REFORMING FINANCE IN TRANSITIONAL SOCIALIST ECONOMIES

Financial reforms initiated in most transitional socialist economiesdo not yet adequately provide many of the financial servicesassociated with market-oriented financial systems. Such services—mobilizingresources, selecting firms and allocating capital, monitoringfirm managers, and facilitating the management of transactionsand risk—are a necessary condition for economic reformto improve living standards. This article envisages four central strategies to guide reformof the financial sector: • Building an infrastructure based on clear and enforceableproperty rights, modern accounting and auditing standards, reliablepayments systems, sound prudential and enforcement regulations,and professionals trained in finance • Ending the shell game of trying to hide the losses ofstate-owned enterprises, and separating government decisionsto finance "priority" firms from the allocation decisions ofindependent financial institutions • Privatizing some financial institutions early—althoughnot necessarily precipitously—in concert with the privatizationof firms and supervisory capabilities, meanwhile cleaning upbank loans to maximize the chances that firms and banks willsucceed as private entities • Improving the tax system and stressing a prudent interestrate policy to reduce uncertainty, distortions, and excessiverepression of the financial sector.      

Inequality and Growth Reconsidered: Lessons from East Asia

East Asian economies have experienced rapid growth over threedecades, with relatively low levels of income inequality, andappear to have also achieved reductions in income inequality.We argue that policies that reduced poverty and income inequality,such as emphasizing high-quality basic education and augmentinglabor demand, also stimulated growth. Closing two virtuous circles,rapid growth and reduced inequality led to higher demand for,and supply of, education, Moreover, low levels of income inequalitymay have directly stimulated growth. We present cross-economyregression results that are consistent with a positive causaleffect of low inequality on economic growth and with low inequalityof income as an independent contributing factor to Fast Asia'srapid growth. We conclude that policies for sharing growth canalso stimulate growth. In particular, investment in educationis a key to sustained growth, both because it contributes directlythrough productivity effects and because it reduces income inequality.     

On the performance of the minimum VaR portfolio

Alexander and Baptista [2002. Economic implications of using a mean-value-at-risk (VaR) model for portfolio selection: A comparison with mean–variance analysis. Journal of Economic Dynamics and Control 26: 1159–93] develop the concept of mean-VaR efficiency for portfolios and demonstrate its very close connection with mean–variance efficiency. In particular, they identify the minimum VaR portfolio as a special type of mean–variance efficient portfolio. Our empirical analysis finds that, for commonly used VaR breach probabilities, minimum VaR portfolios yield ex post returns that conform well with the specified VaR breach probabilities and with return/risk expectations. These results provide a considerable extension of evidence supporting the empirical validity and tractability of the mean-VaR efficiency concept.     

New unions in the UK: the vanguard or the rearguard of the union movement?

Between January 1999 and March 2010, 34 trade unions entered the Certification Officer list or schedule in the UK. This article reports on a survey of those unions, discussing the extent to which they represent new forms of unionism and the possible implications for union revitalisation.     

Visitor management practices and operational sustainability: Expedition cruising in the Kimberley,Australia

The expedition cruise industry along the remote 3000 km Kimberley coast in Australia’s northwest draws on the area’s environmental and cultural assets for its tourism product and provides the main means of access for visitors. Cruises involve frequent on-shore excursions to attractions including rock pools, rock art and historic sites. This study used visitor observations and stakeholder interviews to examine potential impacts on environmental and cultural site assets, and visitor safety and experience. Visitor management practices varied strongly between operators, with vast room for improvement by some operations. Inconsistent visitor management practices contributed to a high level of avoidable risks in terms of visitor safety and negative cultural and environmental impacts. Findings from this study highlight the central role of tour guides and operational procedures for improving visitor management practices.     

The methodology of profit maximization: An Austrian alternative

Conclusion While the MR=MC profit-maximizing model that is used almost religiously by the economics profession has been challenged over the years, it still remains the dominant model to explain firm behavior. However, its popularity does not mean that the model accurately describes what actually occurs in firm decision making. Given that modern mainstream neoclassical economists have failed (through omission or commission) to examine their models through the lens of time, they have lost that component that presents accuracy and enrichment to their arguments. This paper has incorporated challenges to the dominant neoclassical model that were fashioned by Rothbard and, to a much lesser extent, Baumol. In examining the work of both economists, we conclude that the Rothbard model is more complete, as it factors time into the model, where Baumol’s does not, which renders it fatally incomplete. Both authors, however, make a solid point that if one is to analyze the workings of the firm in the real world, other models such as revenue maximization must be taken into account if we are to assume that firms attempt to maximize profits. To be sure, there is much work to be done in the creation of alternative theories of the firm. Klein and others have attempted to build upon the work of Mises and Rothbard to construct a theory of the firm that can stand up to intellectual scrutiny and explain the various aspects of the decision making process within the firm. We attempt through this paper to add to this alternative theoretical construct.     

Population Ageing and Projections of Government Social Outlays in Australia

This paper makes new projections of government social outlays for Australia. The calculations suggest that government social outlays will increase considerably as a percentage of GDP over the next 50 years, by 7.3 per cent of GDP in the base case. This is a greater increase than that found by previous investigators. Over 60 per cent of this increase will occur between 2011 and 2031, the years when the baby boom generation retires. The major contribution to this increase will have come from increased government outlays on social security. Lower rates of net immigration are shown to yield an even larger increase in the percentage of government social outlays in GDP. The paper also considers the disincentive effect of taxation and the effect of in-creasing the age of retirement. However, notwithstanding the trends suggested by the projections, the paper argues that there are a number of reasons to be sanguine about the implications of ageing on the share of government outlays in GDP.