‘Modern’ Phillips curves and the implications for the statistical process of inflation

‘Modern’ theories of the Phillips curve imply that inflation is an integrated, or near integrated’ process. This article explains this implication and why these ‘modern’ theories are logically inconsistent with what is commonly known about the statistical process of inflation.     

Use of rules in decision-making in government outsourcing

The paper reports research on the nature of use of rules in decision making process by government entities in outsourcing commercial activities. The study used multiple data sources such as in-depth personal interviews of multiple categories of respondents, documentary evidence, and observation. The findings indicated that Government organizations use un-written ground rules as the main means of managing outsourcing processes.     

ON MATTERS METHODOLOGICAL IN ECONOMICS

Books reviewed in this article: Lawrence A. Boland (1989) The Methodology of Economic Model Building: Methodology after Samuelson. J. C. Glass and W. Johnson (1989) Economics: Progression, Stagnation or Degeneration? Arjo Klamer, Donald N. McCloskey and Robert M. Solow (eds.) (1989) The Consequences of Economic Rhetoric. Brian J. Loasby (1989) The Mind and Method of the Economist: A Critical Appraisal of Major Economists in the 20th Century. John Pheby (1988) Methodology and Economics: A Critical Introduction.     

The London Business School with Gower Publishing

The theory of employment is reasonably well understood. Producers are confronted with a given level of aggregate demand. They decide how much they can profitably produce, and decide on the mix of capital and labour in response to a given set of relative prices. Over most of the post-war period variations in employment were accounted for mainly by variations in aggregate demand, but that situation changed dramatically during the 1970s. As unemployment has mounted, so has the interest in so-called supply-side explanations of the problem, since it has become obvious that an increase in employment on the scale required can hardly come from a demand stimulus alone. In our account of the 1980 recession, we tended to focus on profitability as a key element in the decision to supply. If the price of goods is too low relative to the price of the factors of production needed to produce them, then the supply of output will fall. In the 1980 recession the price of all the factors of production rose dramatically: real wages shot up following the Clegg awards; real interest rates were at record levels; and the price of energy had recently soared following the OPEC II oil shock. At the same time goods prices were being constrained by the government's counter-inflationary strategy, and most notably by a strong exchange rate. Under these circumstances a substantial proportion of firms, especially in the traded goods sector, found it unprofitable to continue producing. When unprofitable production lines were abandoned, the associated capital equipment was scrapped. These decisions, once taken, were for the most part irreversible even if, as must have happened in some cases, subsequent movements in factor prices would have made production profitable once again. We discussed this phenomenon in the April Forecast Release and showed that, on the assumption that capital-labour ratios had remained at their trend levels, some £25bn of capital equipment (at I980 prices) had been scrapped. The fact that manufacturing output and employment have remained far below their 1979 levels, even though total output at home and abroad is at or well above that level is, we believe, mainly due to this capital scrapping. The jobs in manufacturing will not be re-created - even though UK competitiveness has been restored to pre-1980 levels - until the capital stock is re-built. The scrapping phenomenon is important because it creates a link between employment and too-high real wages (or other factor costs) that is often ignored. In standard production theory a rise in real wages leads to the substitution of capital for labour and employment may fall (if the rive in real wages does not create a more than offsetting increase in aggregate demand). However, production theory is complicated by the fact that capital and labour are complements as well as substitutes. Since a large part of the nation's productive-capacity, once built, uses capital and labour in fixed proportions, a rise in real wages may render part of the existing capital stock uneconomic. High real wages thus destroy capital as well as jobs. In our April Forecast Release, in order to estimate the scale of the scrapping problem, we made the simplifying assumption that capital-labour ratios remained on trend. In practice they vary in line with movements in relative factor prices. In the present Forecast Release we look more closely at the role of factor prices. We find some evidence that changes in relative factor prices affect the capital-labour mix. However, the substitution elasticities are small. The conclusion of this analysis is that the job losses which resulted from too-high factor prices (mainly wages) during the recession cannot be quickly reversed.     

External reviews: What is being done?

Many universities use external reviews (ERs) for tenure and promotion decisions yet little has been written about the practice. Therefore, a questionnaire was sent to a sample of full professors and administrators at all AACSB-accredited schools to learn what was being done, i.e., what reviewers were asked to do for other institutions and what was being done at their own schools. The response rate on the survey was 46.4%. Responses were stratified into three categories; Group 1 (the 30 top publishing schools), Group 2 (other doctoral-granting institutions), and Group 3 (non doctoral-granting schools) according to the ‘different schools with different mission’ hypothesis. Results showed that individuals from Group 1 schools were more likely to be chosen to perform ERs, more likely to be asked to evaluate only the research component of faculty performance, and more likely to be chosen for their area of specialization. The results also showed that Group 1 and Group 2 schools were more likely to require external reviews in promotion and tenure decisions. In addition, there was a relative lack of negative reviews across all of the school-type groups. This study shows that if external reviews are requested, it is highly likely that only positive reviews will be received from the reviewers. Finally, the results indicate that the process may not be functioning as anticipated. Besides the general failure of the evaluators to give negative reviews, the respondents apparently did not feel that they received adequate information on the necessary criteria by which to conduct a review.     

Growth and Risk: Methodology and Micro Evidence

How exposure to risk affects economic growth is a key issuein development. This article quantifies both the ex ante andex post effects of risk using long-running panel data for ruralhouseholds in Zimbabwe. It proposes a simulation-based econometricmethodology to estimate the structural form of a micro modelof household investment decisions under risk. The key findingis that risk substantially reduces growth in this particularsetting: the mean capital stock in the sample is (in expectation)46 percent lower than in the absence of risk. About two-thirdsof the impact of risk is due to the ex ante effect (that is,the behavioral response to risk), which is usually not takeninto account in policy design. These results suggest that policyinterventions that reduce exposure to shocks or that help householdsmanage risk could be much more effective than is commonly thought.     

Professors in the Boardroom and Their Impact on Corporate Governance and Firm Performance

We find that companies with directors from academia are associated with higher performance. This relation is driven by professors without administrative positions. We also find that academic directors play an important governance role through their advising and monitoring functions. Specifically, our results show that the presence of academic directors is associated with greater acquisition performance, a higher number of patents and citations, higher stock price informativeness, lower discretionary accruals, lower chief executive officer (CEO) compensation, and higher CEO forced turnover‐performance sensitivity. Overall, our results indicate that academic directors are valuable advisors and effective monitors and firms benefit from having academic directors.     

The DNA of global leadership competencies

In this article, the author challenges those charged with identifying and developing global leaders to go beyond fads, trends and the "art" of leadership to find the science. An overview of the theories that have influenced our perspectives on leadership is presented first. Assumptions that have been supported by research are then presented indicating virtual DNA structures that may be the source of global leadership competencies. The article also describes two distinct themes represented in global leadership competency. © 2000 John Wiley & Sons, Inc.     

全国电子商业汇票系统的应用与改进建议

由中国人民银行建设并管理的全国电子商业汇票系统（ECDS）的建成运行,标志着我国票据市场迈入电子化时代。ECDS运行一年来,顺利实现了业务全流程办理,商业银行基本确立了电子票据业务处理模式,全国电子票据业务呈现良好发展势头,主要商业银行积极推动电子票据业务开展。但同时,ECDS的推广应用也面临电子票据法规制度尚不完善、电子票据流动性不足和业务发展不均衡等问题,应通过健全法规制度、改进技术手段、加强政策引导等途径,提高电子票据业务的发展水平。