THE TRANSFORMATION PROBLEM

Abstract. The history of the Marxian Transformation Problem is surveyed from 1885 to the present. Particular emphasis is placed on the less well-known literature and the focus is on problems of interpretation rather than on technicalities. A substantial bibliography is provided.     

Do Short Sellers Target Firms with Poor Earnings Quality? Evidence from Earnings Restatements

We study the behavior of short sellers around earnings restatements. We find that short sellers accumulate positions in restating firms several months in advance of the restatement and subsequently unwind these positions after the drop in share price induced by the restatement. The increase in short interest is larger for firms with high levels of accruals prior to restatement. We document that heavily shorted firms experience poor subsequent performance and a higher rate of delisting. Overall, these results suggest that the motive for short selling is, at least in part, related to suspect financial reporting and that short sellers pay attention to information being conveyed by accruals.

Macroeconomic Fragility and Exchange Rate Vulnerability: A Cautionary Record of Transition Economies

The interaction between the exchange rate regime and macroeconomic stabilization in several transition economies during 1990–1996 was influenced by the persistence of high inflation rates and the initial disequilibrium between the highly undervalued nominal exchange rates in relation to their purchasing power parity estimates. Policymakers generally adopted the flexible (nominal) exchange rate regimes for manipulating real exchange rates with a view to correcting the exchange rate disequilibrium and conveying inflation control signals. The rates of real appreciation were higher in the earlier years of high inflation rates. By 1996, lower inflation rates required less currency appreciations thereby reducing the negative impact of the latter on trade competitiveness. However, the persistence of unwarranted interest rate differentials, a consequence of the domination of monetary control over prudent fiscal management, and the associated inflows of foreign funds put an upward pressure on exchange rates exacerbating trade competitiveness. The transition record suggests that innovative exchange rate arrangements can provide only a brief interval during which sound fiscal discipline needs to be put in place for controlling inflation.J. Comp. Econom.,December 1998, 26(4), pp. 621–641. Columbia University, New York, New York 10027.     

Experiments on strategic choices and markets

Much of experimental research in marketing has focused on individual choices. Yet in many contexts, the outcomes of one’s choices depend on the choices of others. Furthermore, the results obtained in individual decision making context may not be applicable to these strategic choices. In this paper, we discuss three avenues for further advancing our understanding of strategic choices. First, there is a need to develop theories about how people learn to play strategic games. Second, there is an opportunity to enrich standard economic models of strategic behavior by allowing for different types of bounded rationality and by relaxing assumptions about utility formulation. These new models can help us to more accurately predict strategic choices. Finally, future research can improve marketing practice by designing better mechanisms and validating them using experiments.     

Consumer perceptions of product variants positioned on atypical attributes

How do consumers perceive new product variants that are positioned on atypical attributes? The authors investigate the joint effects of three factors? brand familiarity, retail shelf display, and consumer goal orientation. The study focuses on snack foods positioned on the atypical attribute of low fat. There are three main findings. First, although high (vs. low) brand familiarity causes relatively unfavorable perceptions on the positioning attribute, it also creates sufficiently favorable perceptions on another determinant attribute, product taste, resulting in a net positive effect for brand equity on purchase likelihood. Second, goal-based versus taxonomic shelf display (i.e., placement with health foods vs. regular snack foods) results in relatively negative perceptions on the positioning attribute, yet more favorable buying intentions. Finally, more (vs. less) health-oriented consumers rate such product variants less favorably on fat content but more favorably on product taste; the former segment is also more likely to buy such product variants.     

Population and Poverty in Africa

This paper sets out the position in Sub-Saharan Africa [SSA] regarding poverty and population. Africa has as much danger of starvation and depopulation [due to Aids] as of over population. The paper sets out a model of poverty based on the twin concepts of capabilities and entitlements. This is micro level approach and points to the importance of health and education as well as physical assets in analysing poverty. Issues of gender are always kept central. Income, access to public goods, physical assets and human capital are the four determinants of the status of any individual visavis poverty. In terms of access to public goods the paper develops a new measure of poverty based on daily calorie supply, access to clean water and access to health care. It would seem that nearly 90% of the population in 25 SSA countries or as many as 350 million can be counted as poor. Poverty is influenced by population most significantly if the household cannot afford education and health for its children. Other effects of population on poverty are thought to be transient. Poverty affects population by the complex interaction of the desire for children as insurance but an inability to ensure their survival. Population problems are most acute in societies which are developing enough to cut death rates drastically but not yet adjusted to lower infant mortality to modify their child bearing behaviour. Policy issues are discussed in the last section which highlights once again the central importance of education, health and land reforms.