Risks of deflation versus risks of excessive inflation in Europe

Economists are currently divided over the question of what represents a more immediate threat to the global economy — deflation or excessive inflation. Using stochastic simulations, this article extrapolates the likely inflation rates in individual European countries and the euro area as a whole. The results indicate that as the financial crisis continues to subside, policymakers should be vigilant about expeditiously rolling back the unconventional monetary policy measures implemented during the crisis.     

Crossnational comparison of entrepreneurs perceptions of success

This article examines how entrepreneurs in the United States, Japan, France, and Canada perceive success. The research examined the perceptions of success, the basis by which success is judged, specific success criteria, major obstacles overcome along the path to success, and the attributes and eucational experiences considered most important in achieving success.     

On games with identical equilibrium payoffs

Summary. This paper compares the sets of Nash, coalition- proof Nash and strong Nash equilibrium payoffs of normal form games which are closely related. We propose sufficient conditions for equivalent or closely related games to have identical sets of equilibrium payoffs. Received: April 23, 1999; revised version: November 23, 1999     

Strategic loan modification: An options-based response to strategic default

This paper presents a parsimonious barrier model for the optimal principal reset in a loan modification, thereby maximizing the loan value to the lender bank and minimizing the likelihood of strategic foreclosure by the homeowner. Writing down the loan-to-value (LTV) ratio will reduce the present value of future payments on the loan, but will also reduce the probability of default, thereby saving foreclosure losses. The optimal trade-off of these two countervailing effects will pinpoint the optimal LTV at which the loan must be reset. We present a simple barrier option decomposition of the loan value that makes the optimization of LTV easy to implement. An extension of the model is shown to account for varying growth rate assumptions about house prices. The model in this paper specifically accounts for the homeowner’s willingness to pay, and uses the framework to model shared-appreciation mortgages (SAMs).     

Energy pricing: 8 Proposals for a better fuel market

If energy policy is to get the mix of fuels right, it must ensure that consumers are faced with their true relative costs. That requires radical changes in the way prices are set as between nationalised industries as well as for commercial and domestic users.     

Are supply-chain relationships more influenced by buyer-supplier relationships or the business environment of the country itself? Evidence from the ‘China-Australia’ trading relationship

In doing business with China, poor supply chain performance is reported as being caused by either poor relationships between firms in China or the business environment in which firms in China have to operate. This research paper explores the relative importance of these two factors for food supply chains from Australia to China. Results are based on surveys of 84 importers, wholesalers and retailers in China and 22 Australian exporters and wholesalers. They show that the country itself had a greater influence than firm to firm relationships. Firms exporting food to China should therefore keep supply chains as short as possible to minimize the uncertainties associated with the business environment.     

Audited financial reporting and voluntary disclosure as complements: A test of the Confirmation Hypothesis

We examine the “confirmation” hypothesis that audited financial reporting and disclosure of managers' private information are complements, because independent verification of outcomes disciplines and hence enhances disclosure credibility. Committing to higher audit fees (a measure of financial statement verification) is associated with management forecasts that are more frequent, specific, timely, accurate and informative to investors. Because private information disclosure and audited financial reporting are complements, their economic roles cannot be evaluated separately. Our evidence cautions against drawing inferences exclusively from market reactions around “announcement periods” because audited financial reporting indirectly affects information released at other times and through other channels.     

UK productivity and employment in 1991

Compared to prewar rates, the growth of UK productivity since 1945 has been rapid, but it has been slower than that of comparable countries. How is it likely to evolve over the next 14 years? To answer this the author makes assumptions about the population size, and the social and economic changes that will shape lifestyles in 1991. He examines productivity and employment in the UK, using four scenarios of output and productivity, presented in two versions. The four scenarios range from the continuation of past trends to the achievement of higher targets (eg EEC levels of productivity growth) : each has two starting points, the 1977 level or the average 1973–1975 level of output. The scenarios illustrate the trade off between unemployment, productivity, and growth, and highlight the possibilities facing the country in 1991: low productivity growth and a comparatively poor UK, or European levels of productivity growth and four million unemployed unless considerable changes take place. The results are not necessarily forecasts; they are the arithmetic consequences of given assumptions.