Recent evidence on the relationship between money growth and budget deficits

This paper examines the recent evidence on the extent to which the Federal Reserve accommodates Treasury financing activities by effectively monetizing newly issued debt. Various lag and lead formulations are used to determine the timing of FED actions. Results suggest that validation has been significant over the 1960–1980 period, and that, especially in recent periods, the FOMC has responded to capital market pressure which appears in advance of impending debt issues. Finally, we find in the limited number of observations available since October 1979 that there has been no substantive “break” in this accommodative policy despite the Fed's alleged emphasis on monetary aggregates.     

Land degradation in South Africa: Conventional views,changing paradigms and a tradition of soil conservation

Land degradation is currently a major concern in South Africa. However, awareness of the problem and attitudes towards it have changed little over the past century. Soil erosion and veld degradation are continually being depicted as acute problems, and overpopulation, overstocking and poor agricultural practices are viewed as the major causal factors. Internationally, however, a new paradigm is emerging, which takes a somewhat more optimistic view of the situation in Africa. One of the basic tenets of this changing perception is that there exists an untapped wealth of indigenous knowledge about the environment and associated human potential. Within this context, this study examines and describes the local tradition of stone terracing on cropland within the former Venda in the Northern Province of South Africa. This living tradition has deep historic roots and local farmers have a remarkably well‐developed understanding of the causes and effects of erosion. While the research location is unique in many ways, this study indicates that farmer tradition and innovation in the former homelands may be more common than has been supposed, and should not be ignored but actively sought out and built upon.     

What is business ethics? A reply to peter drucker

In his What is Business Ethics? Peter Drucker accuses business ethics of singling out business unfairly for special ethical treatment, of subordinating ethical to political concerns, and of being, not ethics at all, but ethical chic. We contend that Drucker's denunciation of business ethics rests upon a fundamental misunderstanding of the field. This article is a response to his charges and an effort to clarify the nature, scope and purpose of business ethics.     

A Destructive Sampling Method Designed for Outsourcing Situations Involving High Quality Production Processes

In outsourcing situations involving manufacturing and assembly, the sampling of units produced is important since in many situations not all of the units can be tested. Destructive sampling, which commonly occurs in the assembly and manufacturing industry, is a form of sampling where all units produced cannot be tested since the parts are destructively tested. In this situation, sampling techniques are used to determine if an entire lot should be accepted or rejected based on the sampling results. The traditional sampling techniques include single or classical sampling, double sampling, multiple sampling, skip-lot sampling, chain sampling and MIL-STD-105E. The purpose of this paper is to develop a sophisticated technique that monitors quality at a lower cost than traditional methods yet has similar monitoring characteristics in situations where quality is high and tests are destructive. The proposed technique, Destructive Sampling Method for High Quality production processes (DSM-HQ), is based on a cost function, which balances the costs of sampling versus the costs of finding a defect on the field. DSM-HQ assumes to have a Poisson process defect pattern and uses an Empirical Bayesian analysis to allow the researcher to include prior knowledge.     

The Relevance of Strategy Research: Practitioner and Academic Viewpoints*

It is important for strategy research to have practical relevance given its professional orientation. the differing perspectives of academics and managers and the rapid development of the field of strategic management suggests a need to address the field's future direction. In this paper, a practitioners' agenda for the field is developed based on a survey of chief executive officers (CEOs) of major US corporations. A comparison of this agenda with one generated by academics highlights the differences between the two constituencies concerning issues of relevance for the future. Compared to academics, CEOs emphasize operating issues; disagree on the priority of strategic issues; and are generally unfamiliar with research-based journals. the two agendas should be viewed as complementary. Some implications for the field are discussed and suggestions made for dealing with the issue of relevance in future research and communicating the results to managers.     

The accountability demand for information in China and the US – A research note

This study replicated Evans, Heiman-Hoffman and Rau’s (hereafter, EHR) [Evans, J. H., III, Heiman-Hoffman, V. B., & Rau, S. (1994). The accountability demand for information. Journal of Management Accounting Research, 6, 24–42] US study, using Chinese MBA students as participants. The Chinese students acted as owners and selected one of two control systems. One control system requires truthful reporting and the other control system permits the manager to falsify the report. The two systems have the same expected payoff to the owner if the owner believes that the manager will always lie when given the opportunity. If the owner believes that there is any probability that the manager will tell the truth, then the more Lenient System has the higher expected payoff. We compared the US versus Chinese control system choices, and examined whether the Chinese owner-participants would be willing to sacrifice wealth to get accountability. The results indicate that a significant proportion of Chinese participants do have an accountability demand for information, and that this proportion is at least as high as that of the US participants in EHR.     

Discount Point Concessions and the Value of Homes with Conventional versus Nonconventional Mortgage Financing

This is an empirical investigation on the impacts of certain seller concessions on home prices. Specifically, we examine the impacts of two seller concessions: discount point concessions (DPCs) and closing cost concessions (CCCs) on home prices. Using hedonic analysis, we find that DPCs are capitalized into home prices. We do not find that CCCs produce capitalization effects. DPCs appear to work in a manner similar to other creative financing techniques such as a buydown mortgage. DPCs enhance affordability by lowering interest costs and debt service payments. DPCs thus lead to increases in effective demand. CCCs will reduce out of pocket expenses but will not necessarily enhance long-term affordability, thus their price effects are less certain. We show that these price premiums are prevalent only when conventional mortgage financing is used. When FHA and VA loans are used, premiums disappear. Of course, governmental insured/guaranteed loans are much more subject to regulation than conventional loans, which may prevent homesellers from price premium maximization. The study establishes the relative significance of discount points versus closing costs as marketing incentives. It appears that the use of discount points as a marketing incentive produces more capitalization effects. The presence of such capitalization effects is consistent with results found in other creative financing studies.     

Partial anticipation, the flow of information and the economic impact of corporate debt sales

Corporate debt sales have been regarded as 'no news' eventsbecause there is no significant price reaction on average totheir announcement. We explore the hypothesis that this lackof average price reaction to debt sale announcements is explainedby the partial anticipation of debt offers. Theory suggeststhat the demand for debt capital is fundamentally related tochanges in the sources and uses of funds, and we find evidencethat earnings are significantly lower, investment growth issignificantly bigger, and, for some issuers, debt refundingrequirements are significantly greater in the period immediatelyprior to issue than in periods well before and after the issue.We find that this preissue information conditions investors'expectations of issue, thereby affecting the cross-sectionalannouncement date price reaction to debt sales in two ways.First, announcement date price reactions are negative, on average,for unanticipated offers or for those offers where prior informationsuggests that an issue is unlikely. Second, holding the probabilityof issue constant, announcement date price reactions are significantlymore negative for offers that raise more capital than investorsexpected. These results are consistent with cash flow signalingand asymmetric information models of corporate financings.     

The evolution of socio-economic modeling in Canada

For the past 15 years the authors have been associated with a research program concerned with the development of structural economic models that had their origins in the input-output models of Leontief. This program has produced a set of conceptual tools embracing a new approach to socio-economic modeling which we term the “design approach.” This approach draws on general systems theory and control theory in application to large social systems. Also emerging from this program as its test prototype is a particular set of models designed for society wide resource analysis and a set of software tools within which design approach models can be designed, implemented, and operated. The design approach provides a new method of assessing technologies in regard to their overall socio-economic resource impact. The objective of this paper is to describe the unique institutional setting and the particular issues which provided the setting and the motivation for embarking on a large scale modeling program. The paper is organized chronologically, describing first of all the evolution of the program approach, the software tools, the Socio-Economic Resource Framework (SERF), which is the prototype set of models that have been implemented, and some results obtained from it.