The Role of Present Value-based Measurement in General Purpose Financial Reporting

Accounting theorists have advocated different measures of the elements of general purpose financial reports. Australian accounting standards currently permit those elements to be measured in a number of ways. At present there is no Australian concepts statement dealing with the topic of measurement. This article examines the proposition that present value-based measurement ought to be, in the context of the Australian conceptual framework, adopted as the "prefewed" conceptual basis of measurement.     

UNDERSTANDING THE WORLD WOOL MARKET: TRADE,PRODUCTIVITY AND GROWERS’ INCOMES*

Applying recent estimates of total factor productivity (TFP) growth on Australian sheep farms, we analyse the long‐run effects of TFP growth on the world wool market using a detailed model of the world wool market that treats raw wool, wool textiles and wool garments as heterogeneous commodities. The model divides the world wool market into nine regions and eight major industrial sectors capturing the extreme nature of the multistage production system through which wool passes. We find that regional sheep producer's welfare responds by between ‐0.9 per cent and 0.7 per cent assuming conservative TFP growth over the period 1995/96–2003/04. Sensitivity analysis shows the welfare effects to be robust with respect to all model parameters, but sensitive to the size of the TFP growth and the degree of TFP spill‐over. Our realistic representation of the multistage nature of the wool production system shows that wool inputs steadily decline in importance in moving from early‐ to late‐stage processing. This production structure indicates that the productivity of sheep farmers has little effect on the prices of and demand for wool garments. In contrast, trade in wool inputs is very responsive to the productivity of sheep farmers.     

Measurement and the Australian Conceptual Framework

The nature of accounting dictates that it be concerned with the process of "measurement". However, only in recent decades has debate about the concept of measurement appeared in accounting literature. This article identifies problem areas and pitfalls that need to be addressed, and contributes to the debate about measurement. It examines the importance of "measurement" to accounting, definitions of the term and what measurement involves. This leads to the consideration of statements and inferences that can be made about the outputs of the measurement process, and to proposed guidelines for the development and assessment of a conceptual framework document.     

Worker Participation—Some Under‐Considered Issues

This paper deals with a variety of issues regarding participation that may have received too little attention or that may be viewed from a different perspective. These include the sometimes faddist interest in the topic, participation as a form of bargaining, and alternate research strategies. It also reports on the current status of several once‐publicized participation sites.     

What Works at Work: Overview and Assessment

This article discusses why it is difficult to measure the effects of management practices on organizational performance. In spite of these difficulties, a collage of evidence suggests that innovative workplace practices can increase performance, primarily through the use of systems of related practices that enhance worker participation, make work design less rigid, and decentralize managerial tasks. A majority of U.S. businesses have adopted some innovative work practices. However, only a small percentage of businesses have adopted a full system of innovative practices. We outline several constraints on the diffusion of new work practices, and suggest directions for future research     

The Social Opportunity Cost of Foreign Exchange: A Partial Defence of Harberger et al.*

This paper clarifies the literature on shadow pricing foreign exchange by distinguishing between two different concepts of ‘the social opportunity cost’ of foreign exchange: (a) the increase in utility (divided by the marginal utility of income) due to the availability of an extra dollar of foreign aid receipts; and (b) the maximum amount of some numeraire good which can be used up by the public sector to produce an extra dollar of foreign exchange, without reducing welfare. Both these concepts can be measured by appropriate, but different, versions of the traditional ‘Harberger’ formula The difference disappears entirely under the assumptions which justify partial equilibrium analysis. All these points can be clarified using a single diagram     

ASSESSING THE VALUE OF ECONOMICS RESEARCH: THE CASE OF THE BIAS IN THE CONSUMER PRICE INDEX

Economists provide sometimes contradictory information about economic systems that contribute to policy design. How does one value this type of knowledge? A political‐economic game is presented that allows for reinforcing and contradictory research messages. Policy makers are assumed to follow a Bayesian decision theory process and the model is tested with quantitative estimates of the value of research on the degree of bias in the Consumer Price Index. Most economists agree that a bias exists, but published estimates vary widely. A blue‐ribbon panel of economists recommended revisions to how the index is calculated, and the Bureau of Labor Statistics subsequently made revisions that differed from their original plans, but how much influence did the panel really have on the revisions? (JEL Z00)     

Piecemeal Multilateral Environmental Policy Reforms under Asymmetric Oligopoly

We develop a general two‐country model with oligopolistic interdependence in which a fixed number of firms make their output and emission decisions simultaneously. We examine the effect of multilateral reforms of emission taxes on global emission levels. With sufficient asymmetry in pollution intensities between the two countries, a proportional multilateral increase in emission tax rates can increase global emission levels. However, a multilateral equal increase of emission tax rates unambiguously reduces global emission levels. We also consider the case of free entry and exit of firms, and find a rule of multilateral reforms which unambiguously lowers total emission levels.     

Deposit Insurance and the Discount Window: Pricing under Asymmetric Information

The risk-sensitive pricing of deposit insurance and the discount window is determined in an environment where banks have private information concerning their financial conditions. The two facilities are managed jointly; an incentive-compatible policy is designed such that banks' choice of terms at which they can obtain insurance and access to discount window credit will reveal their asset quality. The function of the discount window is to be a risk-neutral “lender of last resort” to banks in a market dominated by risk-averse depositors.