International Business Cycles and Exchange Rates

Models of international real business cycles are not able to account for the high volatility of exports, imports, the trade balance, and the terms of trade. By introducing exogenous exchange rate movements in addition to standard technological shocks, the model presented here comes much closer to replicating the relatively high volatility observed in the data while also improving other moments.     

Gestaltungsformen der Bilanzierung von Versicherungsverträgen: ein kritischer Vergleich von Deferral / Matching- und Asset / Liability-Ansätzen

On 31 of March 2004 the IASB issued the IFRS 4 (Insurance Contracts), which is a stepping stone to the second phase of its project on insurance contracts. The new standard deals with limited improvements to accounting practices for insurance contracts, without requiring major changes that may need to be revised in phase II. In the second phase of the project a recognition and measurement model is expected to be finalised which differs significantly from the traditional approach to accounting for insurance contracts. It will be an asset / liability-approach that requires an entity to identify and measure directly the rights and obligations arising from insurance contracts. The resulting assets and liabilities should be measured at their fair value. In contrast to the asset / liability-approach, the traditional approach to accounting for insurance contracts, referred to as deferral / mat-ching-approach, emphasises the measurement of income. Both approaches and their corresponding implications on the balance sheet and the profit and loss statement are analysed in detail.     

Das Bestellerprinzip — Entlastung für den Mieter oder Augenwischerei?

Real estate agents (REAs) brokering rent contracts in Germany charged fees only to tenants but not to landlords until 2015. In order to relieve tenants from this burden, German law now requires REAs to only charge landlords. We suggest three reasons for why landlords’ brokerage fees are not simply passed on to tenants but declined substantially after the legal change as did the amount of brokering of rent contracts. REAs’ bargaining power declined when landlords replaced tenants as bargaining partner. Brokerage fees to be paid by tenants serve as a self-selection mechanism of long term tenants. REAs’ incentives to provide high quality decline when the price is fixed before they produce their service.     

The role of human capital and innovation in economic development: evidence from post-Malthusian Prussia

The effect of human capital on growth involves multiple channels. On the one hand, an increase in human capital directly affects economic growth by enhancing labor productivity in production. On the other hand, human capital is an important input into R&D and therefore increases labor productivity indirectly by accelerating technological change. In addition, different types of human capital such as basic and higher education or training-on-the-job might play different roles in both production and innovation activities. We merge individual data on valuable patents granted in Prussia in the late nineteenth-century with county-level data on literacy, craftsmanship, secondary schooling, and income tax revenues to explore the complex relationship between various types of human capital, innovation, and income. We find that the Second Industrial Revolution can be seen as a transition period when it comes to the role of human capital. As in the preceding First Industrial Revolution, “useful knowledge” embodied in master craftsmen was related to innovation, especially of independent inventors. As in the subsequent twentieth century, the quality of basic education was associated with both workers’ productivity and firms’ R&D processes. In a final step, we show that literacy had also a negative effect on fertility which increased with innovation. In general, our findings support the notion that the accumulation of basic human capital was crucial for the transition to modern economic growth.     

Towards a New Paradigm: Stabilising Financial Markets

The pre-crisis paradigm focused exclusively on the positive role of finance. The new paradigm takes the other side of finance seriously and arrives at distinctly different trade-offs and regulatory approaches.     

Heart rate variability testing: could it change spending for rheumatoid arthritis patients in the United States? An exploratory economic analysis

Background: Autonomic nervous system (ANS) testing with heart rate variability (HRV) has been shown in early research to predict 52-week outcomes in rheumatoid arthritis (RA). HRV testing could be combined with putative ANS biologic pathways to improve treatment response for RA patients. This study explored potential costs and health outcomes of introducing HRV testing into RA treatment, without and with ANS optimization.

Methods: A decision tree exploratory economic model compared HRV testing to standard care in moderate-to-severe biologic-eligible patients over a 10-year time horizon. HRV data was derived from an observational study of RA patients (n?=?33). Patients were stratified into treatment groups based on HRV test scores indicating “low probability of response” and “moderate to high probability of response”. This study explored adding ANS optimization based on HRV score followed by clinically-appropriate treatment. Costs and quality-adjusted life-years (QALYs) for the US population were estimated.

Results: HRV testing in biologic-eligible patients decreased non-effective biologic use, reducing US healthcare costs by $34.6 billion over 10 years with QALYs unchanged. When combined with ANS optimization in biologic-eligible patients, HRV testing could increase costs by $3.6 billion over 10 years but save over 350,000 QALYs. Among all RA patients, HRV testing with ANS optimization could save over $8 billion and over 100,000 QALYs over 10 years, depending on the positive predictive value (PPV) of the HRV test.

Conclusions: The potential economic impact of introducing HRV testing and ANS optimization into RA treatment appears substantial and cost-effective based on the exploratory analysis. Additional rigorous studies are warranted in larger patient samples to better inform decision-making.     

Cost-effective service excellence

This article integrates relevant literature to develop a conceptual model on the potential avenues to achieve service excellence at low unit costs, which we term cost-effective service excellence (CESE). To gain a deeper understanding of these strategies, their applicability and interrelatedness, we analyze how 10 organizations have achieved CESE. Our findings show that CESE can be achieved through three core strategies. First, a dual culture strategy provides a comprehensive set of high-quality services at low cost, largely driven by leadership ambidexterity and contextual ambidexterity. Second, an operations management approach reduces process variability and thereby allows the increased use of systems and technology to achieve CESE. Third, a focused service factory strategy can enable CESE through a highly specialized operation, typically delivering a single type of service to a highly focused customer segment. The use of the three approaches ranges from “pure” (e.g., mostly pursuing a dual culture strategy) to combinations of the latter two approaches with the dual culture strategy (e.g., a focused service factory strategy combined with dual culture). Our conceptual model provides an integrated view of the strategic options available to organizations that aim to pursue a strategy of CESE.     

Prinzipien der Inflationsprognose

Die einzelnen Notenbanken gehen bei ihrer Inflationsprognose zwar in Abhängigkeit von den jeweiligen Gegebenheiten unterschiedlich vor, bei den Grundprinzipien der Prognose herrscht jedoch in den Industrieländern im Wesentlichen Übereinstimmung. Wie wird Inflation prognostiziert? Sollte man sich bei Prognosen auf den jeweiligen Inflationsindikator du jour oder ein einzelnes Prognosemodell verlassen, oder sollte man ein looking at everything und einen multiparadigmatischen Ansatz verfolgen? Dr. Guido Zimmermann, 35, ist Mitarbeiter der Volkswirtschaftlichen Abteilung der DekaBank in Frankfurt. Der Autor vertritt hier seine persönlicheAuffassung.