ARE THE TWIN DEFICITS REALLY RELATED?

The emergence of record current-account and fiscal deficits in the United States during the 1980s draws increasing attention to what has become known as the "twin deficit" problem. Conventional wisdom is that a shift to larger government deficits entails a decline in government saving and results in larger trade deficits, Persistently large trade deficits are troublesome because they imply a transfer of wealth to foreigners and possibly a reduction in future generations' living standards.
This paper examines whether post-World War II data for the United States reveal a long-run secular relationship between the trade deficit and the fiscal deficit. The focus is on the secular relationship since that is the one most relevant to long-run policy concerns. The authors employ three different statistical techniques: (i) a deterministic technique for separating the secular components from the cyclical components to derive secular measures of the twin deficits, (ii) a stochastic procedure to isolate the secular components, (Hi) cointegration analysis to test for a long-run equilibrium relationship.
The authors conclude that, based on the first two approaches, evidence of a positive secular relationship between the twin deficits exists only under flexible exchange rates. This relationship appears quite strong–that is, a $1 change in the fiscal deficit eventually leads to roughly a $1 change in the trade deficit. On the other hand, findings based on cointegration analysis indicate no long-run equilibrium relationship between the twin deficits. This latter finding, however, may reflect a low power of the relevant statistical tests stemming from the shortness of the sample period.     

审计意见的决定因素：来自中国上市公司的证据

利用中国上市公司和相应会计师事务所2001—2003年的综列数据,本文研究了审计意见和会计师事务所规模、上市公司的风险和盈余管理等因素之间的关系。本文发现有破产风险的、进行盈余管理的或小规模的上市公司更可能得到非标准审计意见。如果它们又是大会计师事务所的客户,则得到非标意见的概率更大。本文不支持合资会计师事务所的审计质量更高的结论。     

CLEAN INDOOR AIR LAWS AND THE DEMAND FOR CIGARETTES

This paper empirically tests the effect of clean indoor air laws on smoking. Public place clean indoor air laws restrict cigarette smoking in public places such as restaurants. Private place clean air laws regulate smoking in private work places as well as in public places. This study uses a time series of cross sections of the 50 states of the United States and Washington, D.C., from 1975 through 1985, to estimate single equation and simultaneous equation models of cigarette demand. The single equation results indicate that both the public place law and the private work place law have a negative effect on cigarette demand. However, a test for endogeneity shows that the enactment of clean indoor air laws is a function of cigarette demand. Results from a simultaneous equations model indicate that the public place law has a significant negative impact on cigarette demand, while the work place law has no effect on cigarette demand. Although these results demonstrate that only states with low levels of smoking have passed work place clean air laws, the results do not imply that the level of smoking would not decrease if such a law were imposed in all states.     

How Frequent Financial Reporting Can Cause Managerial Short‐Termism: An Analysis of the Costs and Benefits of Increasing Reporting Frequency

We develop a cost–benefit tradeoff that provides new insights into the frequency with which firms should be required to report the results of their operations to the capital market. The benefit to increasing the frequency of financial reporting is that it causes market prices to better deter investments in negative net present value projects. The cost of increased frequency is that it increases the probability of inducing managerial short‐termism. We analyze the tradeoff between these costs and benefits and develop conditions under which greater reporting frequency is desirable and conditions under which it is not.     

SOME ECONOMIC ASPECTS OF PEST CONTROL IN AGRICULTURE1

This article deals with agricultural losses attributable to insects, diseases and weeds with estimates of percentage rates of losses in crops presented for both Canada and the United States. Analysis of the economic effect of potential elimination of losses in Canadian wheat and fresh apples are discussed. In general, the effect of elimination of losses by means of improved techniques depends upon the elasticity of demand of the individual commodity studied. The particular market position of Canadian wheat created an exception for this product. Emphasizing the need for further scientific investigation, subjects and methods for forthcoming research are outlined.     

Aligning Performance Measurement Systems With Strategy: The Case of Environmental Strategy

Alignment of an organization's performance measurement system with its strategy is widely advocated as a guiding principle in management control system design. Despite its importance, it is far from clear what strategic alignment of performance measures entails, whether and how organizations achieve it. In this article we explore the alignment of performance measures focusing on firms' use of environmental performance indicators as the consequence of pursuing an environmental strategy. Based on the economic and contingency literatures on management control system design and performance measurement, we propose that the use of such performance measures is a consequence of changing the design of the performance measurement system to accommodate the strategy, and by increasing the informativeness of performance metrics. We test these propositions in a sample of financial managers in manufacturing firms in The Netherlands. We find that alignment to environmental strategy is mostly achieved through the increased quantification of environmental performance measures and via their increased sensitivity to managerial actions.     

Financial Reporting and Employee Job Search

We investigate the effects of financial reporting on current employee job search, that is, whether firms' public financial reports cause their employees to reevaluate their jobs and consider leaving. We develop theory for why current employees use earnings announcements (EAs) to inform job search decisions, and empirically investigate job search based on employees' activity on a popular job market website. We find that job search by current employees increases significantly during EA weeks, especially when employees are more mobile and when their information frictions are greater. We also find that employees use EAs to update their expectations about their employers' economic prospects, consistent with learning, and some evidence that positive announcements elicit less search. Our paper contributes to the burgeoning labor and accounting literature by providing among the first evidence closely linking financial reports to employee learning and job search.     

Effects of State-Dependent Forward Guidance,Large-Scale Asset Purchases,and Fiscal Stimulus in a Low-Interest-Rate Environment

We study the incidence and severity of periods with a binding effective lower bound on nominal interest rates and the efficacy of three types of state-dependent policies—forward guidance about the path of future interest rates, large-scale asset purchases, and spending-based fiscal stimulus—in mitigating the detrimental consequences of the lower bound for macro-economic stability. Based on the ECB's New Area-Wide Model of the euro area, our findings suggest that, if left unaddressed, the lower bound can cause substantial macro-economic distortions. In the near term, forward guidance, if fully credible, is most powerful and can largely undo these distortions. A combination of imperfectly credible forward guidance, asset purchases, and fiscal stimulus is almost equally effective, especially when asset purchases enhance the credibility of the forward-guidance policy via a signaling effect. In the long run, with an equilibrium real rate as low as zero, a combination of all three policies is needed to materially reduce the distortions.