Interest Rate Feedback Rules in an Open Economy with Forward Looking Inflation

With the adoption of an explicit inflation target in the UK, there has been renewed interest in the properties of alternative interest rate feedback rules. Following Svensson (1999) a literature examining the relative merits of inflation and price level targeting has also developed. In this paper we compare the stabilization properties of the two forms of feedback rule that have been used most frequently in the literature and which give rise to price level and inflation targeting, respectively. The model in which we embed our rules is significantly richer than those considered in the price level targeting literature and this allows us to explain why the relative performance of the rules is dependent upon the nature of the shock considered and whether or not excess inflation is defined in terms of consumer or output price inflation.     

The determinants of the location of foreign direct investment in UK regions†

This article employs a database of over 2000 observations of Foreign Direct Investment (FDI) projects in UK regions. We analyse this data by means of various multinomial and conditional logit models in order to identify the major determinants of the location choices of these inward investments. Having controlled for the various characteristics of inward investing firms, the projects and the regions, our results suggest that existing regional specialization is the single most important determining feature of where inward FDI locates. In addition, London is seen to benefit primarily by the immigration of new investments, the majority of which are related to service sector activities.     

Modeling the dynamics of inflation compensation

This paper investigates the relationship between short-term and long-term inflation expectations using daily data on inflation compensation derived from the term structure of real and nominal interest rates. We use a flexible econometric model which allows us to uncover this relationship in a data-based manner. We relate our findings to the issue of whether inflation expectations are anchored, unmoored or contained. Our empirical results indicate no support for either unmoored or firmly anchored inflation expectations. Most evidence indicates that inflation expectations are contained.     

Creativity in marketing management—a unified approach

This paper sets out to identify how marketing management can provide the lead in adopting a more creative approach to innovation at the idea generation stage.

Both the proactive and reactive approaches to innovation strategy are discussed in the context of change factors and the sourcing of new ideas for innovation. Four loci of idea initiation are identified, which appear to vary in importance according to industry sector.

Although evidence is presented to suggest that heuristic techniques are being used increasingly to enhance creativity, their use is limited both by the perception of their function and the strategic mode adopted by the organisation. The concept of the marketing‐centred creative circle is introduced to counter these limiting factors. It is argued that the creative circle offers a bridging function in the generation of new ideas for innovation and in extending the existing stock. As well as performing this function, a more creative and entrepreneurial atmosphere will emerge as lateral relationships develop. With the development of successive marketing‐centred creative circles within the organisation, a unified approach to creative innovation will evolve as the traditional proactive and reactive strategies merge.     

Scaling‐up Foreign Aid: Will the ‘Big Push’ Work?

International donors are substantially scaling‐up aid programmes. At the same time, there are widespread reservations over how much aid recipient countries can use effectively. Such concerns are supported by the aid effectiveness literature which finds that there are limits to the amounts of aid recipients can efficiently absorb. This article demonstrates that a ‘big push’ in foreign aid will not lead to diminishing returns as long as donors get the inter‐country allocation of aid right. This is true even if donors provide aid at levels equal to the well‐known target of 0.7 per cent of their gross national income.     

Human Capital, Growth, and Inequality in Russia

Our model captures the fact that Russia has both much human capital and an education system that produces the wrong skills for a market economy. We define a rule for the timing of educational restructuring that is Pareto optimal and that dominates all later times in a Paretian sense while simultaneously reducing inequality. We demonstrate that failure to implement restructuring early in the transition process is likely to produce a very long delay that will significantly reduce Russia's human capital. A retreat from subsidizing public education is likely to be counterproductive. We argue that early educational restructuring should be emphasized in Russia's transition strategy. J. Comp. Econom., December 1999, 27(4), pp. 618–643. Lingnan University, Tuen Mun, N.T., Hong Kong, People's Republic of China; University of Colorado, Denver, Denver, Colorado 88217; and Royal Holloway College, University of London, Egham, Surrey TW20 OEX, United Kingdom.     

Accounting History in Australia: A Survey of Published Works, 1975–99

Research in accounting history has expanded significantly in recent years. This paper reviews the recent development of accounting history in Australia through an examination of the relevant literature while recognizing the wider influence of Australian scholars in the international community of accounting historians. The survey is confined to works on Australian accounting history published in the period of 25 years between 1975 and 1999. These works are discussed using the literature classification framework provided by Carnegie and Napier (1996). Reviewing the literature in this way is expected to be of benefit to historians in general, particularly economic and business historians, and also accounting historians, while future directions for accounting history research in Australia are outlined following a brief critique of the literature examined.     

Welfare Consequences of Tight Price-Cap Regulation

This paper analyses the welfare effects of price-cap regulation of a multi-product monopolist when the price index has fixed weights. A tight cap can result in welfare below the level associated with an unregulated monopoly. This does not occur if the weights are based on lagged quantities and the level of the cap exceeds the previous period's total cost. In a two-period model the welfare problem is alleviated in the second period but first-period performance can be worse if the firm is not myopic.