Implications of a negatively sloped LM curve

Conclusion This paper has shown that the LM curve could be downward sloped if the rate of interest on money (specifically liquid deposits) is sufficiently flexible. If so, the momentary equilibrium could be unstable, especially if the LM curve is far from the vertical (i.e., if the interest rate on money is very flexible). Prospects for instability are enhanced if output adjusts slowly or if the central bank varies the money supply strongly over time in response to the general interest rate. If stability obtains with a downward sloped LM curve, fiscal policy has an unconventional direction of effect on income. Three policy implications follow directly. (1) The rate of interest on deposits which are part of the money supply used as the central bank control tool, should not be allowed to be too flexible (to avoid instability). (2) If the monetary deposit rate is quite flexible, the central bank should not have the money supply react too strongly to the general interest rate—i.e., should not come too close to a pure interest rate policy (again, to avoid instability). (3) If the monetary deposit rate is very flexible, fiscal policy should be used with caution (due to the unconventional direction of effect in the event LM is downward sloped).     

The Justice Motive in East Asia’s Territorial Disputes

Many of the most active and most dangerous security challenges in the Asia-Pacific region are generally seen to involve a complex amalgam of material and ideational conflicts. There is surprisingly little consideration, however, of the role of the justice motive. This article explores the role of the justice motive in the context of three specific maritime and territorial disputes: Dokdo/Takeshima, the Senkaku/Diaoyu Islands, and the South China Sea. What explains its intensity? How does it affect political salience, tractability, and danger of conflict? What are the available mechanisms and prospects for resolving justice conflicts?     

The employee brand: Is yours an all-star?

In this article, a typology is presented which will help organizations better reflect the brand image they desire. The assisting typology is based on the extent to which employees know and understand the organization's mission, values, and desired brand image, and the degree to which they perceive their psychological contracts with the organization as being honored. Organizations can be classified as all-stars, rookies, injured reserves, or strike-out kings, based on the characteristics of a preponderance of their employees. As categorized, rookie organizations cannot deliver the desired brand image because most of their employees lack the knowledge and understanding to do so. Injured reserve organizations, on the other hand, cannot achieve the same because firm employees perceive their psychological contracts with the organization as having been violated, which renders the individuals unwilling and unmotivated. For their part, strike-out king organizations share rookie and injured reserve organizations' worst characteristics. Finally, and conversely, all-star organizations consistently deliver the desired brand image to others because their employees are both able and motivated to do so. To help firms attain this highly desired status, specific guidelines are presented herein which may help organizations become “all-stars” in their own right.     

Information partnerships--shared data, shared scale

How can one company gain access to another's resources or customers without merging ownership, management, or plotting a takeover? The answer is found in new information partnerships, enabling diverse companies to develop strategic coalitions through the sharing of data. The key to cooperation is a quantum improvement in the hardware and software supporting relational databases: new computer speeds, cheaper mass-storage devices, the proliferation of fiber-optic networks, and networking architectures. Information partnerships mean that companies can distribute the technological and financial exposure that comes with huge investments. For the customer's part, partnerships inevitably lead to greater simplification on the desktop and more common standards around which vendors have to compete. The most common types of partnership are: joint marketing partnerships, such as American Airline's award of frequent flyer miles to customers who use Citibank's credit card; intraindustry partnerships, such as the insurance value-added network service (which links insurance and casualty companies to independent agents); customer-supplier partnerships, such as Baxter Healthcare's electronic channel to hospitals for medical and other equipment; and IT vendor-driven partnerships, exemplified by ESAB (a European welding supplies and equipment company), whose expansion strategy was premised on a technology platform offered by an IT vendor. Partnerships that succeed have shared vision at the top, reciprocal skills in information technology, concrete plans for an early success, persistence in the development of usable information for all partners, coordination on business policy, and a new and imaginative business architecture.     

“Rational” and “Endogenous” exchange rate expectations and speculative capital flows in Germany

Zusammenfassung ?Rationale? und ?endogene? Wechselkurserwartungen und spekulative Kapitalbewegungen in Deutschland. —In diesem Aufsatz entwickeln wir zwei Verfahren, um sowohl die Wechselkurserwartungen selbst als auch ihren Einflu\ auf die Kapitalbewegungen zu sch?tzen — und zwar im Rahmen eines Bestandsanpassungsmodells der internationalen Kapitalbewegungen mit ?endogener? bzw. ?rationaler? Erwartungsbildung. Im ersten Verfahren spezifizieren wir eine endogene Funktion der Wechselkurserwartungen in einem komparativ-statischen Modell des monet?ren Gleichgewichts. Diese Erwartungsfunktion und die Wirkung solcher Erwartungen auf die Kapitalbewegungen werden gesch?tzt. Im zweiten Verfahren zeigen wir, wie McCallums Test der Wirkungen von ?rationalen? Erwartungen auf den Terminmarkt zu einem Test ihres Einflusses auf die Kapitalbewegungen erweitert werden kann. Dann sch?tzen wir die Wirkungen dieser beiden Ma\e für Wechselkurserwartungen auf die deutschen Kapitalbewegungen in den Jahren 1961–1968 und in ausgew?hlten kürzeren Perioden, die um die identifizierbaren Zahlungsbilanzkrisen in dem turbulenteren Zeitraum von 1968 bis 1973 liegen. Aus unseren empirischen Tests ergeben sich zwei wichtige Schlu\folgerungen. Erstens ist die Gleichung der Kapitalbewegungen in der Zeit sehr instabil, ein Ergebnis, das mindestens teilweise auf die Wechselkurserwartungen zurückzuführen ist. Zweitens liefern die endogene Funktion der Wechselkurserwartungen und die Sch?tzmethoden, die in diesem Aufsatz entwickelt wurden, sinnvolle Sch?tzungen der Wechselkurserwartungen als eine Funktion von realen ?konomischen Variablen in einem monet?ren Modell.

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Résumé Les attentes ?rationales? et ?endogènes? de taux de change et les flux des capitaux speculatifs en Allemagne. —Dans cet article nous développons deux techniques pour estimer les attentes de taux de change aussi bien que leur conséquence sur les flux des capitaux en cadre d’un modèle d’ajustement de stock des flux des capitaux internationaux qui sont en sens de ces approches ?endogènes? et ?rationales? à la formation d'attente. Dans cette première approche nous spécifions une fonction des attentes de taux de change étant endogène à un modèle comparatifstatique de l’équilibre monétaire. Nous estimons cette fonction d’attente et l’effet de telles attentes sur les flux des capitaux. Dans la deuxième approche nous montrons comment on peut élargir le test de McCallum de la conséquence des attentes ?rationales? sur le marché à terme à un test de leur conséquence sur le flux des capitaux. Puis nous estimons les effets de ces deux mesures des attentes de taux de change sur les flux des capitaux allemands de 1961–1968 et pour des sélectionnées périodes plus brèves autour des crises de taux de change identifiables pendant la période plus turbulente de 1968–1973. Il y a deux conclusions essentielles de notre test empirique. Premièrement, l'équation de flux des capitaux est très instable en cours de temps, un résultat au moins partiellement d? aux attentes de taux de change. Deuxièmement, la fonction des attentes endogènes de taux de change et les techniques d'estimation développées dans cet article livrent des estimations significatives des attentes de taux de change comme fonction des variables économiques réelles dans un modèle monétaire.

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Resumen Espectativas ?racionales? y ?endógenas? para el tipo de cambio y flujos de capital especulativos en Alemania. —En este articulo se desarrollan dos técnicas para estimar tanto las espectativas para el tipo de cambio como su impacto sobre los flujos de capital dentro del contexte de un modelo de ajuste de flujos de capital internacionales que están dentro del espíritu de estas aproximaciones para la formación de espectativas ?endógenas? y ?racionales?. En la primera aproximación se especifica una función de espectativas para el tipo de cambio que es endógena a un modelo estático-comparativo para el equilibrio monetario. Se estiman la función de espectativas y el efecto de esas espectativas sobre los flujos de capital. En la segunda aproximación se muestra, como el test de McCallum sobre el impacto de las espectativas ?racionales? sobre el mercado a futuro, puede ser extendido a un test sobre el impacto de estas espectativas sobre los flujos de capital. Luego se estiman los efectos de ambas medidas para las espectativas del tipo de cambio sobre los flujos de capital de Alemania desde 1961 a 1968 y para perlodos seleccionados más cortos alrededor de crisis de tipo de cambio identificables dentro del período más turbulento de 1968 a 1973. A partir de los tests empíricos se llega a dos conclusiones importantes. Primero, la ecuación de flujo de capital es muy inestable a traves del tiempo, un resultado debido por lo menos en parte a las espectativas para el tipo de cambio. Segundo, la función de espectativas para el tipo de cambio endógena y las técnicas de estimación desarrolladas en este articulo llevan a estimaciones sensatas de las espectativas para el tipo de cambio como una función de variables económicas reales en un modelo monetario.

     

Who Benefits in an Insider Negotiated Block Trade?

We examine insider negotiated block trades to investigate whether new active blockholders with special expertise create shareholder value. In contrast to existing studies, we find no reliable overall evidence of permanent stock price increases, operating changes, or improved net of industry profitability associated with these major control changes. Top executive turnover is extensive, but appears largely attributable to the block sellers’ actions, not the imposition of discipline by the block buyer. Results suggest initial shareholder gains anticipate takeovers, not improvements in profitability. When a takeover is not forthcoming, the gain disappears.     

A Tale of Two Gate-Sharing Plans: The National Football League and the National League, 1952-1956

Do professional sports leagues design revenue-sharing rules primarily to help financially weaker teams, or do such organizations view revenue-sharing rules as ways to reward teams for being competitive? Baseball's National League and the National Football League provide evidence from the 1950s that revenue-sharing plans may have surprising effects. If strong teams draw well on the road, revenue-sharing plans may provide modest succor to teams in smaller cities and may benefit teams in larger cities. The two leagues' experiences also suggest that owners are willing to enact regressive aspects in their revenue-sharing plans, possibly to forestall moral hazard possibilities arising from automatically helping teams that remain poor draws or that fail to improve.     

Semi-quantitative risk assessment method for product management

The workshop presented a semi-quantitative risk assessment technique that can be used to judge the total risk on all undesired consequences/events for a product manufacturing operation. The technique requires an experienced team to judge risk utilizing a numerical rating system that, although arbitrarily chosen, is self consistent and provides a relative assessment of product manufacturing risk. Once calculated, the risk is compared to the product's net income for making risk management and product planning decisions. The workshop included an exercise where all participants could try the technique.