Networks,Regional Development and Democratic Control

The networking literature has burgeoned in recent years within a complex cross‐disciplinary field and particularly in economic geography and regional planning. Networks have been analysed both as organizational expressions of globalization, linked to claims about the rise of the network society, and as territorial and cultural systems of exchange. Concepts of networks and networking have been accepted as positive, and sometimes also as progressive or radical within both social science and policy discourses. In this article we analyse regionally embedded economic networks and the EU’s urban and regional policy networks as a new mode of administration, at a variety of spatial scales. Little attention has been paid to the theoretical implications of using the concept of network as a social metaphor or to the operation of actually existing networks, as a result of conceptualizing networks in ways that deny their constitutive inequalities, asymmetries and democratic deficits. This darker side has been pushed into the shadows by the rhetorical emphasis on the benefits claimed for networked organizational forms.     

Optimal Piecewise Linear Income Taxation

Given its significance in practice, piecewise linear taxation has received relatively little attention in the literature. This paper offers a simple and transparent analysis of its main characteristics. We fully characterize optimal tax parameters for the cases in which budget sets are convex and nonconvex respectively. A numerical analysis of a discrete version of the model shows the circumstances under which each of these cases will hold as a global optimum. We find that, given plausible parameter values and wage distributions, the globally optimal tax system is convex, and marginal rate progressivity increases with rising inequality.     

Econometrics of the Basu Asymmetric Timeliness Coefficient and Accounting Conservatism

A substantial literature investigates conditional conservatism, defined as asymmetric accounting recognition of economic shocks (“news”), and how it depends on various market, political, and institutional variables. Studies typically assume the Basu [1997] asymmetric timeliness coefficient (the incremental slope on negative returns in a piecewise‐linear regression of accounting income on stock returns) is a valid conditional conservatism measure. We analyze the measure's validity, in the context of a model with accounting income incorporating different types of information with different lags, and with noise. We demonstrate that the asymmetric timeliness coefficient varies with firm characteristics affecting their information environments, such as the length of the firm's operating and investment cycles, and its degree of diversification. We particularly examine one characteristic, the extent to which “unbooked” information (such as revised expectations about rents and growth options) is independent of other information, and discuss the conditions under which a proxy for this characteristic is the market‐to‐book ratio. We also conclude that much criticism of the Basu regression misconstrues researchers’ objectives.     

Market and Political/Regulatory Perspectives on the Recent Accounting Scandals

Not surprisingly, the recent accounting scandals look different when viewed from the perspectives of the political/regulatory process and of the market for corporate governance and financial reporting. We do not have the opportunity to observe a world in which either market or political/regulatory processes operate independently, and the events are recent and not well researched, so untangling their separate effects is somewhat conjectural. This paper offers conjectures on issues such as: What caused the scandalous behavior? Why was there such a rash of accounting scandals at one time? Who killed Arthur Andersen—the Securities and Exchange Commission, or the market? Did fraudulent accounting kill Enron, or just keep it alive for too long? What is the social cost of financial reporting fraud? Does the United States in fact operate a “principles‐based” or a “rules‐based” accounting system? Was there market failure? Or was there regulatory failure? Or both? Was the Sarbanes‐Oxley Act a political and regulatory overreaction? Does the United States follow an ineffective regulatory model?     

A Remark on Color‐Blind Affirmative Action

Faced with legal challenges to explicitly race‐contingent admissions policies, elite educational institutions have turned to criteria that meet diversity goals without being formally contingent on applicant identity. We establish that under weak conditions that apply generically, such color‐blind affirmative action policies must be nonmonotone, in the sense that within each social group, some students with lower scores are admitted while others with higher scores are denied. In addition, we argue that blind rules can generate greater disparities in mean scores across groups conditional on acceptance than would arise if explicitly race‐contingent policies were permitted.     

PRICES,INEQUALITY, AND POVERTY: METHODOLOGY AND INDIAN EVIDENCE

This paper uses a methodology for evaluating the distributional implications of price movement for inequality and poverty measurement. The methodology is based on a distinction between inequalities in nominal and real expenditure. The conversion of nominal to real expenditure takes into account the varying household preferences. The empirical application to the Indian budget datasets from NSS rounds 50, 55, and 61 shows the usefulness of the proposed procedures. The relative price changes in India have tended to be inequality and poverty reducing as confirmed by formal statistical tests. The result is robust to expenditure dependent equivalence scales. The progressivity of the relative price changes weakened in the second half of our time period as Fuel and Light overtook the composite group called “Miscellaneous” in recording the largest price increase. While the poverty rates registered a decline, which was marginal in the urban areas, there was a sharp increase in inequality.