Output-inflation tradeoffs in 34 countries

This article examines the responsiveness of real output to the variability of inflation and aggregate demand. In the manner of Lucas (1973), estimates of the output-inflation tradeoff are computed for a large sample of countries. This measure is then correlated with the variances of the inflation rate and the growth rate in nominal income. Because differences in inflation variance (and hence the tradeoff) are viewed as the outcomes of differences in demand variance, correlations between these two variables are also reported. Cross-time and cross-country results provide a good measure of support for Lucas and the notion that attempts to exploit the tradeoff weaken it.     

Embodied ethics: Some common concerns of religion and business

De George's understanding of theology is limited to one of five commonly recognized models of theology, the orthodox model. This model is vulnerable to De George's criticisms. When religious ethics operates out of the revisionist model of theology, however, his criticisms lose their sting. Revisionist religious ethics, moreover, can make a fruitful contribution to business ethics. Such a religious ethic acknowledges the embodiment dimension of business activities, it complements philosophical analysis with the practice of moral discernment, and it recognizes irony as an active component in decision-making.John T. Leahy is an Associate Professor of Religious Studies at DePaul University.     

Do interventions in foreign exchange markets modify investors' expectations? The experience of Japan between 1992 and 2004

The purpose of this paper is to analyze the impact of the Bank of Japan's official interventions on the JPY/USD parity during the period 1992–2004. The novelty of our approach is to combine two recent advances of the empirical literature on foreign exchange interventions: (i) drawing on over-the-counter option prices to characterize more precisely the distribution of market expectations; (ii) redefining interventions in terms of events as they tend to come in clusters. Moreover, in order to deal with the features of the data (small sample size, non-standard distribution), we use bootstrap tests.We show that interventions have a significant impact on the mean expectation (the forward rate). The results are more ambiguous for variance. Additionally, we find that the effect of interventions on skewness is significant, robust to different definitions of skewness, and consistent with the direction of interventions. On the contrary, our results clearly show that kurtosis is not affected by interventions. We finally show that: (i) coordination increases effectiveness of interventions; (ii) results are not altered when controlling for other economic and political news.     

Communities of tomorrow

The social spotlight seems to be refocusing to the scale of local community at a time when globalisation of the economy is threatening the authority of nation-states. Certain small communities are in peril of falling out of the global economy while losing local customs to a globalised culture. Globally beleaguered nation-states are being squeezed in a two-pronged grip: from the growing weight of global capital and from local communities rising to global pressures by demanding local solutions. National authority is also being bypassed as new global communities of interest form on the Internet, expanding the meaning of the term community. But, is community more than common interest—a celebration of difference, negotiating symbiosis among diversity of ethnicity, lifestyle and aspirations for the future? This paper explores five scenarios of tomorrow’s communities. One scenario is a nostalgic return to the romantic notion of the white-picket fence. Then there is the drop-out feral community. In another future the fence becomes a fortress wall, or a ring of barbed wire. Yet another is a virtual community beyond place, where people sharing a common interest live in cyber-reality. The viable community is one for the long haul. To be viable in a global world it must make local-global links to create synergies by sharing resources and inspirations throughout a diverse, planetary society. Viable, local-global network communities of tomorrow set a global example for creativity by honouring difference and open exchange. They take responsibility for their own futures.Two powerful images from recent events remain with me, in juxtaposition. After considering the American attacks on Afghanistan, a well-experienced teacher feels isolated at the periphery, and powerless. In addition, she watches, in “quiet despair”, one of her pupils “virtually going crazy” before her eyes. She shares these words with me:

“Neither he nor I, it seems, have anywhere to run except to the graciousness and the care of the other children, that as classroom leader I’m tying daily to coalesce, in order to put a cocoon of community around him. Bit like the planet!”

“We all work to keep our very bright and fairly disturbed ADHD-labelled¹ learner connected to us in genuine relationship. That’s the foundation of authentic learning support. I’m not operating a medical model!”

Our leaders and the babbling mass media ignore this, the first image, and many similar to it.By contrast, the second image gets constant exposure. It gets instant recall from most TV viewers. It is the scramble of screen jockeys, on what is left of Wall Street, playing the casino economy, in a frenzy of greed. Curiously the main media focus emphasizes images that represent the world at the global scale. They largely ignore images of life at the scale of community.Why is this? Why does the second image of the so-called finance community, where the focus is the dollar, override the more basic image of a hometown community where the focus is human life-support? Are the media reflecting our true priorities, and have we got it wrong? Is money more important than community?     

Accounting for Option–based Compensation: The Economic Cost Approach

The intrinsic value approach amortizes over the life of the option, the difference between the stock price on the date of the grant and the exercise price of the option. The fair market value approach amortizes over the life of the option, the market value of stock options on the date of the grant. These approaches do not reflect the changes in the option–based compensation cost after the grant date. This paper proposes an economic cost approach that not only adjusts for the changes in the value of the options during its life but also records the issuance of the stock at fair market value on the exercise date.     

Grounded Theory und ihre bisherige Anwendung in der empirischen Controlling- und Rechnungswesenforschung

Zusammenfassung  Die Bildung von Forschungshypothesen ist zwar immer ein kreativer, sollte aber gleichzeitig kein unsystematischer Prozess sein. Im vorliegenden Artikel liegt der Fokus auf der Methodenunterstützung des Entdeckungszusammenhangs. Die Methode der Grounded Theory bietet einen Bezugsrahmen für qualitative empirische Studien, mit dem Theorien entwickelt werden, die aus dem Textmaterial zu begründen sind. Eine Literaturanalyse verdeutlicht, dass das Potenzial dieser Methode bisher in der Controlling- und Rechnungswesenforschung weitgehend ungenutzt bleibt. Anhand einer Diskussion empirischer Studien, welche auf die Methode zurückgreifen, werden Anwendungsm?glichkeiten der Grounded Theory für diese Disziplinen aufgezeigt.

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Summary  Creating research hypotheses is always a creative but not necessarily an unsystematic process. In our study we introduce a method supporting the logic of discovery. The grounded theory approach provides a framework for a systematic development of theories emerging from empirical data. A literature review stresses that the potential of the method so far is unused in accounting research. The grounded theory approach is introduced to support empirical work within this research field. Options for an application of the method in accounting research are shown by the means of a discussion of empirical studies. Furthermore the reader gets hints for reference studies.

     

How to measure mutual fund performance: economic versus statistical relevance

In the present paper a comprehensive assessment of existing mutual fund performance models is presented. Using a survivor‐bias free database of all US mutual funds, we explore the added value of introducing extra variables such as size, book‐to‐market, momentum and a bond index. In addition to that we evaluate the use of introducing time‐variation in betas and alpha. The search for the most suitable model to measure mutual fund performance will be addressed along two lines. First, we are interested in the statistical significance of adding more factors to the single factor model. Second, we focus on the economic importance of more elaborate model specifications. The added value of the present study lies both in the step‐wise process of identifying relevant factors, and the use of a rich US mutual fund database that was recently released by the Center for Research in Security Prices.     

Unemployment compensation and episodes of nonemployment

This paper examines the influence of unemployment insurance (UI) on the length of nonemployment spells experienced by young workers. The analysis introduces a flexible duration model to estimate the effects of the weekly benefit amount and weeks of eligibility on the amount of time spent between jobs by men, distinguishing between the experiences of UI and non-UI recipients. The empirical findings suggest three conclusions: (1) UI recipients experience longer spells of nonemployment than their non-UI recipient counterparts, at least up to the point of exhaustion of UI benefits; (2) the level of the weekly benefit amount does not significantly affect the length of nonemployment spells; and (3) increasing the number of weeks of eligibility offered by a UI program leads to longer episodes of nonemployment.