Should the Cost-of-living Index Provide the Conceptual Framework for a Consumer Price Index?

In some countries, the cost-of-living (COL) index serves as the conceptual framework for the CPI, but it has been rejected in others. This paper reviews issues that have arisen in the statistical agency debate and in the economics literature on the COL index, including rhetorical matters which have influenced the debate. I contend that COL theory is useful as a decision-making framework in estimating components of the CPI, and that COL index theory provides appropriate guidance for measuring consumer inflation, contrary to the view that has been adopted for the European HICP and expressed by an advisory committee for the RPI.     

Hedging derivatives in the banking industry: Evidence of investor confusion

Hedging derivatives are complex instruments that require particular scrutiny by bank regulators to ensure that a bank’s risk profile is consistent with sound banking practices. The Basel II agreement envisions a system of banking oversight that includes market discipline as a key element of the regulatory framework. A necessary condition in achieving market discipline is that market participants must be able to decipher the underlying conditions from reported results. We examine the relationship between investor confusion and the income effects arising from fair value recognition of hedging derivatives in the banking industry. We use abnormal trading volume as a proxy for investor confusion, and we find a positive and significant relationship between fair value accounting incomes and two alternative measures of abnormal trading volume. The findings suggest that accounting requirements alone may be insufficient to communicate the complexities of hedging derivatives to investors in a way that achieves the market discipline prescribed by Basel II. Bank regulators may need to augment extant efforts for transparency to ensure that risks are adequately communicated to the market.     

The Effects of 9/11 and Terrorism on Human Resource Management: Recovery, Reconsideration, and Renewal

The United States suffered an unprecedented loss of life on September 11, 2001, from what was labeled a terrorist attack. Mainly on the basis of data from professional association surveys and government agencies, it was found that the United States and many other countries of the world have been significantly affected by the events and aftermath of that morning's events. As an unprecedented attack on a country not usually affected by external terrorism, it allows a unique study of how terrorism can affect countries in the world. As a result of 9/11 there were significant changes in the U.S. economy and society that, because of the global economy and politics as well as the international war on terrorism, certainly have international consequences. Changes also occurred in most areas of human resource management as well as producing a much greater emphasis on having an overall business crisis management program. However, many of the initial changes appear to have diminished over time. The resultant changes, and lack of changes, produce rich questions for further research.