Does global inflation help forecast inflation in industrialized countries?

Ciccarelli and Mojon (CM; Review of Economics and Statistics, 2010, 92(3), 524–535) propose an inflation forecasting model incorporating a global inflation factor and show that it consistently beats several standard forecasting benchmarks. We show that CM's global inflation model does not improve upon the Atkeson and Ohanian (AO; Federal Reserve Bank of Minneapolis Quarterly Review, 2001, 25(1), 2–11) naive benchmark. However, we find that augmenting the AO model with a global inflation factor improves forecast accuracy at longer horizons, supporting CM's claim about the usefulness of global inflation.     

Impairment and negative equity in the Irish mortgage market

Amongst the many housing markets across the OECD presently experiencing difficulties, the Irish case stands out. Between 2004 and 2007, a significant house price bubble emerged in Ireland, while the real economy was enjoying persistently strong growth rates. The sharp decline in house prices post 2007 coupled with the significant increase in unemployment has generated a combination of difficulties for the Irish residential market. To date, much of the analysis and discussion of the Irish market has tended to focus on either the concept of mortgage repayment distress or potential negative equity. By examining the issue of credit default in the Irish mortgage market, we focus on the interaction between delinquency (repayment distress) and solvency (negative equity). Building on earlier work, which used the Survey on Income and Living Conditions (SILC), we marry existing estimates of repayment distress with estimates of negative equity for a representative sample of Irish households. Using copula modelling we then examine the dependence structure across the distributions of mortgage delinquency and solvency for these households. As a result, we are in a position to estimate the probability that a household experiencing repayment distress might also be in negative equity.     

Brain drain in the age of mass migration: Does relative inequality explain migrant selectivity?

Brain drain is a core economic policy problem for many developing countries today. Does relative inequality in source and destination countries influence the brain-drain phenomenon? We explore human capital selectivity during the period 1820–1909.We apply age heaping techniques to measure human capital selectivity of international migrants. In a sample of 52 source and five destination countries we find selective migration determined by relative anthropometric inequality in source and destination countries. Other inequality measures confirm this. The results remain robust in OLS and Arellano–Bond approaches. We confirm the Roy–Borjas model of migrant self-selection. Moreover, we find that countries like Germany and UK experienced a small positive effect, because the less educated emigrated in larger numbers.     

The Pension Protection Fund*

We develop a model of the Pension Protection Fund (PPF), a defined benefit pension guarantee system for the UK, based on an analogy between pension liabilities and corporate debt obligations. We show that the PPF is likely to face many years of low claims interspersed irregularly with periods of very large claims. There is a significant chance that these claims will be so large that the PPF will default on its liabilities, leaving the government with no option but to bail it out. The cause of this problem is the double impact of a fall in equity prices on the PPF: it makes sponsor firms more likely to default and it makes defaulted plans more likely to be underfunded. We use our model to derive a fair premium for PPF insurance under different circumstances, to estimate the extent of cross‐subsidies in the PPF between strong and weak sponsors, and to show that risk‐rated premiums are unlikely to have a substantial effect on either the size or the lumpiness of claims. We argue that for the PPF to operate effectively, it should be introduced in tandem with strong minimum funding requirements and a lower level of benefit guarantee than at present.     

Comparing Malta and USA police officers’ individual and organizational support on outcomes

This paper investigates the quality of support for police officers in the USA and Malta to use as protection against stress. The authors found a significantly different organizational work context for police officers doing the same tasks. Police officers in both countries would benefit from upskilling in psychological capital and police managers require upskilling in management training as a means of increasing support for police to reduce the impact of stress.     

Does Asian management research need more self-confidence? Reflections from Russia

This commentary on Klaus Meyer’s article, “Asian Management Research Needs More Self-confidence,” in the Asia Pacific Journal of Management (2006), discusses the need for Asian management research to look beyond the pressures for publication in top-tier, Western scholarly academic journals. We reflect on our nearly two decades of research on Russian management to illustrate many of Meyer’s ideas and insights in a different transition economy. We support his call for more context-specific research that can also offer contributions to global management knowledge as well as indigenous management practice.

The Cost of Life Expectancy and the Implicit Social Valuation of Life

A new method of estimating the economic value of life is proposed. Using cross-country data, an equation is estimated to explain life expectancy as a function of real consumption of goods and services. The associated cost function for life expectancy in terms of the prices of specific goods and services is used to estimate the cost of a reduction in age-specific mortality rates sufficient to save the life of one person. The cost of saving a life in OECD countries is as much as 1000 times that in the poorest countries. Ethical implications are discussed.