10, there is little correlation between ranking and econometrics requirements. Liberal arts econometrics classes are much more likely to require research projects than their counterparts in universities.     

What’s in a Credo? A Critique of the Academy of Management’s Code of Ethical Conduct and Code of Ethics

The Academy of Management formally adopted a Code of Ethical Conduct in 1990. During the subsequent 15 years, almost nothing had been published about it and its value as a formal document meant to guide professional practice. Rather surprisingly then, in December 2005 an entirely new Code of Ethics was introduced by the Academy’s Board, to take effect in February 2006. Why was a new code promulgated? More broadly, what do the contents of these codes, the processes of their promulgation, and their expressed purposes, suggest about the value of such codes for similarly situated professional associations, in general? This article seeks to identify key strengths and weaknesses of the original code, begin an assessment of the potential value of the new code, and so stimulate debate. Further, not only is this a call to the members of the Academy to engage in some thoughtful debate and possible amendment of its new code, but also a caution to all such associations to take seriously the hurdles that must be jumped before any code can be developed and promulgated to worthwhile effect.     

Investment in organization capital

We study a firm’s investment in organization capital by analyzing a dynamic model of language development and intrafirm communication. We show that firms with richer internal language (i.e., more organization capital) have lower employee turnover, and higher diversity in skill and wages among incumbents who are promoted from within the firm. Our results also suggest that firms in rapidly changing industries are less likely to invest in organization capital, and are more likely to have high managerial turnover. Finally, our model shows that employment protection regulations lead to more investment in organization capital but less innovation.     

Deposit insurance and bank regulation in a monetary economy: a general equilibrium exposition

Summary. It is commonly argued that poorly designed banking system safety nets are largely to blame for the frequency and severity of modern banking crises. For example, underpriced deposit insurance and/or low reserve requirements are often viewed as factors that encourage risk-taking by banks. In this paper, we study the effects of three policy variables: deposit insurance premia, reserve requirements and the way in which the costs of bank bailouts are financed. We show that when deposit insurance premia are low, the monetization of bank bailout costs may not be more inflationary than financing these costs out of general revenue. This is because, while monetizing the costs increases the inflation tax rate, higher levels of general taxation reduce savings, deposits, bank reserves, and the inflation tax base. Increasing the inflation tax rate obviously raises inflation, but so does an erosion of the inflation tax base. We also find that low deposit insurance premia or low reserve requirements may not be associated with a high rate of bank failure.Received: 2 January 2002, Revised: 1 March 2003JEL Classification Numbers: D5, E5, G1.B. D. Smith: Sadly, our co-author, colleague and dear friend, Bruce D. Smith, died on July 9, 2002.     

Return enhancement trading strategies for size based portfolios

Recent theoretical work suggests that definitions of market efficiency that allow for the possibility of time-varying risk-premia will generally lead to return sign predictability. Consistent with this theory, we show that a logit model based on the lagged value of the market risk premium is useful for successfully predicting the return sign for CRSP small decile portfolio returns, but not large ones. We additionally employ this model in market timing simulations of micro-cap mutual funds in which investment can actually be made. The results indicate that a market-timing strategy based on our return-sign forecasting model outperforms a buy-and-hold strategy for 13 of 14 micro-cap funds studied. On average, the buy-and-hold strategy produces an average compound return of 11.98% per annum versus an average of 16.60% for the market-timing strategy. Nevertheless, trading restrictions make the return-sign forecasting model more practical to employ by the micro-cap fund portfolio manager rather than the individual fund investor.

A college athletics recruiting game to teach the economics of rent-seeking

The authors of this article describe an adaptation of the rent-seeking game by Goeree and Holt (1999) to the recruiting of athletes by NCAA Division I football and basketball teams. Students engage in an effort-based lottery, i.e., recruiting to sign a blue-chip prospect. The winner gets the prize—the player's marginal revenue product in excess of his grant in aid. Students recruit in three scenarios: by recruiting legally, by recruiting legally or with illegal bribes, and by offering wages to athletes in an auction. The authors demonstrate the game's use in a principles course, but it is easily adaptable to other courses. To aid instructors unfamiliar with sports and NCAA recruiting, they include a comprehensive lesson plan with suggested readings and multimedia.     

Cost-effectiveness of combination daclatasvir-sofosbuvir for treatment of genotype 3 chronic hepatitis C infection in the United States

Background: A phase III trial evaluated the efficacy and safety of Daklinza (daclatasvir or DCV) in combination with sofosbuvir (SOF) for treatment of genotype (GT) 3 hepatitis C virus (HCV) patients.

Aim: This study evaluated the cost-effectiveness of DCV?+?SOF vs SOF in combination with ribavirin (RBV) over a 20-year time horizon from the perspective of a United States (US) payer.

Methods: A published Markov model was adapted to reflect US demographic characteristics, treatment patterns, costs of drug acquisition, monitoring, disease and adverse event management, and mortality risks. Clinical inputs came from the ALLY-3 and VALENCE trials. The primary outcome was the incremental cost-utility ratio. Life-years, incidence of complications, number of patients achieving sustained virological response (SVR), and the total cost per SVR were secondary outcomes. Costs (2014 USD) and quality-adjusted life years (QALYs) were discounted at 3% per year. Deterministic, probabilistic, and scenario sensitivity analyses were conducted.

Results: DCV?+?SOF was associated with lower costs and better effectiveness than SOF?+?RBV in the base case and in almost all scenarios (i.e. treatment-experienced, non-cirrhotic, time horizons of 5, 10, and 80 years). DCV?+?SOF was less costly, but also slightly less effective than SOF?+?RBV in the cirrhotic and treatment-naïve population scenarios. Results were sensitive to variations in the probability of achieving SVR for both treatment arms. DCV?+?SOF costs less than $50,000 per QALY gained in 79% of all probabilistic iterations compared with SOF?+?RBV.

Conclusion: DCV?+?SOF is a dominant option compared with SOF?+?RBV in the US for the overall GT 3 HCV patient population.