Is PMI Useful in Quarterly GDP Growth Forecasts for India? An Exploratory Note

This paper examines the relationship between India’s quarterly overall GDP, manufacturing GDP and services GDP and the corresponding monthly data on overall manufacturing and services PMI for the period January 2006 to July 2014. The objective is to see if the two overall PMIs are related to the level and quarterly growth rate of overall GDP and its chosen components. Considering the quarterly time series nature of the data set, the HEGY equation of Hylleberg et al. (J Econom 44:215–238, 1990) extended by adding the PMI variables as exogenous regressors is used as the regression mode to relate a GDP level/growth rate variable to the two overall PMI variables. The results show that the three GDP level variables, but none of the GDP growth rate variables, have significant positive correlation with services PMI, but not with manufacturing PMI. Finally, the marginal effect of services PMI on manufacturing GDP level is found to be the largest, followed by that for overall GDP level and services GDP level.

     

Exact solutions for bond and option prices with systematic jump risk

A variety of realistic economic considerations make jump-diffusion models of interest rate dynamics an appealing modeling choice to price interest-rate contingent claims. However, exact closed-form solutions for bond prices when interest rates follow a mixed jump-diffusion process have proved very hard to derive. This paper puts forward two new models of interest-rate dynamics that combine infrequent, discrete changes in the interest-rate level, modeled as a jump process, with short-lived, mean reverting shocks, modeled as a diffusion process. The two models differ in the way jumps affect the central tendency of interest rates; in one case shocks are temporary, in the other shocks are permanent. We derive exact closed-form solutions for the price of a discount bond and computationally tractable schemes to price bond options.     

Statistical interpretation,decomposition and properties of Atkinson's inequality index

The paper contains a statistical interpretation and an interesting decomposition of the inequality index due to Atkinson.

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Riassunto Questo lavoro presenta un'interpretazione statistica in termini di medie di potenza dell'indice di disuguaglianza di Atkinson e fornisce una scomposizione di detto indice in una quota che misura la disuguaglianza tra gruppi ed una quota che misura quella all'interno dei gruppi. Si dimostrano alcuni teoremi relativi alla misura decomposta nelle sue due componenti sopraindicate.

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Versione definitiva pervenuta il 20-1-1982

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This paper expresses personal views of the authors and does not necessarily reflect the views of the organisations they are associated with.     

DETERMINING COST OF SALES IN THE CCA SYSTEM

The profit concept in the Current Cost Accounting system is based on the objective of maintaining “capital” in the sense of “operating capability”. This paper seeks to demonstrate that the recommended capital maintenance adjustment of the Australian Provisional Accounting Standard on “Current Cost Accounting”, as it relates to cost of sales, is inappropriate for the stated capital maintenance objective. This appears to be because operating capability is a dated concept, since it is the operating capability existing at the beginning of an accounting period which is to be maintained. An alternative adjustment for cost of sales is proposed which is consistent with the stated capital maintenance objective.     

Effects of foreign investment in the presence of unemployment

In this paper we present a simple model of unemployment in the presence of foreign investment in the traded sector. More foreign investment increases employment in the nontraded sector but may or may not increase employment in the traded sector. The effect on total employment is also ambiguous. In a two-country framework with foreign investment itself a variable, we show that foreign investment should most likely be subsidized rather than taxed. Moreover, the employment maximizing tax on foreign investment is shown to be less than the optimum tax.     

Build loyalty in business markets

Companies often apply consumer marketing solutions in business markets without realizing that such strategies only hamper the acquisition and retention of profitable customers. Unlike consumers, business customers inevitably need customized products, quantities, or prices. A company in a business market must therefore manage customers individually, showing how its products or services can help solve each buyer's problems. And it must learn to reap the enormous benefits of loyalty by developing individual relationships with customers. To achieve these ends, the firm's marketers must become aware of the different types of benefits the company offers and convey their value to the appropriate executives in the customer company. It's especially important to inform customers about what the author calls nontangible nonfinancial benefits-above-and-beyond efforts, such as delivering supplies on holidays to keep customers' production lines going. The author has developed a simple set of devices-the benefit stack and the decision-maker stack-to help marketers communicate their firm's myriad benefits. The vendor lists the benefits it offers, then lists the customer's decision makers, specifying their concerns, motivations, and power bases. By linking the two stacks, the vendor can systematically communicate how it will meet each decision-maker's needs. The author has also developed a tool called a loyalty ladder, which helps a company determine how much time and money to spend on relationships with various customers. As customers become increasingly loyal, they display behaviors in a predictable sequence, from growing the relationship and providing word-of-mouth endorsements to investing in the vendor company. The author has found that customers follow the same sequence of loyalty behaviors in all business markets.     

Ranking of sectors based on fuzzy importance measure

The changing nature of policy variables specific to any planned developmental programme often leads to conflicting decisional problems regarding the identification of thrust areas. Hence the inherent requirement is for a composite index which eases out such ambiguous choice issues. The present paper introduces the measure of sectoral importance which is capable of encompassing different variables with their associated weights and ranks sectors in an economy based on such a measure. However, the term importance suggests the qualitativeness and subjectivity involved in defining such a concept and thus establishes the need for the concepts of fuzzy mathematics. The theory of fuzzy subsets is capable of dealing with qualitative variables within a quantitative framework. The sectoral importance measures derived from the sectoral output linkages, employment multipliers and value added multipliers, have been represented as fuzzy subsets, or to be precise, as fuzzy numbers. A comparison of these numbers through the binary approach of determination of the measure of relative strength provides the basis for the ranking of sectors. The novelty of the approach lies in its simplicity and flexibility in treating qualitative factors which characterise most decision support socio economic planning problems. The validity of the exercise has been tested by applying it to the economy of West Bengal, a State of India.