Price Commitment versus Flexibility: the Role of Exchange Rate Uncertainty and its Implications for Exchange Rate Passthrough

The paper investigates the incentives to commit price or retain price flexibility in a model in which exporting firms face different degrees of exchange rate uncertainty. The result shows that introducing exchange rate uncertainty can lead to the endogenous emergence of a unique leader–follower equilibrium; which firm emerges as price leader depends on the substitutability of products, the magnitude of exchange rate uncertainty, and the cost structure. This study may provide one explanation as to why some exporters set price before the realization of the nominal exchange rates (“sticky price”). The results imply exchange rate variability affects exchange rate passthrough.     

Service Competitiveness – An Anglo-US Study

This article reports on the latest in a series of international comparisons of management practices and performance outcomes of industries in various countries. Here, it is the service industries in the UK and the US which come under the microscope. Among the companies surveyed, there were more world-class performers in the US than the UK, but also more low performers. The concluding part of the article is diagnostic – the authors also suggest measures which could improve performance.     

Economic relations between the EU and East Asia: Past, present and future

Present economic linkages between the European Union and East Asia are relatively underdeveloped despite the fact that a number of EU member states have deep historical associations within the region. It is imperative that EU business engages itself more intensively in East Asia if Europe is not to become marginalised in an emergent “Pacific century”. *** DIRECT SUPPORT *** A02GP109 00002     

THE LOCATION OF NONMETROPOLITAN HIGH-TECH INDUSTRIES: A Comparison of Regional Determinants

A study of the location of three classifications of high-tech industries in rural areas was undertaken using ordinary least squares, Tobit, and a two-step estimation procedure suggested by Heckman (1976). The results indicate that the location decision for high tech firms is influenced primarily by the county population, adjacency to an SMSA, and the expenditures on public infrastructure (exclusive of education expenditures). However, location near interstate highways was generally not a significant factor. Results were similar between branch and unit (single ownership) plants. Some differences in signs of orders of magnitude occurred among the estimation procedures. Making a choice between Tobit and Heckman approaches depends upon the goal of the research.     

Optimal Taxation with Private Government Information

The Ramsey model of fiscal policy implies that taxes should be smooth in the sense of having small variances. In contrast, empirical labour tax processes are smooth in the sense of being random walks; they provide prima facie evidence for incomplete government insurance. This paper considers whether private government information might lie behind such incomplete insurance. It shows that optimal incentive compatible policies exhibit limited use of state contingent debt and greater persistence in taxes and debt, and it argues that they are better approximations to empirical fiscal policies than those implied by the Ramsey model. The paper also establishes that optimal incentive compatible allocations converge to allocations such that the government's incentive compatibility constraint no longer binds. Generally, these limiting allocations are ones in which the government is maximally indebted. Their credibility and the interaction of incentive compatibility and credibility is briefly discussed.     

Self-Employment and Job Satisfaction: Investigating the Role of Self-Efficacy, Depression, and Seniority

Are self‐employed workers more satisfied with their jobs compared to wage and salary workers? Using The National Survey of Families and Households: Wave I, 1987–1988, and Wave II 1992–1994 several expectations are evaluated in this article. First, self‐employed persons should enjoy higher job satisfaction than others. Second, a portion of the association between job satisfaction and self‐employment should be explained by higher levels of self‐efficacy and by lower levels of depression among the self‐employed compared to others. Third, self‐employment veterans are a select group and should be different systematically from self‐employment newcomers with respect to reported job satisfaction. Findings offer support for the first and second arguments above but not the third. Post‐hoc analysis suggests that among the newly self‐employed, the association between job satisfaction and self‐employment depends on both the quantity and quality of time invested in the business. Implications of these findings and directions for further research are discussed.