Book Reviews

Mari Pangestu, Economic Reform, Deregulation, and Privatization: The Indonesian Experience, Centre for Strategic and International Studies, Jakarta, 1996, pp. vi + 192. Rp 15,000.

Colin Barlow and Joan Hardjono (eds), Indonesia Assessment 1995: Development in Eastern Indonesia, Research School of Pacific and Asian Studies, ANU, Canberra, and Institute of Southeast Asian Studies, Singapore, 1996, pp, xxx + 287. S$29.90; US$25.00; A$25.00.

Kosuke Mizuno, Rural Industrialization in Indonesia: A Case Study of Community-Based Weaving Industry in West Java, IDE Occasional Paper Series no 31, Institute of Developing Economies, Tokyo, 1996, pp. viii + 114.     

Defining cost of quality in the materiel department

The first step in reducing the cost of poor quality is to identify the defects controlled by materiel management. This article discusses the defects the authors have identified and measured in their efforts to reduce quality costs.     

CAN A PERPETUAL INVENTORY CAPITAL STOCK BE USED FOR PRODUCTION FUNCTION PARAMETER ESTIMATION?

Due to lack of data on capital disappearance, we simply do not know the covariance of the capital stock with factor inputs and prices well enough to estimate production function parameters. Since replacement rates are rational economic decisions, the errors in a perpetual inventory capital stock vary systematically with the business cycle and such economic variables as rates of technical progress and interest rates. This introduces systematic errors into calculated parameters of production functions and rates of technical progress.     

An empirical examination of transaction‐ and firm‐level influences on the vertical boundaries of the firm

A large literature has successfully employed transaction cost economic theory to describe how exchange conditions affect the optimal form of organization. However, this approach has historically not accounted for the influence of firm‐specific attributes on the governance decision. This paper develops a model based on insights from transaction cost economics, the resource‐based view, and real options theory to examine how transaction‐level characteristics, firm‐specific capabilities, and product‐market scope influence the governance of production. Empirical evidence derived from analysis of 469 make‐or‐buy decisions involving 117 semiconductor firms indicates that decisions regarding the governance of production activities are strongly influenced by both transaction‐ and firm‐level effects. Copyright © 2003 John Wiley & Sons, Ltd.     

UK External Imbalances and the Sterling: Are they on a Sustainable Path?

An updated version of Krugman’s 1993 MMF framework is used to consider the implications of buoyant domestic demand for the real exchange rate and debt dynamics. The updating includes a Taylor rule for monetary policy and explicit treatment of external assets and liabilities. In response to an exogenous rise in the aggregate demand, short-run appreciation of the real exchange rate is followed by a prolonged decline as external debt accumulates and net wealth deteriorates. Whether in equilibrium the real exchange rate is stronger or weaker depends crucially on a comparison of real interest rates and the growth rate. If the domestic growth rate is higher than global real interest rates, the currency may strengthen in the long run despite the deterioration of net external assets. To see whether the strength of sterling is sustainable, the analysis is briefly calibrated to UK data over the last decade. Blanchard et al. (The US current account and the dollar. CEPR DP no 4888, 2005) suggest that international liabilities to be treated as imperfect substitutes: so we check to see how this would affect our results.

Unemployment rate hysteresis and the great recession: exploring the metropolitan evidence

Standard unit-root tests of the hysteresis hypothesis specify a unit root under the null against the stationary alternative of the natural-rate hypothesis,     

Voter ID Laws and Voter Turnout

Atlantic Economic Journal - In recent years, many states have enacted laws imposing strict identification requirements for voting. Proponents contend such laws are necessary to prevent voter fraud...     

Evidence of psychological barriers in the conditional moments of major world stock indices

This study investigates the existence of psychological barriers in the Dow Jones Industrial Average, the S&;P 500, and six foreign stock indices. It is believed by many in the investment community that index levels that are multiples of 100 serve as barriers, and that markets may resist crossing these barriers. Although return dynamics in the neighborhood of barrier points are not identical for all series studied, we find aberrations in the conditional means and variances consistent with psychological barriers. In five of the eight indices studied, conditional mean returns are significantly higher after crossing a barrier as part of an upward move, while only two series exhibit significant mean effects after crossing a barrier as part of a downward move. In seven of the eight series studied, we find significant conditional variance effects coincident with a barrier crossing. In addition, most series exhibit evidence of autoregressive conditional heteroskedastic (ARCH), generalized ARCH (GARCH), and leverage effects.