Predicting the budgetary funding need of education in the three-year budget for 2008–2010

The paper presents a technique developed by the authors, which makes it possible to determine the necessary amount of financing for education at all the budget system levels for 2008-2010, based on the Russian average value of financing, taking into account the budget expenditures index for two variants of student population, i.e. the actual number of on-budget students and the number of students required to meet the economy’s need for trained workers. The technique was developed and the calculations were made on the basis of Russian long-term forecasts and the Russian three-year federal budget for 2008–2010.     

Trends in economic cooperation between Southern Russian regions

The economic situation, foreign economic relations, and export/import structure of Southern Russian regions are considered; the author’s opinion on the development of free economic prices in Southern Russiaís resort area is given; this conclusion is justified on the grounds that any trends emerging in the foreign relations of Southern Russian regions must be adjusted to match the targets set for the country as a whole.     

The different faces of coupon elasticity

Coupons account for over two-thirds of all consumer promotional efforts initiated by the manufacturers of consumer goods. In this study, the impact of coupons on brand sales is investigated and how that impact decays over the life of the coupon is demonstrated. Specifically, we present an econometric model that can capture coupon effects in terms of equivalent price reduction, account for coupon effects over time, allow inference of coupon effects when retailers decide to double or triple the coupon value, and provide both self-coupon and cross-coupon elasticities at different levels of aggregation. A widely used sales response model is adapted, and an analytical model is proposed to estimate both the self-coupon and cross-coupon (face value) elasticities of sales at the store level. From the store-level elasticity estimates for a given week, the authors analytically derive the coupon elasticities for the chain level by aggregating across stores, and over the life of the coupon by aggregating over time. The proposed sales response model is estimated with the data obtained from three markets for various product categories, and the coupon elasticities are computed. The proposed framework allows one to demonstrate the hypothetical equivalence of a shelf-price reduction for a given coupon face value in each week. Also, the effect of doubling the face value of a coupon results in more than a proportionate increase in elasticity. The authors find that both self and cross-coupon elasticities are much smaller in magnitude than the average self and cross-price elasticity measures reported in the literature.     

The Competitive Characteristics of U.S Manufacturers in the Machine Tool Industry

This paper examines the competitive characteristics of U.S. manufacturers in the machine tool (MT) industry. After several decades of decline, this industry has recently shown signs of a modest but sustained recovery. Empirical evidence from a national survey of 104 MT producers suggests that the revival of this sector has been driven by a combination of factors, including renewed export involvement, improved customer support, and better product design. Although most MT companies are small-to-medium-sized enterprises (SMEs), the survey data show that very small SMEs are poorly represented in the recovery thrust of the industry as a whole. Our principal conclusion is that the MT industry has been following an export-led path toward stabilization, but that certain types of small producers are unlikely to thrive for very long. The most serious problems facing small producers include shrinking local markets, import competition, shortages of skilled labor, and cyclical demand.     

WINDOW ON EASTERN EUROPE: Ethical Perceptions of Polish Business Students

An experienced educationalist comments on the views of top Polish business students on ethics in public life, government and business in modern Poland. The author is Wicklander Professor of Professional Ethics at DePaul University, Chicago, and also served recently as Visiting Fulbright Professor at the Adam Mickiewicz University in Poznan, Poland. He is currently President of the Society of Business Ethics in the USA.     

Bank mergers and components of risk: An evaluation

The present study empirically examines the contribution of the acquired banks in only the nonconglomerate types of mergers (i.e., banks with banks), where the bulk of the payment is in the form of equity to the acquiring bank and finds overwhelmingly statistically significant evidence that nonconglomerate types of mergers definitely reduce the total as well as the unsystematic risk while having no statistically significant effect on systematic risk. Therefore, it seems that diversification may be a possible motive for bank mergers.     

Zur Entscheidung y>y0 aufgrund der Messung einer korrelierten Variablen

Zusammenfassung Es wird eine optimale Strategie im Sinne des minimalen erwarteten Verlustes für die beiden Entscheidungeny>y _o undyy _o aufgrund der Messungen einer mitY positiv korrelierten, einfacher und/oder billiger zugänglichen ZufallsvariablenX abgeleitet. Dabei wird angenommen, daßX undY nach einer bivariaten Normalverteilung mit bekannten Parametern verteilt sind und die Entscheidungyy _o getroffen wird, wennx größer ist als ein zu bestimmendesx _o, und die Entscheidungy>y _o, wennx gleich oder kleiner als diesesx _o ist. Für die Bestimmung des optimalenx _o werden zunächst die Kosten für die beiden Fehlentscheidungen jeweils als konstant vorausgesetzt, in einem weiteren Ansatz wird jedoch für die Mißklassifikationyy _o eine mity exponentiell wachsende Risikofunktion angenommen. Um die relative Häufigkeit der zu erwartenden Fehlklassifikationen abschätzen zu können, wird schließlich die bedingte WahrscheinlichkeitP(x>x _o,y) errechnet.

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Summary An optimal strategy, with minimum expected risk, for the decisionsy>y _o oryy _o is constructed on the basis of the measurement of a variableX, which is positively correlated withY and can be measured more easily and/or with smaller expense. A bivariate normal distribution with known parameters is assumed forX andY. For the observationsx a limitx _o is aimed at, so that the decisionsy>y _o oryy _o are taken ifx>x orxx _o respectively. Optimal values ofx _o are first calculated under the assumption of constant losses for the two misclassifications (x>x _o ifyy _o andxx _o ify>y _o). In a further approach the loss for a wrong decisionyy _o is assumed to increase exponentially withy. Finally the conditional probabilityP (x>x _o\y) is calculated to get an assessment of the relative frequencies of wrong decisions to be expected.

     

A General Method of Deriving the Inefficiencies of Banks from a Profit Function

This article develops a new method of estimating inefficiencies in joint production and shows that unlike the approaches utilized in the previous studies of inefficiency, this method maintains a consistent relationship between the error term of a profit function and the error terms of its price derivatives. A useful by-product of the method is a proof of a Hotelling-like lemma that relates stochastic input demand and output supply functions to stochastic profit functions. While the previous studies fit a single frontier to data on all firms, this paper estimates a frontier unique to every observed firm to allow each one to have a different potential of achieving maximal levels of profit. The new method is applied in the analysis of annual data, 1984–1989, for U.S. commercial banks. Both the analytical and numerical results of the paper show that the residual that the previous studies attribute to inefficiency includes the effects of excluded variables and of inaccuracies in the specified functional forms. Once accurate estimates of these effects are subtracted from the residual, the distortions in the measured inefficiencies should be considerably reduced. Consequently, this article considers how such estimates might be obtained.