Fiscal deficits and inflation

Macroeconomic theory postulates that persistent fiscal deficits are inflationary. Yet empirical research has had limited success in uncovering this relationship. This paper reexamines the issue in light of broader data and a new modeling approach that incorporates two key features of the theory. Unlike previous studies, we model inflation as non-linearly related to fiscal deficits through the inflation tax base and estimate this relationship as intrinsically dynamic, using panel techniques that explicitly distinguish between short- and long-run effects of fiscal deficits. Results spanning 107 countries over 1960-2001 show a strong positive association between deficits and inflation among high-inflation and developing country groups, but not among low-inflation advanced economies.     

Fiscal Consolidation and Decentralisation: A Tale of Two Tiers*

This paper contributes to the established literature on fiscal consolidations by investigating the distinct behaviour of central and sub‐central tiers of government during general government consolidation attempts. In the light of different degrees of decentralisation across OECD countries, and the different responsibilities devolved to sub‐central tiers, we believe that this approach offers an illuminating insight into the analysis of fiscal consolidations and their success. We show that the involvement of the sub‐central tiers of government is crucial to achieving cuts in expenditure, particularly in relation to the overall size of the government wage bill. In addition, central governments appear to exert a strong influence on the expenditure of sub‐central tiers through their grant allocations, and control of these allocations appears to have a considerable impact upon the overall success of consolidation attempts. Finally, we demonstrate that there is a skewness in cuts towards sub‐central capital expenditure both when central governments cut grant allocations and when sub‐central governments engage in lone consolidation attempts.     

Machine learning in individual claims reserving

Machine learning techniques make it feasible to calculate claims reserves on individual claims data. This paper illustrates how these techniques can be used by providing an explicit example in individual claims reserving.     

Tax penalties on fluctuating incomes: estimates from longitudinal data

Progressive personal income taxes can cause individuals with fluctuating incomes to pay more taxes over time than individuals with constant incomes of the same average value. The implicit tax penalty violates principles of equity and may harm efficiency by discouraging risk-taking activities, such as entrepreneurship. This paper uses longitudinal data to estimate the tax penalties in six panels of Canadian data from 1993 to 2010. The effects of various income averaging policies for mitigating tax penalties are then examined.     

Audit personnel salaries and audit quality

This study examines the relation between audit personnel salaries and office-level audit quality. We measure audit personnel salaries at the associate, senior, and manager ranks for Big 4 audit offices from 2004 to 2013, using unique individual-auditor-level data obtained from the U.S. Department of Labor. We find that offices that pay lower salaries have a higher percentage of clients that experience restatements. In related analyses, we also find lower levels of audit quality when audit employees are paid less, relative to other lines of service in accounting firms. Finally, we document positive and significant associations between salary and fees, suggesting that audit offices pass some of the cost of higher labor onto their clients. Overall, our findings provide important initial evidence on the role of audit salary and its relation to audit quality and audit fees.     

能源博弈与互依共存

一场围绕能源的新的大博弈即将来临。推动这一大变化的最主要力量是全球对于气候变化和能源安全的共同关注。在这场博弈中,国家利益在传统的市场规则中扮演越来越重要的角色。对于生产国和消费国来说,共同的挑战是认清互相依存的现实并为达成谅解而建立组织框架。中国目前的发展正锁定其能源消费模式从而带动未来数十年的能源需求。从消费角度来讲,中国、印度和美国在决定这场全球能源博弈规则的过程中,将扮演最重要的角色。资源民族主义的崛起以及全球寻找能源的行为,正迫使每个国家重新考虑各自的外交政策以及联盟关系。国家石油企业正寻求私营石油公司的技术,二者需要建立起与过去不同的新型合作关系。气候变化和能源安全带来的大变化大挑战,是这场能源大博弈的所有参与者都要面对的。关键在于创建可转化为互相信任和依存关系的利益平衡的理解框架。     

A note on net present value and internal rate of return functions in electronic spreadsheets

Academic accountants are increasing their use of electronic spreadsheets in teaching. The net present value functions of some popular spreadsheets make incorrect calculations. The internal rate of return functions do not handle multiple rates in a standard way.     

Psychological Meaning of Products and Product Positioning

New product positioning is an issue increasingly being considered by new products managers. An article on this topic by Crawford appeared in this Journal in 1985. Roberto Friedmann and Parker Lessig employ the concept of psychological meaning of products to discuss why and how Crawford's new product positioning typology affects the consumer. They present arguments to show that the psychological meaning of products and Crawford's typology address product positioning from complementary and converging perspectives. They also argue that psychological meaning of products can be a valuable managerial planning tool.