THE WELFARE EFFECTS OF PAY-AS-YOU-GO RETIREMENT PROGRAMS: THE ROLE OF TAX AND BENEFIT TIMING

It is well known that pay-as-you-go retirement programs reduce steady-state welfare and the capital stock in dynamically efficient overlapping generation (OLG) economies. The common two-period OLG model obscures, however, the relationship between the magnitude of these effects and the ages at which taxes are paid and benefits received. Program changes that shift taxes to older workers or benefits to younger retirees have effects similar to reductions in program size, yielding steady-state welfare gains and increases in capital accumulation while imposing transition costs on current generations. This analysis has policy implications for both tax and benefit timing . ( JEL H55, E62)     

Corporate Governance and the Information Content of Insider Trades

Most corporate governance research focuses on the behavior of chief executive officers, board members, institutional shareholders, and other similar parties. Little research focuses on the impact of executives whose primary responsibility is to enforce and shape corporate governance inside the firm. This study examines the role of the general counsel (GC) in mitigating informed trading by corporate insiders. We find that insider trading profits and the predictive ability of insider trades for future operating performance are generally higher when insiders trade within firm‐imposed restricted trade windows. However, when GC approval is required to execute a trade, insiders’ trading profits and the predictive ability of insider trades for future operating performance are substantively lower. Thus, when given the authority, it appears the GC can effectively limit the extent to which corporate insiders use their private information to extract rents from shareholders.     

Identifying the poor in the 1870s and 1880s1

Poverty lines devised throughout England and Wales in the 1870s and 1880s defined ‘the poor’, a new class not recognized by the poor law. This article provides an account of the poverty lines adopted, mainly by school boards, in about 40 different places; the context in which they were developed; and what has been retrieved of the reasons determining the adoption of specific poverty lines. In particular, it examines the principal controversies surrounding them, and the challenge they posed to the poor law; and, incidentally, compares them to the poverty lines proposed, many years later, by Booth and Rowntree.     

USING THE WORLD WIDE WEB IN ACCOUNTING RESEARCH: A HUGE STEP FORWARD OR A NEW CONSTRAINT?

The Internet has been used in academia as a means of sharing information between researchers for many years. The more recent development of the World Wide Web as an Internet tool launched this technology into the business domain and this has led to a significant growth in the availability of business related information resources on the network. This paper discusses the potential of the web for the use in the specific domain of accounting research. It highlights the relevant information a researcher can expect to find on the network, suggests ways of using the web to improve research development and dissemination and discusses a number of concerns that are commonly raised by researchers who wish to use the web in their research.     

The Effects of Analyst‐Country Institutions on Biased Research: Evidence from Target Prices

Prior research demonstrates that a strong institutional infrastructure in a country moderates self‐serving behavior of market participants. Cross‐country economic activities have increased significantly, presenting a research opportunity to examine the relative influence of local versus foreign institutional infrastructure on individual market participants. We utilize variation in analyst‐country location relative to covered firm location to examine institutional determinants of optimism in analyst research. Focusing on target prices, where persistent optimism is well documented, we find that analysts domiciled in countries with stronger institutional infrastructures exhibit significantly attenuated target price optimism and more value‐relevant target prices. Our results demonstrate the importance of domestic country‐level institutional factors in moderating self‐serving behavior of market participants engaged in cross‐country activities.     

Long-term Unemployment and the Labour Market: some further results

In a previous Briefing Paper we discussed the current high rate of long-term unemployment. We described the process by which the ratio of long-term unemployment to total unemployment was determined and suggested some explanations for the rapid rise in long-term unemployment since 1980. We also investigated the role of long-term unemployment in shifting the relationship between unemployment and vacancies. In this Briefing Paper we extend our study to consider the relationship between unemployment and inflation. In particular we discuss the apparent failure of high unemployment to affect the growth of real wages. Finally we compare some policies for reducing unemployment.     

Is the Economy Overheating?

In the last year total output has risen 4 per cent and manufacturing is up 6 per cent. Unemployment has fallen by 400,000. The current account, which was in surplus in the first half of the year, has moved back into deficit. Does this mean that the economy is “over- heating”? In the context of our forecast we examine this issue; we consider how rapidly supply can increase and how fast demand is increasing. We conclude that the growth of output in the last year was initially driven by supply and that, more recently, domestic demand has been growing very rapidly. The emergence of a current account deficit is evidence of excess domestic demand but from now on we expect demand to grow less rapidly. With non-oil supply expanding at a rate in excess of 3 per cent, we forecast steady output growth and little change in either inflation or the current account. In our judgement, the economy, though hot, is not overheating.