USER INFLUENCE ON THE RELATIONSHIP BETWEEN FORECAST ACCURACY,APPLICATION AND LOGISTICS PERFORMANCE

When companies develop and apply more accurate forecasts in their planning and management activities, they have the potential to improve performance throughout their organization and across the supply chain. To realize these improvements, however, companies must (1) implement techniques and practices that improve forecast accuracy, and (2) integrate the more accurate forecasts into their planning and management activities. While much research has focused on accomplishing the first of these requirements, few studies have investigated the important role that user's play in the application of forecasts for logistics planning and management. This article establishes a connection between forecast performance, user perceptions of the quality of forecasts they receive, the extent that they use the forecasts and the resulting impact on logistics performance.     

LOCAL WELL‐POSEDNESS OF MUSIELA’S SPDE WITH LÉVY NOISE

We determine sufficient conditions on the volatility coefficient of Musiela’s stochastic partial differential equation driven by an infinite dimensional Lévy process so that it admits a unique local mild solution in spaces of functions whose first derivative is square integrable with respect to a weight.     

Firm size and the adoption of flexible automation

Data on the diffusion of flexible automation systems in the Italian metalworking industry are used to point out the role of size for the adoption of complex, systemic innovations. Plant and firm sizes turn out to be positively correlated to adoption rates. Moreover, adoption is more likely, ceteris paribus, in plants which are part of large industrial groups. This pattern applies in general, and is particularly remarkable for more advanced solutions. In this light, guidelines for industrial policies that focus on financial support, the diffusion of industrial standards, and the correction of asymmetries in the availability of know-how and skills are proposed.Financial support for this paper was provided by the Ministero della Pubblica Istruzione (MPI 40% research funds). Grants from the Fondazione Mauro and the CNR research project Tecnologie Meccaniche are also acknowledged. The research took advantage of the FLAUTO database, set up at the Laboratorio di Economia dei Processi di Automazione, MIP-Politecnico di Milano.     

Deficits, Money Growth and Inflation in Italy: 1875–1994

In this paper, we examine econometrically the "fiscal dominance" model of the Monetary History of Italy proposed by Spinelli and Fratianni (1996). We test the proposition that monetary policy is endogenous to fiscal policy, and that such an endogeneity creates a specificity in the process generating Italian inflation. We perform our econometric tests by estimating a small structural linear econometric model, addressing carefully the issues of data-congruency of the specification, non-stationarity, cointegration, and credibility of the over-identifying restrictions. Our econometric investigation is based on a sample of annual observations from 1875–1994 and exploits the structural break which occurred in 1975, when Baffi became Governor of the Bank of Italy and the lack of independence of the central bank was first perceived as a problem. Baffi started the slow evolution process leading to the independence of the central bank, which was institutionally ratified by his successor Ciampi, when, in 1981, the Bank of Italy interrupted his commitment to buy all the government bonds left unsold in the public tenders (the "divorce"). Our empirical analysis over the sample 1875–1975 confirms the existence of a link between government deficit and money growth, and of a long-run relationship between the quantity of money and the price level; the evidence also stresses the relevance of supply side factors in the determination of inflation. When the model estimated for the sample 1875–1975 is applied to the period 1975–1994, a clear structural break in the relation between government deficits and money growth emerges. (J.E.L.: E5, E6).     

Choosing project risk management techniques. A theoretical framework

The pressure for increasing quality while reducing time and costs places particular emphasis on managing risk in projects. To this end, several models and techniques have been developed in literature and applied in practice, so that there is a strong need for clarifying when and how each of them should be used. At the same time, knowledge about risk management is becoming a matter of paramount importance to effectively deal with the complexity of projects. However, communication and knowledge creation are not easy tasks, especially when dealing with uncertainty, because decision-making is often fragmented and a comprehensive perspective on the goals, opportunities and threats of a project is missing. With the purpose of providing guidelines for the selection of risk techniques taking into account the most relevant aspects characterising the managerial and operational scenario of a project, a theoretical framework to classify these techniques is proposed. Based on a literature review of the criteria to categorise risk techniques, three dimensions are defined: the phase of the risk management process, the phase of the project life cycle and the corporate maturity towards risk. The taxonomy is then applied to a wide selection of risk techniques according to their documented applications. This work helps to integrate the risk management and the knowledge management processes. Future research efforts will be directed towards refining the framework and testing it in multiple industries.     

Investment decisions,net present value and bounded rationality

The Net Present Value maximizing model has a respectable ancestry and is considered by most scholars to be a theoretically sound decision model. In real-life applications, decision makers use the NPV rule, but apply a subjectively determined hurdle rate, as opposed to the ‘correct’ opportunity cost of capital. According to a heuristics-and-biases-program approach, this implies that the hurdle-rate rule is a biased heuristic. This work shows that the hurdle-rate rule may be interpreted as a fruitful strategy of bounded rationality, where several domain-specific and project-specific elements are integrated and condensed into an aspiration level. The paper also addresses the issue of a productive cooperation between bounded and unbounded rationality.     

Valuing Climate Change Effects Upon UK Agricultural GHG Emissions: Spatial Analysis of a Regulating Ecosystem Service

This article provides estimates of the physical and economic value of changes in greenhouse gas (GHG) emissions projected to arise from climate change induced shifts in UK agricultural land use during the period 2004–2060. In physical terms, significant regional differences are predicted with the intensity of agricultural GHG emissions increasing in the upland north and western parts of the UK and decreasing in the lowland south and east of the country. Overall these imply relative modest increases in the physical quantity of emissions. However, rapid rises in the expected marginal value of such emissions translate these trends into major increases in their economic costs over the period considered.     

Anchoring the yield curve using survey expectations

The dynamic behavior of the term structure of interest rates is difficult to replicate with models, and even models with a proven track record of empirical performance have underperformed since the early 2000s. On the other hand, survey expectations can accurately predict yields, but they are typically not available for all maturities and/or forecast horizons. We show how survey expectations can be exploited to improve the accuracy of yield curve forecasts given by a base model. We do so by employing a flexible exponential tilting method that anchors the model forecasts to the survey expectations, and we develop a test to guide the choice of the anchoring points. The method implicitly incorporates into yield curve forecasts any information that survey participants have access to—such as information about the current state of the economy or forward‐looking information contained in monetary policy announcements—without the need to explicitly model it. We document that anchoring delivers large and significant gains in forecast accuracy relative to the class of models that are widely adopted by financial and policy institutions for forecasting the term structure of interest rates.