OPTIMAL CONSUMPTION AND INVESTMENT FOR A LARGE INVESTOR: AN INTENSITY‐BASED CONTROL FRAMEWORK

We introduce a new stochastic control framework where in addition to controlling the local coefficients of a jump‐diffusion process, it is also possible to control the intensity of switching from one state of the environment to the other. Building upon this framework, we develop a large investor model for optimal consumption and investment that generalizes the regime‐switching approach of Bäuerle and Rieder (2004) .     

Lebt Deutschland auf Kosten südeuropäischer Länder?

Deutschland wird vorgeworfen, in der Europ?ischen W?hrungsunion eine „beggar-thyneighbour“-Politik zu betreiben. Die Autoren weisen diese Kritik zurück. Sie vertreten vielmehr die Auffassung, dass die deutsche Wirtschaft durch die Arbeitsmarktreformen sowie die Lohnzurückhaltung positiv beeinfl usst wurde und angesichts der demografi schen Perspektive Leistungsbilanzüberschüsse bzw. steigende Ersparnisse vorausschauend sind.     

Controllability and Persistence of Money Market Rates along the Yield Curve: Evidence from the Euro Area

Abstract. Controllability of longer‐term interest rates requires that the persistence of their deviations from the central bank's policy rate (i.e. the policy spreads) remains sufficiently low. This paper applies fractional integration techniques to assess the persistence of policy spreads of euro area money market rates along the yield curve. Independently from anticipated policy rate changes, there is strong evidence for all maturities that policy spreads exhibit long memory. We show that recent changes in the operational framework and the communication strategy of the European Central Bank (ECB) have significantly decreased the persistence of euro area policy spreads and, thus, have enhanced the ECB's influence on longer‐term money market rates.     

Are Higher Education Subsidies Second Best?

An optimal taxation framework is considered in which part of the population can take advantage of investment in higher education. It is shown that social welfare can sometimes be increased by supplementing linear income taxes with a subsidy to material investment in higher education, but that social welfare can never be increased by supplementing a non‐linear income tax with such a subsidy.     

A note on public debt, tax-exempt bonds, and Ponzi games

By issuing tax-exempt bonds, the government can incur debt and never pay back any principal or interest, even if the economy without public debt evolves on a dynamically efficient growth path. The welfare effects of such a Ponzi type borrowing scheme are mixed. The current young will unambiguously benefit. Depending on preferences and the aggregate technology, a finite number of subsequent generations may also benefit. However, the welfare of all generations thereafter will be lower than in the economy without public debt.     

Brand portfolio, corporate image, and reputation: Managing brand deletions

Brand portfolio management addresses, among other issues, the interrelated questions of what brands to add, retain, or delete. A small number of brands in a firm’s brand portfolio can often have a disproportionately large positive or negative impact on its image and reputation and the responses of stakeholders. Brand deletions can be critical from the standpoint of a firm being able to free up resources to redeploy toward enhancing the competitive standing and financial performance of brands in its portfolio with the greatest potential to positively affect its image and reputation. Against this backdrop, the authors focus on the organizational and environmental drivers of brand deletion propensity, the predisposition of a firm to delete a particular brand from its brand portfolio. The authors propose a conceptual model delineating the drivers of brand deletion propensity and suggest directions for future research, including the related concept of brand deletion intensity. Rajan Varadarajan (varadarajan@tamu.edu) is Distinguished Professor of Marketing and holder of the Ford Chair in Marketing and E-Commerce in the Mays Business School at Texas A&M University. His primary teaching and research interest is in the area of strategy. His research on strategy has been published in theJournal of Marketing, the Journal of the Academy of Marketing Science, theAcademy of Management Journal, theStrategic Management Journal, and other journals. Rajan served as editor of theJournal of Marketing from 1993 to 1996 and theJournal of the Academy of Marketing Science from 2000 to 2003. He currently serves on the editorial review boards of theJournal of Marketing, theJournal of the Academy of Marketing Science, theJournal of International Marketing, theJournal of Interactive Marketing and other journals. He is a recipient of a number of honors and awards, including the Academy of Marketing Science Distinguished Marketing Educator Award (2003), the American Marketing Association Mahajan Award for Career Contributions to Marketing Strategy (2003), and the Texas A&M University Distinguished Achievement Award in Research (1994). Mark P. DeFanti (mdefanti@tamu.edu) is a doctoral student in marketing at Texas A&M University. He received his M.B.A. from The University of Texas at Austin and his B.A. from Amherst College. His current research interests include brand portfolio management, corporate name changes, and business-to-business branding. His teaching interests include advertising, brand management, and marketing strategy. Paul S. Busch (p-busch@tamu.edu) is a professor of marketing in the Mays Business School at Texas A&M University. He received his Ph.D. from Pennsylvania State University. His research has been published in theJournal of Marketing, theJournal of Marketing Research, Decision Sciences, theJournal of Business Research, andBusiness Horizons. He serves on the editorial review boards of theJournal of Business-to-Business Marketing, theAsian Journal of Marketing, andMarketing Management. His research interests include buyer-seller relationships, business-to-business branding, and brand portfolio management. His teaching interests include promotional strategy and new product development.     

Was treibt staatliche Umverteilung?

This paper investigates the major drivers of governmental redistribution. Extended and harmonised data on effective redistribution recently provided by the newest version of the Standardized World Income Inequality Database allows for the assessment of the origins of governmental redistribution for a broad sample of countries. Our findings confirm the Meltzer-Richard hypothesis, pointing to a robust positive relationship between market inequality and redistribution. We show that perceptions of inequality are often biased and that the redistribution-enhancing effect of gross inequality is even stronger when individuals are aware of national income disparities. The results also suggest that top income shares tend to impede redistributive policies.