Aid Quality and Donor Rankings

This paper offers new measures of aid quality covering 38 bilateral and multilateral donors, as well as new insights about the robustness and usefulness of such measures. The 2005 Paris Declaration on Aid Effectiveness and the follow-up 2008 Accra Agenda for Action have focused attention on common donor practices that reduce the development impact of aid. Using 18 underlying indicators that capture these practices—derived from the OECD-DAC’s Survey for Monitoring the Paris Declaration, the new AidData database, and the DAC aid tables—the authors construct an overall aid quality index and four coherently defined sub-indexes on aid selectivity, alignment, harmonization, and specialization. Compared with earlier indicators used in donor rankings, this indicator set is more comprehensive and representative of the range of donor practices addressed in the Paris Declaration, improving the validity, reliability, and robustness of rankings. One of the innovations is to increase the validity of the aid quality indicators by adjusting for recipient characteristics, donor aid volumes, and other factors. Despite these improvements in data and methodology, the authors caution against overinterpretation of overall indexes such as these. Alternative plausible assumptions regarding weights or the inclusion of additional indicators can still produce marked shifts in the ranking of some donors, so that small differences in overall rankings are not meaningful. Moreover, because the performance of some donors varies considerably across the four sub-indexes, these sub-indexes may be more useful than the overall index in identifying donors’ relative strengths and weaknesses.     

Has Australia's floating exchange rate regime been optimal?

This paper develops a straightforward theoretical framework for evaluating exchange rate regime choice for small economies. It proposes that a floating exchange rate minimises national income and employment variation when real macroeconomic shocks predominate, whereas a pegged exchange rate achieves this goal should monetary shocks predominate. It then shows econometrically that, in the case of Australia, a floating exchange rate best suited the economy for the period 1985 to 2010, because real shocks were more significant than monetary shocks. Moreover, consistent with the theory, further results showing that a stronger (weaker) exchange rate correlated with positive (negative) deviations from trend GDP affirm that a floating exchange rate regime was optimal for Australia over this time.     

HYBRID INNOVATION IN MEIJI,JAPAN*

Japan’s hybrid innovation system during the Meiji era provides a useful laboratory for examining the effectiveness of complementary incentives to patents. Patents were introduced in 1885, and by 1911 1.2 million mostly nonpecuniary prizes were awarded at 8,503 competitions. Prizes provided a strong boost to patents, especially in less developed prefectures, and they also induced large spillovers of technical knowledge in prefectures adjacent to those with prizes, relative to distant control prefectures without prizes. Linking competition expenditures with the expected market value of patents induced by the prizes permits a cost–benefit assessment of the prize competitions to be made.     

Measuring the Contributions of Brand to Shareholder Value (and How to Maintain or Increase Them)

Since 1993 Young & Rubicam has invested over $130 million in collecting and interpreting data on consumers' perceptions of some 44,000 product and service brands in over 50 countries. At the core of Y&R's research effort is the Brand‐Asset® Valuator (or “BAV”), a model that converts the firm's hoard of data on global consumer perceptions and behavior patterns into assessments of brand strength and value. When combined with the findings of independent research by academics in marketing and finance (using Compustat data on corporate operating and stock‐price performance), the BAV's assessments of brand values can be used to quantify the contributions of brands to both corporate earnings and market values. One of the main findings of this research is that brands contribute to the market value of companies by increasing not only current earnings, but the price‐to‐earnings (P/E) multiples that investors assign to current earnings. Such increases in P/E multiples in turn reflect investors' expectations for lower risk, higher growth or both. At the same time, more recent consumer surveys (conducted in 2005‐2007) provided indications of brand “erosion” even as the markets were pushing up share prices, presumably with the expectation that intangibles like brand would continue to drive operating earnings in the future. For the leaders of consumer‐related corporations, the resulting “disconnect” between stock prices and brand values points to a continuing challenge for brand management. Building brand value is important for both finance professionals trying to increase shareholder value and marketers trying to build brand strength and increase sales and margin. The aim of the authors' research is to bring these two groups—finance and marketing— closer together by demonstrating the role of marketing strategy and brand equity in driving shareholder value.     

REGIONAL GDP IN BRITAIN, 1871–1911: SOME ESTIMATES

The paper builds on a method proposed by Geary and Stark for estimating regional incomes in Victorian Britain. This is modified by using tax data to allocate non‐wage income across regions. The results suggest that the coefficient of variation of regional GDP per head was rising rapidly prior to World War I in similar fashion to the late 20th century such that its level in 1901 and 2001 was about the same. In both episodes of globalization there were big winners and big losers among British regions.     

Investment-specific technological change and growth accounting

Greenwood et al. [1997. Long-run implications of investment-specific technological change. American Economic Review 87(3), 342-362; and 2000. The role of investment-specific technological change in the business cycle. European Economic Review 44, 91-115] and Hercowitz [1998. The ‘embodiment’ controversy: a review essay. Journal of Monetary Economics 41, 217-224] have claimed that the Jorgenson form of growth accounting is conceptually flawed and severely understates the importance of technological progress embodied in new capital goods for explaining growth. To the contrary, this paper shows that in its technology aspects their model is a special case of the Jorgensonian growth accounting model. What they call investment-specific technological change is shown to be closely related to the more familiar concept of total factor productivity (TFP) growth: statements about the one can be translated into statements about the other. Empirically, differences between their conclusions and those of growth accounting studies about the extent to which embodiment explains US economic growth are found to relate more to data than to methodology.     

Valuing high altitude spruce-fir forest improvements: importance of forest condition and recreation activity

High altitude spruce fir forests are typical around the world and are often subjected to multiple forms of recreational use. In this paper, we use household and recreation group data for a spruce fir forest high in the Appalachian Mountains of the U. S. to evaluate the benefits from forest protection (i. e., from improving the forest condition). Our benefits estimation procedures use the referendum-type, contingent valuation (CV) approach of Cameron (1988). We modify the usual practice of obtaining a single willingness-to-pay (WTP) value by using alternative questionnaire scenarios and conducting tests to examine i) household and recreation group value sensitivity to forest condition, and ii) recreation group differences in WTP for forest protection. A first sample of southeastern U. S. households was asked to value a forest protection program for a spruce-fir forest showing no impact from insect disturbance or atmospheric deposition. The second sample was asked to value a protection program for a forest already experiencing impact from insect infestation and air pollution. Logit analysis of the two samples revealed no statistically significant difference in household WTP between the two forest protection programs. Further analysis indicated that consumptive forest users (i. e., hunters and anglers) held forest protection values that were sensitive to a change forest condition, while nonconsumptive forest users (i. e., campers and hikers) held values that were insensitive to the same condition change. Recreation group comparisons revealed that consumptive forest users also held lower values for forest protection than nonconsumptive recreationists. These results demonstrate the importance of estimating public values for forest protection in terms of heterogeneous groups rather than as a homogeneous whole.