Role of Endogenous Vintage Specific Depreciation in the Optimal Behavior of Firms

This paper studies the firms' capital accumulation process in a vintage capital model with embodied technological change. We take into account that depreciation is endogenous and in particular associated with vintage specific maintenance expenditure. We prove that maintenance is a local substitute for investment as soon as the marginal cost of maintenance is strictly increasing. We show that maintenance and investment in new capital goods appear as complements with respect to the changes in productivity, cost of maintenance, fixed cost of operation, efficiency of maintenance services and appear as substitutes with respect to the price of new machines. Allowing for investment in old vintages, we determine that investment in old machines appears as a substitute of both investments in new machines and maintenance services. We end up by analyzing the effects of technological progress on optimal plans and prove that a negative anticipation effect can occur even without any market imperfections.     

Russian and Belarus monetary union: Phantom or reality?

As of January 1, 2004, the Belarus rouble has been pegged to the Russian rouble. This is intended as a first step towards monetary union, which it is planned should come into force on January 1, 2005. This plan presupposes the successful resolution of a number of difficult political and economic problems, however, and it is by no means certain that the plan will not later be abandoned.     

Job search models and frictional unemployment

A number of job search models based on Stigler's classic paper on information in the labor market have appeared recently in the literature. Since the duration of job search is a by-product of these models, they give important insights into the theory of frictional unemployment. What is particularly striking about these models is their basic assumption that individuals attempt to maximize the discounted stream of future income. The present paper attempts to make up this oversimplification by presenting an alternative job search model which posits that individuals attempt to maximize the discounted stream of future satisfaction. Predictions of the two basic models are compared. A final section draws out the implications of the utility model for frictional unemployment.     

A look inside AMLF: What traded and who benefited

The Federal Reserve’s AMLF program was designed to provide liquidity to money market funds (MMFs). Between September 2008 and May 2009, the program made $217 billion in non-recourse loans to depository institutions and bank holding companies to purchase asset-backed commercial paper from MMFs. JP Morgan and State Street dominated the program, accounting for over 90% of all loans made. Our analysis suggests that JP Morgan exhibited more self-dealing behavior than State Street. We find that JP Morgan and State Street earned economically and statistically significant cumulative returns of 2.28% and 2.49% (respectively) over the first seven days of the program after controlling for market returns and heteroscedasticity.     

Properties in science and their modelling

Properties in the usual sense are analyzed by means of the construction of an abstract property. Once constructed, the abstract property provides a useful tool for analyzing the nature of usual properties. This paper shows that such modelling allows to classify properties and to explicate their structure. Applications of this modelling to study of some classical and quantum physical quantities are also described.     

Agriculture,nutrition and development in Yugoslavia

Improvements in food consumption and nutrition, being important indicators of the standard of living, can only be analysed properly within the context of socioeconomic development. The authors examine the developments of food and nutrition policy in Yugoslavia, a country disadvantaged by a backward economy and poor social conditions inherited from the prewar and pre-revolutionary period and exacerbated by the second world war.     

Return to the “natural” process of decision-making leads to good strategies

A novel approach to strategic management, Risk-Constrained Optimization (RCO), is an ensemble of special models, procedures, and algorithms to generate, evaluate, and help in executing good alternative strategies. RCO is a patented system of planning under uncertainty that searches for the most acceptable compromise between improving results and reducing risk in our decisions. Risk management and scenario planning dominate over optimization. RCO still uses maximization, but only in combination with several protective filters that screen, modify, and scale back the strategies, as necessary. As with any protective equipment, RCO could reduce the need for knowledge about the future.JEL Classification: D21, D81, C61I would like to acknowledge extremely helpful and insightful comments of Professor Mark Perlman (to whom this article owes very, very much), Professor Irma Adelman, Erwin Rezelman, Dr. Victor V. Masch, and an anonymous reviewer. I also greatly appreciate help in editing by David Owens and Professor Irving Rothman.     

Preferred habitat for liquidity in international short-term interest rates

Risk-shifting window dressing and a preferred habitat for liquidity have been offered as possible explanations as to why US money market rates are higher before the year-end than afterwards. The two hypotheses differ in the timing of the rate decline at the year-end and the evidence on the timing of the decline supports the preferred habitat hypothesis in US money markets. This paper extends this line of research to the behavior of international short-term interest rates at year-ends and quarter-ends using London interbank offer rates (LIBOR) for 11 different currencies. The results suggest that the behavior of LIBOR for five currencies: the US Dollar, Euro, Japanese Yen, Swiss Franc, and German Mark is consistent with year-end or quarter-end preferred habitats for liquidity. Other currencies do not demonstrate consistently distinct patterns in turn-of-the-year and turn-of-the-quarter yields. None of the results provides any support for risk-shifting window dressing.