The relationship between budget deficits and capital inflows: Further econometric evidence

This research note examines the impact of federal deficits on U.S. capital inflows. Expanding on the previous work of Bahmani-Oskooee and Payesteh (1994), we employ the relatively new maximum likelihood procedure developed byJohansen (1988) andjohansen andJuselius (1990) to do cointegration tests. The results find a long run relationship between budget deficits and capital inflows. In addition, findings from error-correlation modeling reveal that short-run disequilibria in financial markets are corrected very rapidly, suggesting that these markets are efficient.     

Choosing the right instrument

This paper analyses the optimal choice of second-best optimal environmental policies. Using a partial equilibrium model, the paper first reconfirms the well-known result that the existence of a double dividend (in its weak definition) favours environmental policy instruments which maximise tax revenues for a given improvement in environmental quality. Additional revenues can be used to reduce the distortion of existing taxes such as taxes on labour and capital income. Without uncertainty, environmental taxes and auctioned permits are equally appropriate. In the presence of uncertainty, however, the optimal choice of taxes or tradable permits depends on the relative magnitudes of the marginal environmental damage and the marginal benefit from consuming a polluting good. In the second part, the paper, therefore, analyses how the revenue capacity affects the optimal choice of environmental policy instruments in the presence of uncertainty. The paper shows that the first-best choice rule between price and quantity regulation (Weitzman, 1974) remains valid in a second-best world with distortionary taxation.     

Consumer Risk Perceptions and Marketing Strategy: The Case of Genetically Modified Food

New technologies are hitting the marketplace every day. In trying to make sense of these new technologies, consumers perceive a series of risks and benefits of consumption and use those perceptions to form product judgments. One way for managers to mitigate organizational related risk is to understand how consumers perceive consumption‐related risk. To illustrate this point, the case of genetically modified (GM) food is examined and a series of focus groups is conducted in which participants examined different product labels that either framed the technology as a benefit gained or as a risk avoided. The results indicate that consumers do indeed form very different product evaluations based on how the new technology is framed, but these evaluations vary based on the level of the consumers’ preexisting knowledge. This study provides support for the contention that a better understanding of consumer risk perceptions is an important first step in developing marketing strategies for new technology‐oriented products.     

The theory of met expectations applied to expatriate adjustment: the role of crosscultural training

This study will test two hypotheses to determine whether the formation of expectations (prior to the global assignment) affects expatriates' adjustment. This study utilized a sample of seventy-three expatriates who completed questionnaires approximately ten months after arriving in their host countries. All the expatriates had predeparture cross-cultural training, but the training varied in perceived relevance. The expatriates were assigned either to countries where their native language was spoken (e.g. Americans in the UK) or to countries where their native language was not spoken (e.g. Americans in France). The results of the mediated regression analysis suggest that the more tailored and relevant the pre-departure cross-cultural training, the more expectations were either met or positively exceeded. Analyses suggest that both cross-cultural training and the language spoken in the host country affect the accuracy of expatriates' expectations prior to the assignment - and that having accurate expectations, in turn, positively affects cross-cultural adjustment. The results from this study encourage organizations to develop programmes that will ensure their expatriates have realistic expectations prior to their global assignments (e.g. through tailored cross-cultural training).     

The Subprime Crisis and African Americans

There is a long history of unfair housing and lending practices in the United States and generally, African Americans have been disproportionately negatively impacted by these activities. In order to understand the current economic crisis and its impacts on African Americans, one must first explore the historical spectrum of discriminatory actions leveled against blacks in housing and mortgage lending. This paper discusses the recent subprime mortgage crisis and identifies the ways that African Americans were impacted. It provides an historical review of mortgage lending and housing discrimination and the role that public policy played in these practices. It then chronicles the subprime mortgage crisis and connects the consequences of lending policy run amok by targeting minority communities.