Output-inflation tradeoffs in 34 countries

This article examines the responsiveness of real output to the variability of inflation and aggregate demand. In the manner of Lucas (1973), estimates of the output-inflation tradeoff are computed for a large sample of countries. This measure is then correlated with the variances of the inflation rate and the growth rate in nominal income. Because differences in inflation variance (and hence the tradeoff) are viewed as the outcomes of differences in demand variance, correlations between these two variables are also reported. Cross-time and cross-country results provide a good measure of support for Lucas and the notion that attempts to exploit the tradeoff weaken it.     

Lies,damned lies and statistics: the accuracy of survey responses

That survey research is error prone is not a new idea and different varieties of non-sampling error have been investigated in the literature as well as consideration being given in many statistics textbooks to the issue of sampling error. The paper here considers research upon corporate environmental reporting. It compares information provided by corporate environmental reports with information that survey respondents claim their organization’s environmental report contains. This enables the accuracy of the claims to be assessed. Consideration is given to two different industries the Water industry and the Energy industry. Errors due to inaccurate reporting by survey respondents are shown to be relatively infrequent and respondents appear just about as likely to claim they report information that they do not, in fact, report as to fail to indicate that they report information that is, in fact, actually reported.     

Embodied ethics: Some common concerns of religion and business

De George's understanding of theology is limited to one of five commonly recognized models of theology, the orthodox model. This model is vulnerable to De George's criticisms. When religious ethics operates out of the revisionist model of theology, however, his criticisms lose their sting. Revisionist religious ethics, moreover, can make a fruitful contribution to business ethics. Such a religious ethic acknowledges the embodiment dimension of business activities, it complements philosophical analysis with the practice of moral discernment, and it recognizes irony as an active component in decision-making.John T. Leahy is an Associate Professor of Religious Studies at DePaul University.     

Lord Aldington's Disservice to Wealth Creation

The habitual opposition to the growth of service industries from traditionalists and manufacturing interests is rehearsed in the Aldington Report on Overseas Trade John McEnery (right), former Under-Secretary at the Department of Trade and Industry, and author of IEA Research Monograph Manufacturing Two Nations, condemns outmoded patterns of thought and recalls on the Upper House to abandon its manufacturing myopia     

Debtor-in-possession financing

Several recent papers have documented the benefits of debtor-in-possession (DIP) financing in the restructuring of firms in Chapter 11. However, the view on benefits is not unanimous and some legal scholars have raised doubts about DIP financing's effects on debt-holders and the possibility of expropriative wealth transfers. In this paper we address this issue by analyzing both stock and bond price data for a comprehensive sample of DIP loans and find significant positive abnormal stock and bond returns at the announcement of DIP loans. Also, we do not find evidence of wealth transfers from junior to senior debt-holders. Further, we examine the DIP loan process in detail and we document important institutional features of DIP loans such as maturity, covenants, fees and interest charges. We find evidence of intense monitoring using covenants. We also find higher fees and charges associated with DIP loans. We argue that overall the results are consistent with the information processing role of financial intermediaries.     

Competition, Contractibility, and the Market for Donors to Nonprofits

This article investigates theoretically and empirically theeffects of competition for donors on the behavior of nonprofitorganizations. Theoretically, we consider a situation in whichnonprofit organizations use donations to produce some commodity,but the use of donations is only partially contractible. Themain results of the model indicate that an increase in competition(i) decreases the fraction of donations allocated to perquisiteconsumption and (ii) increases the fraction of donations allocatedto promotional expenditures. Moreover, the effects of competitionare magnified by the ability to contract on the use of donations.These hypotheses are tested with data on the expenditures ofnonprofit organizations in a number of subsectors where competitionis primarily local. We use across–metropolitan statisticalareas' variation to measure differences in competition and proxycontractibility by the importance of tangible assets, whichare more easily observed by donors. The estimated effects ofcompetition and contractibility are consistent with our model.     

Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter

This article specifies what an optimal pollution tax should be when dealing with a vertical Cournot oligopoly. Polluting firms sell final goods to consumers and outsource their abatement activities to an environment industry. It is assumed that both markets are imperfectly competitive. Thus, the tax is a single instrument used to regulate three sorts of distortions, one negative externality and two restrictions in production. Consequently, the optimal tax rate is the result of a trade-off that depends on the firms’ market power along the vertical structure. A detailed analysis of Cournot-Nash equilibria in both markets is also performed. In this context, the efficiency of abatement activities plays a key-role. It gives a new understanding to the necessary conditions for the emergence of an eco-industrial sector.      

Competition Policy: What are the Costs and Benefits of Measuring its Costs and Benefits?

Summary  Competition authorities are increasingly measuring the effects of their enforcement actions, seeking a robust justification for the proliferation of competition policy. We highlight the importance of identifying the right counterfactual against which to measure effects, and set out the relevant categories of costs and benefits. We then explore how a balance can be struck between the benefits and inherent limitations of these measurement exercises. Relatively crude analyses of cartel action benefits can be sufficient to achieve public legitimacy for competition policy. Assessing the effects of merger and conduct inquiries is often ambiguous, but could be used to improve decision-making processes. Director and Managing Consultant, respectively, at Oxera, Oxford and London. The valuable comments of Fod Barnes, Kerry Hughes and an anonymous referee are gratefully acknowledged. The opinions expressed in this article are those of the authors alone.