The World Credit Crisis: Understanding It,and What to Do

The origin of the world credit crisis has four stages: (1) too much credit – an international perspective; (2) too much risk – reaction to low real interest rate; (3) the fatal flaw – the new complex financial instruments; and (4) the panic – bank lending dries up. The paper also discusses how the crisis spread around the world from the US, whether the high credit expansion was the fault of Alan Greenspan, whether China is to blame, and how this crisis related to the often expected crisis of global imbalances. Some implications for long‐term reform are discussed.     

Asymptotic results for the risk process based on marked point processes

Abstract

In this paper asymptotic properties for the risk process will be studied when the number of risk units tends to infinity. The paper extends asymptotic properties for the classical risk process to more general processes. In the classical risk process the claim amounts are assumed independent and identically distributed, and the claim number process is a homogeneous Poisson process.

The key tool is point process theory with associated martingale theory. The results are illustrated by examples.     

Foreign Direct Investment,Transactions Linkages,and the Performance of the Domestic Sector

Using data from the UK Census of Production, including foreign ownership data, and information from UK industry input-output tables, this paper examines whether the intensity of transactions linkages between foreign and domestic firms affects productivity growth in domestic manufacturing industries. The implications of the findings for policies promoting linkages between multinational and domestic firms in the UK economy are outlined.     

The school as a social system: Indicators for change

In systems analysis, the school may be viewed as a functionally differentiated subsystem of the broader social system in which it is embedded. To maintain a viable relationship with that social system, the school is subject to continual changes to meet the shifting social, economic, political, and technological forces in its environment. However, the more successful the school organization is in assessing accurately changing environmental forces, and in making appropriate adjustments to those forces, the more successful will it be in resisting temporary pressures and transitory movements and in controlling its own directions.

A major research problem is to identify those organizational properties that enable the school to assess accurately new demands and to adjust appropriately to those demands. Theoretically, those properties might be expected to include: (1) operationalized statements of instrumental goals; (2) a work structure that involves interdependence in task performance; (3) participation in decision making; (4) an incentive system that utilizes performance criteria rather than expressive relationships; (5) personnel practices that encourage a cosmopolitan orientation; and (6) institutionalized provisions for change advocacy.

The specification of the relationships among these properties, or variables, and the determination of means for assessing them quantitatively, are tasks that remain to be accomplished.     

The importance of firms in wage determination

Firms are central to many theories of the labor market. However, the actual degree to which firms shape the structure of wages is still not well understood. This paper investigates (i) the importance of firms in explaining wage differences across individuals and industries, and (ii) how the nature of interfirm mobility – job-to-job vs. job-unemployment-job – affects the relative importance of firms and workers in wage determination. Results indicate that (i) firms are much more important in explaining the variance of average wages across industries rather than across individuals, and (ii) using job-to-job transitions to identify the firm's contribution to the wage rate reduces the importance of firm wage policies in explaining wage differences by as much as 50%.     

Quotas and the second best

This note makes two observations about trade restrictions on subgroups of commodities. First, unlike tariffs, unalterable quotas provide no second-best justification for general restrictions. Second, the optimal allocation of intra-subgroup trade depends on the form of restraint imposed.     

The Biofuel Controversy

Summary  About a decade ago, the main OECD countries decided to promote the use of biofuels so as to reduce greenhouse gases, to contribute to energy self-sufficiency and to create additional demand for agricultural commodities. The introduction of mandatory blending requirements and lavish subsidies spurred fast adoption of this technology. In the course of 2008, the already existing controversy about the effectiveness of this strategy culminated as the resulting upward shift in demand contributed to staggering rises in food prices on world markets. It is uncertain as yet whether this will tone done current ambitions among policy makers to expand biofuel production. The paper shows that high ratios of energy prices to food prices are needed to make biofuel production profitable without the mandatory blending and subsidies. Yet, even if food-based biofuels disappeared, the issue remains that rising high energy prices will promote intensified use worldwide of land for energy crops, requiring huge amounts of mineral fertilizers and putting nature under additional pressure. In policy terms, this defines three major tasks. The first is replacing the current excise taxes on energy carriers by a uniform carbon tax, so as to mitigate greenhouse gas emissions in an efficient manner, the second to prevent price fluctuations on the oil markets from destabilizing food markets, as happened in recent years. Introduction of upper limits on the use of food for biofuel could prove effective here. The third, much wider, task is to make the transition to a partly biomass based energy production possible and sustainable, that is establishing fair distribution of property and user rights over the lands, while safeguarding biodiversity and soil fertility and maintaining adequate labour standards and living conditions, also during periods that these become non-profitable following a drop in energy prices. The authors thank Lia van Wesenbeeck for her comments.     

Neuere sozialpolitische Literatur

Ohne Zusammenfassung     

Monetary effects on nominal oil prices

The paper presents a theory of nominal asset prices for competitively owned oil. Focusing on monetary effects, with flexible oil prices the US dollar oil price should follow the aggregate US price level. But with rigid nominal oil prices, the nominal oil price jumps proportionally to nominal interest rate increases. We find evidence for structural breaks in the nominal oil price that are used to illustrate the theory of oil price jumps. The evidence also indicates strong Granger causality of the oil price by US inflation as is consistent with the theory.