Growth cycles and inflation in a model of the class struggle

The problems of price and wage inflation and unemployment are discussed here in a context of a model of class struggle developed by R. M. Goodwin. The basic Goodwin model which is an analog of the Volterra-Lotka preypredator model is extended to include actual and anticipated price inflation and excess capacity. Cyclical behavior of labor's share in national income and the employment ratio is studied around a Harrodian steady state. It is found that the presence of money illusion with respect to the actual rate of inflation in the wage bargaining equation is a stabilizing influence. With respect to anticipated inflation, local stability of equilibrium is no longer assured. The implications of this for Phillips curve analysis are also derived.     

ASPECTS OF COMMUNITY PARTICIPATION WITHIN LOW-INCOME HOUSING

This paper deals with the meaning and scope of community participation, the potential benefits for actors involved, practical obstacles, the shared responsibilities and related questions. It tries to explore the nature of participation in many contexts and attempts to analyze the concepts of "influence" and "power" in community participation. Various appropriate questions are asked, and a number of answers offered.     

The demand for tax haven operations

What types of firms establish tax haven operations, and what purposes do these operations serve? Analysis of affiliate-level data for American firms indicates that larger, more international firms, and those with extensive intrafirm trade and high R and D intensities, are the most likely to use tax havens. Tax haven operations facilitate tax avoidance both by permitting firms to allocate taxable income away from high-tax jurisdictions and by reducing the burden of home country taxation of foreign income. The evidence suggests that the primary use of affiliates in larger tax haven countries is to reallocate taxable income, whereas the primary use of affiliates in smaller tax haven countries is to facilitate deferral of U.S. taxation of foreign income. Firms with sizeable foreign operations benefit the most from using tax havens, an effect that can be evaluated by using foreign economic growth rates as instruments for firm-level growth of foreign investment outside of tax havens. One percent greater sales and investment growth in nearby non-haven countries is associated with a 1.5 to 2% greater likelihood of establishing a tax haven operation.     

Data envelopment analysis with stochastic variations in data

The mathematical programming-based technique data envelopment analysis (DEA) has often treated data as being deterministic. In response to the criticism that in most applications there is error and random noise in the data, a number of mathematically elegant solutions to incorporating stochastic variations in data have been proposed. In this paper, we propose a chance-constrained formulation of DEA that allows random variations in the data. We study properties of the ensuing efficiency measure using a small sample in which multiple inputs and a single output are correlated, and are the result of a stochastic process. We replicate the analysis using Monte Carlo simulations and conclude that using simulations provides a more flexible and computationally less cumbersome approach to studying the effects of noise in the data. We suggest that, in keeping with the tradition of DEA, the simulation approach allows users to explicitly consider different data generating processes and allows for greater flexibility in implementing DEA under stochastic variations in data.     

Capital structure with risky foreign investment

Firms facing significant business risks have incentives to mitigate the costs of these risks by adjusting their capital structures. This paper investigates this link by analyzing the exposures of multinational firms to political risk. The evidence indicates that returns on investment in politically risky countries are more volatile than returns elsewhere. Multinational firms reduce their leverage in response to these political risks: a one standard deviation increase in foreign political risk is associated with 3.5% reduced leverage. The effect of foreign political risks on leverage is most pronounced for firms in industries whose returns are most susceptible to political influence.     

Market reactions to export subsidies

This paper analyzes the economic impact of export subsidies by investigating stock price reactions to a critical event in 1997. On November 18, 1997, the European Union announced its intention to file a complaint before the World Trade Organization (WTO), arguing that the United States provided American exporters illegal subsidies by permitting them to use Foreign Sales Corporations to exempt a fraction of export profits from taxation. Share prices of American exporters fell sharply on this news, and its implication that the WTO might force the United States to eliminate the subsidy, which happened in 2004. The share price declines were largest for exporters with high profit margins and those whose tax situations made the threatened export subsidy particularly valuable. This evidence suggests that export subsidies do not merely benefit foreign consumers, but also improve the profitability of exporters, particularly those earning rents in imperfectly competitive markets.     

Cost-minimization comparison of darunavir plus ritonavir and lopinavir/ritonavir in HIV-1 infected treatment-naïve women of childbearing age

Background:

Guidelines from the Department of Health and Human Services in the US recommend ritonavir-boosted lopinavir (LPV/r) as a preferred protease inhibitor (PI) for HIV-positive antiretroviral-na?ve pregnant women. These guidelines also cite ritonavir-boosted darunavir (DRV?+?RTV) as an alternative PI in this clinical scenario. The purpose of this analysis was to compare economic outcomes for regimens based on these two treatments.

Study design:

An existing discrete event simulation (DES) model was adapted to conduct a cost-minimization analysis comparing the two regimens in HIV-infected women of childbearing age (WOCBA), from the perspective of a healthcare payer in the US.

Methods:

The DES model was used to represent disease states, health events, healthcare encounters, pregnancy, and treatment choices in HIV-infected WOCBA starting treatment with regimens based on either LPV/r or DRV?+?RTV. It also incorporated parameters for individual patient characteristics, and for antiretroviral (ARV) treatment effectiveness, treatment sequencing, clinical progression, and resource use. Potential events included scheduled physician visits; viral suppression; viral rebound; AIDS-related complications; CHD events; treatment discontinuation and switching; ARV treatment side-effects (SE); and death. The primary outcomes were discounted 5-year and 10-year healthcare costs. Alternative scenarios considered different rates of switching from DRV?+?RTV to LPV/r upon conception.

Results:

Compared with DRV?+?RTV, LPV/r was associated with similar clinical outcomes while offering savings at the 5- and 10-year horizons (of $24,904 and $43,502 per patient, respectively), and in extensive sensitivity analyses. The main driver of the savings was the difference in cost between PIs.

Conclusions:

Starting HIV-infected ARV-treatment-na?ve WOCBA on an LPV/r-based regimen is cost-saving and provides similar patient outcomes compared to a DRV?+?RTV-based regimen.     

On the acquisition of equity carve-outs

We examine the role played by the parent’s motive in undertaking a carve-out; the parent’s post-IPO influence over the carved-out subsidiary; and anti-takeover provisions and industry structure of a carve-out on its acquisition likelihood and its acquisition premium. We find that the probability and hazard of a carve-out acquisition increase when the parent’s objective is to unlock the value of a subsidiary and when the parent and the subsidiary are tied with a product-market relationship. We also find that the post-IPO parent ownership significantly affects the acquisition likelihood and the level of acquisition premium. Additional analyses examining the post-IPO carve-out status suggest that the product-market relationship and post-IPO parent ownership increase the probability of re-acquisition.     

Capital Controls, Liberalizations, and Foreign Direct Investment

This article evaluates the impact of capital controls and theirliberalization on the activities of US multinational firms.These firms attempt to circumvent capital controls by reducingreported local profitability and increasing the frequency ofdividend repatriations. As a result, the reported profit impactof local capital controls is comparable with the effect of 27%higher corporate tax rates, and affiliates located in countriesimposing capital controls are 9.8% more likely than other affiliatesto remit dividends to parent companies. Multinational affiliateslocated in countries with capital controls face 5.25% higherinterest rates on local borrowing than do affiliates of thesame parent borrowing locally in countries without capital controls.Capital control liberalizations are associated with significantincreases in multinational activity—property, plant, andequipment grow at 6.9% faster annual rates following liberalizations.The combination of the costliness of avoidance and higher interestrates discourages investment in countries with capital controls,and this effect is reversed upon liberalization of controls.(JEL F21, F23, F36, F42, G15, G32, G34)