Public Policy Issues as a Route to Statistical Awareness

There appears to be a paradox in the fact that as more and more quantitative information becomes routinely available in a world perceived to be ever more complex, there is less and less direct appreciation of the role and power of statistical thinking. It is suggested that the profession should exploit very real public concerns regarding risk aspects of public policy as a possible pedagogic route to raising statistical awareness.     

On the optimal acquisition of foreign capital through investment of oil export revenues

The subject of the paper is the optimal policy for a national monopoly to follow when the product exported is an essential input for production in the importing country and the exporter wishes to invest the proceeds in the purchase of claims on the capital stock of the importer. A number of alternative optimal solutions are compared with the conventional monopoly solution. The focus is on the deviations from this solution that are induced by the actual or desired ownership of capital in the importing country by the exporter.     

Commitment, advertising and efficiency of two-sided investment in competitive search equilibrium

Competitive search entails both commitment to and advertising of pay-off relevant aspects of market participants. This paper considers incrementally the implications of each in a labor market where both workers and firms invest prior to market entry. A wide range of institutional arrangements are addressed within the same general framework. When the characteristics of jobs or workers are advertised the efficient outcome pertains. Commitment without advertising typically leads to market unravelling: the Diamond paradox. But, whenever wages and human capital are advertised, firms become residual claimants; the private and social returns to investment coincide. Absent wage commitment, the Hosios condition implies efficiency when investments are advertised.     

Managerial attitudes to social responsibility: A comparative study in India and Britain

Changes in the understanding of the relationship between business and society have led to increased interest in and discussion of the notion of corporate social responsibility.This paper offers an empirical analysis of the perceptions of top executives in the West Midlands, U.K., and in Delhi, District Ghaziabad, India, of the notion of corporate social responsibility. Organisational changes and involvement in social action programmes, and problems of implementing and monitoring Social Responsibility in two cultures, India and Britain, were explored.The results of this study are compared with results obtained from studies on American companies and some significant similarities and differences are noted.Finally, some of the implications of the acceptance of the relevance of social responsibility to industry and the social involvement of industry are discussed. A. Farooq Khan is Associate Professor at the Faculty of Commerce of the Aligarh Muslim University. He has been awarded the Common-Wealth Scholarship (1975–1978) and he visited Hungary under the Indo-Hungarian Cultural Exchange Programme (1984–1985). He has published over thirty papers and two books: Business and Society, S. Chand & Co. Ramnagar, New Delhi, 1985; and Social Responsibility and Management, Faculty of Commerce Publication, Aligarh, 1983.Adrian Atkinson is Managing Director of Human Factor Consultants (UK) Ltd.     

Donor lifetime value: An empirical analysis

The successful quantification in monetary terms of the value of a donor to a voluntary organisation is absolutely essential to the subsequent development of fundraising strategy. The question most voluntary organisations have failed to address, however, is how best to calculate this value. Many fundraisers continue to examine value historically, looking at the total amounts given to date. Such an approach fundamentally ignores the future or lifetime potential of a given charity donor and can lead to the development of contact strategies that are wholly inappropriate given the worth of that individual. It is the purpose of this paper to calculate the lifetime value (LTV) of various categories of donor and to explain how charities might use such information to inform the development of their fundraising strategy.     

Matching bias in labor demand estimation

Using a matched firm-worker dataset, we show both theoretically and empirically that positive assortative matching between firms and workers leads to an underestimation of the absolute value of wage elasticity of labor demand.     

On graduation from fiscal procyclicality

In the past, industrial countries have tended to pursue countercyclical or, at worst, acyclical fiscal policy. In sharp contrast, emerging and developing countries have followed procyclical fiscal policy, thus exacerbating the underlying business cycle. We show that, over the last decade, about a third of the developing world has been able to escape the procyclicality trap and actually become countercyclical. We then focus on the role played by the quality of institutions, which appears to be a key determinant of a country’s ability to graduate. We show that, even after controlling for the endogeneity of institutions and other determinants of fiscal procyclicality, there is a causal link running from stronger institutions to less procyclical or more countercyclical fiscal policy.     

Information Gathering Externalities for a Multi‐Attribute Good

Most goods and services vary in numerous dimensions. Customers choose to acquire information to assess some characteristics and not others. Their choices affect firms' incentives to invest in quality and so lead to indirect externalities in consumers' choices. We characterize a model in which a monopolist invests in the quality of a product with two characteristics, and consumers are heterogeneous ex‐ante. Consumers do not internalize their influence on the firm's investment incentives when choosing which information to acquire. Cheaper information affects consumers' information gathering and thereby firm investment. This can paradoxically reduce consumer surplus, profits, and welfare.     

Forecasting exchange rate volatility: The superior performance of conditional combinations of time series and option implied forecasts

This paper provides empirical evidence that combinations of option implied and time series volatility forecasts that are conditional on current information are statistically superior to individual models, unconditional combinations, and hybrid forecasts. Superior forecasting performance is achieved by both, taking into account the conditional expected performance of each model given current information, and combining individual forecasts. The method used in this paper to produce conditional combinations extends the application of conditional predictive ability tests to select forecast combinations. The application is for volatility forecasts of the Mexican peso–US dollar exchange rate, where realized volatility calculated using intraday data is used as a proxy for the (latent) daily volatility.