Cost structure and technical change in rural banking

Using the multi-product translog cost function, this paper examines the cost structure and technical change occurring within the novel Ghanaian rural banks. The results of the seemingly unrelated error components model indicate substantial unexploited economies of scale in individual products as well as in overall intermediation. There is presence of pairwise complementarity between loans and government securities and between deposits and government securities, but absence of pairwise complementarity between loans and deposits. Overall, capital-using and labour-saving technical change has occurred but efficiency loss in deposit mobilization outweighs the efficiency gains in government securities and lending activities; operation of agencies reinforces the overall efficiency loss. The rural banks must not be hindered from expanding, but in any growth strategy deposit mobilization should take a central position and the cost of operating agencies watched closely.     

A Case Study and Field Evaluation of EDP-XPERT

This paper reports on the continued evaluation of EDP-XPERT, and expert system for assisting Computer Audit Specialists (CASs) in evaluating the reliability of EDP controls in advanced computer environments. The current evaluation of the system involved four phases. First, Senior CASs used the system on two case studies. Second, it was then used by the Senior CASs to evaluate recently completed audits. Third, a sensitivity analysis of the system's output was conducted. Fourth, the knowledge base was reprogrammed into another expert system shell and the Senior CASs' responses on the two cases and the audits were re-run. The results indicated that EDP-XPERT performed well on the case studies but that performance declined on the audits. The sensitivity analysis showed that EDP-XPERT's conclusions were affected by moderate perturbations of the CASs' input judgments. Finally, reprogramming the knowledge base into a more flexible expert system shell substantially improved the performance of the system's judgements.     

Problem- and emotion-focused coping dimensions and sales presentation effectiveness

The ability to cope effectively with job-related stress may be important if salespeople are to perform effectively. Therefore, the specific nature of the coping tactics used by salespeople to deal with job-related stress and the use of certain coping strategies associated with sales presentation effectiveness of salespeople were investigated. Data provided by salespeople from three organizations were used to assess the degree to which specific coping strategies were related to sales presentation effectiveness. Before entering academe, Dr. Strutton was in sales with the Tenneco Corporation and was president of a retailing firm in North Carolina. His research has been published in theJournal of the Academy of Marketing Science, Journal of Advertising Research, Journal of Business Research, Journal of Macromarketing, andJournal of Personal Selling & Sales Management, among other scholarly journals. Dr. Strutton’s current research interests include issues relating to sales and channels management. He has a B.S. in chemistry and an M.B.A. in management and received his Ph.D. in marketing from the University of Arkansas. Before entering academe, Dr. Lumpkin worked in marketing research for Phillips Petroleum Company. His primary research interests include retail patronage theory, market segmentation, and research methodology, with recent research focused on the elderly consumer. His research has been published in theJournal of the Academy of Marketing Science, Journal of Retailing, Journal of Business Research, The Gerontologist, Journal of Advertising, Journal of Advertising Research, and other scholarly journals.     

INTERNATIONAL WELFARE AND EMPLOYMENT LINKAGES ARISING FROM MINIMUM WAGES*

We formulate a two‐country model with monopolistic competition and heterogeneous firms to reconsider labor market linkages in open economies. Labor market imperfections arise by virtue of country‐specific real minimum wages. Abstracting from selection of just the best firms into export status, standard effects on marginal and average firm productivity are reversed in our model, yet there are significant gains from trade arising from employment expansion. In addition, we show that with firm heterogeneity an increase in one country’s minimum wage triggers firm exit in both countries and thus harms workers at home and abroad.     

Behavioral economics: implications for regulatory behavior

Behavioral economics (BE) examines the implications for decision-making when actors suffer from biases documented in the psychological literature. This article considers how such biases affect regulatory decisions. The article posits a simple model of a regulator who serves as an agent to a political overseer. The regulator chooses a policy that accounts for the rewards she receives from the political overseer—whose optimal policy is assumed to maximize short-run outputs that garner political support, rather than long-term welfare outcomes—and the weight the regulator puts on the optimal long run policy. Flawed heuristics and myopia are likely to lead regulators to adopt policies closer to the preferences of political overseers than they would otherwise. The incentive structure for regulators is likely to reward those who adopt politically expedient policies, either intentionally (due to a desire to please the political overseer) or accidentally (due to bounded rationality). The article urges that careful thought be given to calls for greater state intervention, especially when those calls seek to correct firm biases. The article proposes measures that focus rewards to regulators on outcomes rather than outputs as a way to help ameliorate regulatory biases.     

Ecosystem Service Value and Agricultural Conversion in the Amazon: Implications for Policy Intervention

We explore the welfare implications of agricultural expansion in the Brazilian Amazon by comparing spatially explicit estimates of soybean rents and the value of ecosystem services. Although these estimates are generated from different datasets, models, and estimation techniques, the values are comparable, such that the value of ecosystem services is greater than soybean rents for about 61% of the total area and 24% of the area where soybean rents are positive if protected areas are well enforced. Based on the balance between the benefits and costs of conversion, failure to value ecosystem services reduces total social welfare by 7.13 billion dollars annually relative to an optimum. Policy instruments that internalize the value of ecosystem services via protected lands, land conversion taxes, conservation subsidies, or excise taxes can avoid much of this loss. Regardless of intervention regime, policy makers should be cognizant of the diminishing net benefits of converting natural ecosystems to agriculture. Realizing the final 3.8% requires the conversion of an additional 15% natural ecosystems to soybean production.     

Species Invasion as Catastrophe: The Case of the Brown Tree Snake

This paper develops a two-stage model for the optimal management of a potential invasive species. The arrival of an invasive species is modeled as an irreversible event with an uncertain arrival time. The model is solved in two stages, beginning with the post-invasion stage. Once the arrival occurs, the optimal path of species removal is that which minimizes the present value of damage and removal costs plus the expected present value of prevention costs. An expenditure-dependent, conditional hazard rate describing species arrival is developed based on discussions with natural resource managers. We solve for the optimal sequence of prevention expenditures, given the minimum invasion penalty as just described. For the case of the Brown Tree Snake potentially invading Hawaii, we find that pre-invasion expenditures on prevention are inverse U-shaped in the hazard rate. Efficient prevention should be approximately $2.9?million today and held constant until invasion. Once invasion occurs, optimal prevention requires $3.1?million annually and $1.6?million per year on species removal to keep the population at its steady state level, due to high search costs at very small population levels.