Information Shocks and the Dynamics of the Housing Market*

In this paper, we analyze housing‐market reactions to the release of previously unpublished information on school quality. Using high‐quality housing data, which precisely bracket the timing of the information shock, we investigate housing‐price dynamics within school‐catchment areas. We find a robust short‐term housing‐market reaction to the publication of school‐quality indicators, suggesting that this information was new to the households, and that households are willing to pay for better schools. The publication effect does not seem to be permanent as prices revert to pre‐publication levels after two to three months.     

Using the budget constraint to monetarise impact assessment results

Recent developments in Life Cycle Impact Assessment (LCIA) provide a basis for reducing the uncertainty in monetarisation of environmental impacts. The LCIA method “Ecoindicator99” provides impact pathways ending in a physical score for each of the three safeguard subjects humans, ecosystems, and resources. We redefine these damage categories so that they can be measured in terms of Quality Adjusted Life Years (QALYs) for impacts on human well-being, Biodiversity Adjusted Hectare Years (BAHYs) for impacts on ecosystems, and monetary units for impacts on resource productivity.The monetary value of a QALY can be derived from the budget constraint, i.e. the fact that the average annual income is the maximum that an average person can pay for an additional life year. Since a QALY by definition is a life-year lived at full well-being, the budget constraint can be determined as the potential annual economic production per capita at full well-being. We determine this to be 74,000 EUR with an uncertainty estimate of 62,000 to 84,000 EUR. This corresponds well to the 74,627 EUR willingness-to-pay estimate of the ExternE project. Differences to other estimates can be explained by inherent biases in the valuation approaches used to derive these estimates.The value of ecosystems can be expressed in monetary terms or in terms of QALYs, as the share of our well-being that we are willing to sacrifice to protect the ecosystems. While this trade-off should preferably be done by choice modelling, only one such study was found at the level of abstraction that allows us to relate BAHYs to QALYs or monetary units. Stressing the necessity for such studies, we resort to suggest a temporary proxy value of 1400 EUR/BAHY (or 52 BAHY/QALY), with an uncertainty range of 350 to 3500 EUR/BAHY.The practical consequences of the above-described monetarisation values has been investigated by combining them with the midpoint impact categories of two recent LCIA methods, thus providing a new LCIA method with the option of expressing results in both midpoints and an optional choice between QALY and monetary units as endpoint. From our application of the new method to different case studies, it is noteworthy that resource impacts obtain less emphasis than in previous LCIA methods, while impacts on ecosystems obtain more importance. This shows the significance of being able to express impacts on resources and ecosystems in the same units as impacts on human well-being.     

Globalization,transparency and economic growth: The vulnerability of Chinese firms to macroeconomic shocks

The process of globalization encompasses economic and financial integration. The abolition of capital controls and the dismantling of barriers of different kinds will expose previously sheltered companies to shocks originating in the global economic arena. Policy-makers in already globalized countries have learned that market participants should be prepared in due time to meet the new exposure to fluctuating rates of exchange, interest and inflation. China has recently adopted a version of the International Financial Reporting Standards (IFRS) in an effort to improve the quality of information available for risk management and for pricing of risk. This paper analyzes the gains in transparency from the implementation of IFRS in Europe as of January 2005 and reports no improvements in regard to the macroeconomic impact on firms. Based on this experience, improvements for Chinese adoption are suggested. The paper presents a framework for how to understand and measure the impact of different scenarios on corporate performance. It also elaborates on how to communicate the macroeconomic effects to external stakeholders of the firm in a way that should foster further economic growth in China.     

The development of models of accounting information systems in Sweden

Traditionally, accounting has evolved as a technique. Practitioners and academics have striven to improve the technical features of accounting. Now, accounting is conceived increasingly as an organizational artefact which interacts with other organizational practices in shaping organizational reality. Taking a broad perspective of management control, this paper aims at contributing to our knowledge of accounting in this second sense and identifying some Swedish contributions to the tool-box of accounting. In reviewing the development of models of accounting information in Sweden mainly since World War II, different factors explaining the evolution of each model are identified. Analyses of these factors reveal that different groups of actors have been engaged in the development of different parts of the accounting information system (AIS). It is also noted that the introduction of models that are widely applied has delayed the emergence of new models better adapted to the current situation in business. Comparisons will be made with the development in some other countries.     

Accounting for Macroeconomic Influences on the Firm

Accounting based measures of exposure to macroeconomic shocks in exchange rates, interest rates and inflation do not capture the economic effects on the corporation of such shocks. We suggest measures that conceptually are coefficients in a multiple regression. The coefficients capture the sensitivity of a firm's real value or cash flows to unanticipated changes in each variable holding other variables constant. Information about such sensitivity coefficients would enable external stakeholders to distinguish between risk caused by firm-specific factors on the one hand and macroeconomic factors on the other. Scenario analysis is discussed as an alternative method for evaluating sensitivity coefficients. Information requirements for scenario and regression analysis are compared. Sensitivity coefficients can be used to identify a firm's functional currency or currency basket in which cash flows are independent of exchange rate changes. An example built on an actual case in Appendix demonstrates how insights can be gained from estimates of the suggested exposure measures.     

An environmental performance index for products reflecting damage costs

Several studies have demonstrated how to use DEA (Data Envelopment Analysis) based techniques to estimate environmental performance indices. None of these studies, however, are taking information on the environmental damage costs of the pressure types considered into account. This study is bridging a gap between environmental indices founded in physical pressures and damage costs founded in welfare economics. The aim of the paper is twofold: first, to demonstrate how to implement the information on environmental damage costs within a DEA based environmental performance index, and second, to estimate these indices at product level by using Danish input-output data and environmental data from 1997.     

Voluntary Environmental Agreements: Taking Up Positions And Meeting Pressure

This paper portrays voluntary agreements as a Nash-bargaining game between the authorities and the polluting industry. Before bargaining starts, the authorities threaten to introduce emission licences if the negotiations come to nothing, while industry, by the use of lobbying campaigns, can make it politically costly to regulate by law. The most likely game of the ones considered is characterized by the authorities first announcing a level of licensing, whereupon industry will adjust its lobbying activity. This game results in a relatively defensive industry and authorities than other games under consideration.     

MACROECONOMIC STABILIZATION POLICIES IN THE EMU: SPILLOVERS, ASYMMETRIES AND INSTITUTIONS

This paper studies the institutional design of the coordination of macroeconomic stabilization policies within a monetary union in the framework of linear quadratic differential games. A central role in the analysis plays the partitioned game approach of the endogenous coalition formation literature. The specific policy recommendations in the European Economic and Monetary Union (EMU) context depend on the particular characteristics of the shocks and the economic structure. In the case of a common shock, fiscal coordination or full policy coordination is desirable. When anti‐symmetric shocks are considered, fiscal coordination improves the performance but full policy coordination does not produce further gains in policymakers' welfare.