The implementation of SNB monetary policy

We use a regime-switching approach to model the implementation of SNB monetary policy. The regime-switching technique is crucial for assessing the flexibility inherent in the SNB’s monetary policy strategy. The empirical findings support the idea that repo operations are instrumental in smoothing the implementation of monetary policy in normal times, while changes in the official operational target, accompanied by the accommodating use of repo operations, produce the intended effects in periods of distress. Another significant contribution also comes from some new measures designed to improve liquidity in the Swiss franc money market during the financial crisis of 2007–2008.     

Environmental awakening in the Swedish pulp and paper industry: pollution resistance and firm responses in the Early 20th century

The purpose of this article is to analyse in what way a conflict in the early 20th century (1904–1911) over a Swedish pulp mill's emissions into air and water impacted on the technology choices and strategies of the mill. The article also analyses what characterized the company's other responses to the complaints, in the form of counter‐arguments, as well as engagement of experts. The access to information about the deliberations at the mill's board meetings is very rare in historical studies of company behaviour in relation to the environment, and provides us with a unique opportunity to comprehend in what way business strategies were developed during the course of the conflict. Technology choices are often characterized by the search for knowledge that enables a company to employ existing but not yet developed technical potentials, rather than choices between known technical solutions. We emphasize that this is particularly evident in a case where a company is forced to alter its technology in order to solve previously unknown environmental problems. In spite of a persistent search, the mill did not find any ready‐made technological solutions to the environmental problems faced and was therefore forced to engage scientific expertise and even initiate basic scientific research. In 1911, the Swedish Supreme Administrative Court ordered the mill to undertake a number of pollution abatement investments. Interestingly – and partly in line with the so‐called Porter hypothesis – the long‐run economics of these investments turned out to be more favourable than anticipated prior to the verdict. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training

While foreign-owned firms have consistently been found to pay higher wages than domestic firms to what appear to be equally productive workers, the causes of this remain unresolved. In a two-period bargaining framework we show that if training is more productive and specific in foreign firms, foreign firm workers will have a steeper wage profile and thus acquire a premium over time. Using a rich employer-employee matched data set we verify that the foreign wage premium is only acquired by workers over time spent in the firm and only by those that receive on-the-job training, thus providing empirical support for a firm-specific human capital acquisition explanation. JEL no. F23, J24     

Survival and efficiency curves for capital and the time-age-profile of vintage prices

The decline in the service flow from a stock of capital goods with age, due to the physical retirement of capital units and to the gradual loss of efficiency of each unit remaining, can be described by survival curves and efficiency curves. The paper reconsiders the relationship between these curves and the vintage prices of capital under neo-classical assumptions about perfect second hand markets and malleability, using duality between quantites and prices. Three examples with parametric survival and efficiency curves are presented. Concavity of the survival and efficiency curves may be compatible with convexity of the age-price profile. This approach is contrasted with the frequently cited Hulten-Wykoff approach. Empirical illustrations, focusing on the cenvexity/concavity issue, are given.     

Towards Sustainability Economics: Principles and Values

Synopsis  Radical alternatives, in terms of our ideas about science in society, about economics, ideology and institutional arrangements, should be included among possibilities considered within the scope of a pluralistic philosophy. While all these aspects of our mental maps are interrelated and important, economics plays a key role in attempts to get closer to a sustainable society. Mainstream neoclassical economics is not enough. The tendency to exclusively rely on this particular theory is considered part of the problems faced. A ‘sustainability economics’ more in line with dominant ideas of democracy is proposed, emphasizing the ethical, ideological and political elements. Reference is made to institutional theory but the principles and concepts suggested are in many ways similar to other kinds of heterodox economics and developments in other social sciences. Neoclassical economics is used as a point of reference in pointing to alternative ideas about human beings, organizations, markets, decision- making, efficiency, rationality, progress in society and institutional change processes. Predilection for such an alternative conceptual framework (or for neoclassical economics) is not exclusively a scientific choice but as much a matter of political and ideological preferences. One paradigm may be dominant at a time, but because of the ideological specificity of each paradigm, competing theoretical perspectives should be accepted and even encouraged in a democratic society.      

Convexity theory for the term structure equation

We study the convexity and model parameter monotonicity properties for prices of bonds and bond options when the short rate is modeled by a diffusion process. We provide sharp conditions on the model parameters under which the convexity of the price in the short rate is guaranteed. Under these conditions, the price is decreasing in the drift and increasing in the volatility of the short rate. We also study the convexity properties of the logarithm of the price and find simple conditions on the coefficients that guarantee that the price is log-convex or log-concave.      

Environmental Regulations and Plant Exit

A qualitative response model is applied to study the relationship between environmental regulations and plant exit. The data set is Norwegian panel data for establishments in three manufacturing sectors that have high shares of units which have been under strict environmental regulations. In two of the sectors, the estimated exit probability of regulated establishments is, ceteris paribus, only one third of the exit probability of non-regulated establishments. We also find that the probability to change regulation status from being non-regulated to become regulated depends significantly on economic factors. In particular, establishments with weak profitability had the highest probability to come under environmental regulation.     

Sollten Marketing und Vertrieb prozessorientiert geführt werden?

In vielen Unternehmen stellt die Marketing- und Vertriebsorganisation eine permanente Baustelle dar. Problematisch ist v.a. die Ausrichtung der zahlreichen Teilfunktionen mit Marketing- und Vertriebsaufgaben auf die Bedürfnisse des Kunden. Zunehmend setzen Unternehmen Techniken des Prozessmanagements ein, um Kundenorientierung sicherzustellen. Dieser Beitrag geht auf die Hintergründe ein. Er liefert zudem empirische Ergebnisse zur derzeitigen Prozessorientierung deutscher Unternehmen in Marketing und Vertrieb, die auf positive Effektivit?ts- und Effizienzwirkungen eines prozessorientierten Marketing hindeuten.     

Ein neuer Zugang zum Konzept des Discounted Cashflow

A lot of papers have been published about the concept of discounted cash flow or DCF. In this paper we will summarize the recent development and review the main results. After showing the main weaknesses of the concept we will make a sketch of some promising ideas that can form the basis to overcome these weaknesses.