Aggregate scale economies, market integration, and optimal welfare state policy

Using a two-sector-two-country model with aggregate scale economies and unionisation, we show that optimal welfare state policy entails positive levels of unemployment benefits under free-trade and capital mobility. In this setting, economic integration does not reduce the revenue raising capacity of governments and thus does not lead to a race-to-the-bottom in social standards. Instead, trade and capital flows interact with welfare state policies in increasing welfare even when each government acts independently (non-cooperatively) in determining its optimal welfare payment. Cooperation is shown to improve upon non-cooperative outcomes by raising both the generosity of the welfare state and aggregate welfare.     

Gender differences in low‐risk single‐occasion drinking: an application of the theory of planned behaviour

This study examines the theory of planned behaviour (TPB) in the context of adhering to the UK low‐risk single‐occasion drinking (LRSOD) guidelines. Additionally, gender differences were explored. A convenience sample of 110 female students and 107 male students provided information about their LRSOD behaviour, as well as views, attitudes and intention regarding keeping to the LRSOD limit. Results of this study show the theory of reasoned action rather than the TPB to be pertinent, accounting for 24% of the variance for the female sample and 36% for the male sample. Gender differences are evident in terms of perceived pressure from government and educational campaigns as well as perceived likelihood of positive consequences of adhering to the LRSOD guidelines. Implications of the findings are discussed.     

Economic reform,informal–formal sector linkages and intervention in the informal sector in developing countries: A paradox

Within a general equilibrium framework of a developing economy with a foreign owned factor of production, this paper questions whether the informal–formal sector relationship is pro-cyclical/complementary – expansion or contraction in one necessarily implies an expansion or contraction in the other – when the informal sector is subject to a technological shock. We derive a necessary and sufficient condition under which a positive shock to the informal sector results in an emphcontraction in both the size of the urban formal sector and the informal sector. Thus, although our result shows that the informal–formal sector relationship is pro-cyclical, it nevertheless calls into question the conventional wisdom on the benefits of intervention in the informal sector of developing economies, particularly where multinational corporations sub-contract certain labor-intensive stages of production to the informal sector.     

A macroeconometric framework for monetary policy evaluation: A case study of Pakistan

This paper attempts to establish the quantitative importance of the various channels of monetary transmission by constructing, estimating and simulating a small macroeconometric model of Pakistan's monetary sector, while using data from the monetary statistics and the monetary survey of the State Bank of Pakistan over 1976–2007. The paper elucidates that the key feature of the study of monetary policy in Pakistan has been preoccupied with neglect either of the demand or the supply function of money and shows how this may lead to imprecise policy actions and mistaken conclusions. Accordingly, we delineate the transmission mechanism of monetary policy by taking into consideration all structural money demand and money supply linkages along with the historically implied identifying assumption in the framework of a marginalized macroeconometric model. The within-sample and out-of-sample evaluations of the model are found satisfactory. The paper presents results of three policy simulations from the estimated model that highlight the impact of alternative monetary policy instruments on the monetary variables under a rule-based and a discretionary policy environment. We find that (i) the SBP subscribes to an unannounced monetary policy rule, (ii) the determination of the policy rate under the announced rule environment stabilizes the monetary sector in that convergence to full equilibrium is smooth and rapid, (iii) a 100 bps reduction in the discount rate, ceteris paribus, decreases money supply by 4.97%, and (iv) the long term implication of reducing (increasing) the reserve requirement ratio on time (demand) deposits, ceteris paribus, is only higher inflation. Finally, we establish that a 100 bps increase in interest rate increases money supply by 3.14% in full equilibrium.     

Corporate governance and earnings management at large U.S. bank holding companies

This paper examines whether corporate governance mechanisms affect earnings and earnings management at the largest publicly traded bank holding companies in the United States. We first find that performance, earnings management, and corporate governance are endogenously determined. Thus, OLS estimation can lead to biased coefficients and a simultaneous equations approach is used. We find that CEO pay-for-performance sensitivity (PPS), board independence, and capital are positively related to earnings and that earnings, board independence, and capital are negatively related to earnings management. We also find that PPS is positively related to earnings management. Finally, PPS and board independence are positively related and the relationship is bidirectional. While both PPS and board independence are associated with higher earnings, our results indicate that more independent boards appear to constrain the earnings management that greater PPS compels.     

THE DEMAND FOR FATS AND OILS IN CANADA

The overall per capita consumption of fats and oils in Canada has shown only a slight upward trend over the last twenty years. The composition of fats and oils consumed, however, has changed drastically. The most noticeable change was the shift from animal fats to oils and fats of vegetable origin. Specific economic variables have played a key role in determining the nature and direction of consumption for each fat and oil product. Most of the consumption demand changes exhibited over the period are explained by corresponding changes in respective prices and income. Demand for all fats and oils remains in the inelastic range. Income growth had a positive effect on the demand for margarine, butter and especially for shortening, but a negative effect on that for lard. The associated nature of demands for these products, as a group of food items, implies that alternative statistical methods of estimation can yield precise and consistent demand parameters. The parameters obtained from the conventional ordinary least squares (OLS) were verified and refined using Zellner's “Seemingly unrelated regressions” (ZSUR) and full information maximum likelihood (FIML). Reliable demand measures are essential prerequisites for effective agricultural policy and planning. Pendants les vingls ans passés, la consommation canadienne globale par habitant des huiles et des graisses n'a montré qu' une légère tendence ascendante. Mais alors, le montant consommé des diverses genres d'huiles et de graisses a changé beaucoup. Le changement le plus remarquable a eu lieu au niveau d'une nouvelle préférence pour les graisses d'origine végétale au lieu des graisses animales. Des variables économiques spécifiques ont fortement déterminé la nature et la direction de la consommation de chaque produit huileux ou graisseux. Presque tous les changements de demande de consommation pendant cette période peuvent être expliqués par des changements correspondants de prix et de revenus. La demande est inélastique pour toutes les huiles et les graisses. l'acroissement des revenus renforce la demande pour le margarine, le beurre et surtout pour la graisse à pâtisserie mais diminue la demande pour le saindue. Puisque la demande pour ces produits alimentaires est liée, des méthodes alternatives d'estimation statistique peuvent rapporter des paramètres de demande précis et consistants. Les paramètres obtenus de la méthode conventionnelle de ‘ordinary least square’ (OLS) ont été vérifiés et raffinés avec celles obtenus par la méthode de ‘Seemingly unrelated regression’ de Zellner (ZSUR) et par la méthode de ‘full information maximum likelihood’ (FIML). Des sûres mesures de demande sont des requis essentiels à la formulation efficace de la politique et de la plani-fication agricole.     

On black market exchange rate and demand for money in developing countries: The case of Nigeria

This paper examines the hitherto unexplored question of the effects of the black market exchange rate expectations on the domestic demand for money in Nigeria. This study finds that real income and expected inflation rates are the appropriate scale and opportunity cost variables for the demand for money function in Nigeria. The results also suggest that depreciation in black market exchange rate exerts a significant negative impact on the domestic demand for money. A policy implication of this research is that since a depreciation of the black market exchange rate tends to decrease the demand for money, it should be taken into account in the execution of monetary policy. The authors would like to thank an anonymous referee for helpful suggestions which substantially improved the quality of the paper. This research was supported in part by a summer research grant from the College of Business Administration, University of New Orleans.     

Adoption of Food Safety and Quality Controls: Do Firm Characteristics Matter? Evidence from the Canadian Food Processing Sector

This study explores the association between the adoption of food safety and quality assurance practices in the Canadian food processing sector and firm characteristics. A conceptual model is developed recognizing that the relative importance of a firm's incentives to adopt enhanced food safety and quality assurance practices is influenced by the firm's characteristics and activities. Binomial logit models are estimated to explore the association between adoption of various combinations of food safety and quality assurance practices including hazard analysis and critical control point (HACCP). The findings show that the adoption of food safety and quality practices varies widely between individual firms according to, among others, firm size, country of ownership and control, level of innovativeness, level of export orientation, forms of food safety inspection, and the subsector in which the firm operates. Incentives of being able to access foreign markets play an important role in influencing HACCP adoption. La présente étude analyse le lien entre l'adoption de pratiques visant la salubrité et l'assurance de la qualité des aliments au sein de l'industrie canadienne de la transformation et les caractéristiques des entreprises. Nous avons élaboré un modèle conceptuel reconnaissant que l'importance relative des incitatifs qui motivent une entreprise à adopter des pratiques améliorées en matière de salubrité et d'assurance de la qualité des aliments est influencée par les caractéristiques et les activités de l'entreprise. Nous avons estimé des modèles logit binomiaux pour examiner le lien entre l'adoption de diverses combinaisons de pratiques visant la salubrité et l'assurance de la qualité des aliments, y compris les systèmes HACCP (analyse des risques et maîtrise des points critiques). Les résultats ont montré que l'adoption de ces pratiques variait considérablement d'une entreprise à l'autre en fonction, entre autres, de la taille de l'entreprise, du pays de propriété et de contrôle, du degré d'innovation, du degré de vocation exportatrice, des programmes d'inspection de la salubrité des aliments et du sous‐secteur dans lequel une entreprise évolue. La perspective de pénétrer les marchés étrangers joue un rôle important dans l'adoption de systèmes HACCP.