A Personal Agenda for the Next Decade

The paper sets a broad agenda touching several areas of policy. It starts from the least likely policy at this point of time, the use of the tax system for redistribution. It discusses prudent macroeconomic coordination without the strings of the Maastricht Treaty in business troughs. Regulation of financial markets, agricultural policies, and health issues are coming up on a desirable agenda of the United States, but are probably important for all countries, as are social security policy and climate change.     

MODELING THE TERM STRUCTURE FROM THE ON‐THE‐RUN TREASURY YIELD CURVE

We propose a new model to estimate the term structure of interest rates using observed on‐the‐run Treasury yields. The new model is an improvement over models that require a priori knowledge of the shape of the yield curve to estimate the term structure. The general form of the model is an exponential function that depends on the estimation of four parameters fit by nonlinear least squares and has straightforward interpretations. In comparing the proposed model with current yield‐curve‐smoothing models, we find that, for the data used, the proposed model does best overall in terms of pricing accuracy both in sample and out of sample. JEL classification: E43, G12     

Uncertainty Associated with Future Environmental Costs and the Market's Differential Response to Earnings Information

This study examines whether the uncertainty arising from a firm's exposure to future environmental costs (environmental uncertainty) affects the market's price sensitivity to reported earnings. Specifically, when environmental uncertainty is significantly high, are investors more responsive to reported earnings released by 'high-polluting' firms than reported earnings announced by 'low-polluting' firms within the same industry? The initial impact of Title IV (the acid rain provisions) of the 1990 Clean Air Act Amendments (1990 CAAA) on the US electric utility industry provides the research setting required to isolate the effects of environmental uncertainty while addressing this question. Consistent with theoretical predictions, we find that the earnings response coefficients (ERCs) of high-polluting electric utilities are significantly greater than those of their low-polluting counterparts during a predicted period of elevated environmental uncertainty. In adjoining sample years associated with lower environmental uncertainty, we observe no statistical difference in the magnitude of the ERCs between these two groups. In addition, the study's findings suggest that the magnitude of the ERC is increasing in the firm's exposure to future environmental costs, after controlling for other factors that potentially affect ERCs.     

Internal labour markets in the Australian banking industry: their nature prior to the Second World War and their recent decline

This paper uses evidence from late nineteenth-and early twentieth-century personnel records of two Australian banks to examine the nature of internal labour markets prior to the Second World War. It is argued that the industry possessed all the classic features of internal labour markets: limited ports of entry, internal promotion, long careers, and assignment of wages by well-defined rules. The paper then examines the reasons why banks adopted internal labour markets. Finally, the paper examines the recent decline of internal labour markets and examines the role of technological and social changes in this decline.     

Dynamic linkages among equity markets in the Middle East and North African countries

The relaxation of security laws and regulations in emerging markets in the Middle East and North Africa (MENA) provides abundant opportunities for foreign investors. These markets exhibit high-expected returns and substantial volatility. In this paper, we investigate the lead/lag relationship between the MENA countries and regions. We find no market causality or spillover from one country to another in the North Africa region. Our results for the Levant region reveal that there are linkages between stock markets in this region. The results for the Gulf Cooperation Council (GCC) region show that there is more interaction and linkage in the GCC region than in the North Africa and Levant regions. An unexpected result is that UAE's stock market leads all the markets in this region. Finally, we investigate linkages among the three regions. We find that GCC influences the other two regions.     

Stability, Asymmetry and Seasonality of Fund Performance: An Analysis of Australian Multi‐sector Managed Funds

Using a sample of Australian Multi-sector trusts we examine selectivity and market timing performance and extend the analysis to include the relatively new measure of volatility timing. This is of particular relevance to our data set, as high levels of volatility persistence are prevalent in Australia. In addition we consider the stability, asymmetry and seasonality of the various performance and risk measures. A survivorship adjustment procedure is also employed in order to assess the impact of survivorship on selectivity, market timing and volatility timing performance.     

The fleeting nature of permanent reinvestment: Accounting for the undistributed earnings of foreign subsidiaries

Over the last decade, an increasing percentage of the profits reported by U.S. corporations were earned by their foreign subsidiaries and retained outside the United States resulting in the deferral of income taxes. The American Jobs Creation Act of 2004 provided a temporary federal tax incentive to remit such earnings, which resulted in the repatriation of $140 billion by the 30 firms comprising the Dow Jones Industrial Average. An analysis of the financial reporting disclosures made by these firms reveals that a tax expense was not fully recognized on a substantial portion of the earnings until repatriation because of an exception for foreign reinvestments deemed to be essentially permanent in duration. The implications of the currently acceptable accounting for undistributed foreign earnings are discussed as well as recommendations to improve the relevancy and reliability of the disclosures required for this exception to comprehensive recognition of deferred taxes.     

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.     

Current state of the electrification of Russia

The current progress of electrification in Russia is clearly insufficient compared with G8 countries. At the same time, economy sectors have a high potential for energy saving. The electricity consumption of households depends on their cash income and the growth rate of electricity tariffs.