Cost Accounting for War: Contracting Procedures and Cost-plus Pricing in WWI Industrial Mobilization in Italy

The aim of this paper is to explore the role played by cost accounting in Italy's Industrial Mobilization system and in the largest firm manufacturing weaponry, Ansaldo of Genoa, during WWI. While in other countries such as the UK and the USA, efficiency in buying and managing war material was an important part of military strategy, in Italy, various factors impeded it. This paper focuses on contracting procedures adopted by the Ministry of War and Ministry of Munitions and looks at the cost accounting practices in Ansaldo to see how costs were determined and how prices were set. We found a paradox. On the one hand, despite knowledge of costing, the government did not impose cost controls on the producers of war material, nor on their profit rates. On the other hand, examining Ansaldo's cost sheets we discover they underestimated their production costs leading the firm to losses despite its favorable political position. This paper contributes to the theoretical debate about the relationships between accounting and war in the Italian context where lobbying, collusion, bribery and private interests dominated the administrative behavior of public and private actors instead of efficiency, accountability and honesty.     

A No‐Arbitrage Fractional Cointegration Model for Futures and Spot Daily Ranges

The no‐arbitrage relation between futures and spot prices implies an analogous relation between futures and spot daily ranges. The long‐memory features of the range‐based volatility estimators are analyzed, and fractional cointegration is tested in a semi‐parametric framework. In particular, the no‐arbitrage condition is used to derive a long‐run relationship between volatility measures and to justify the use of a fractional vector error correction model (FVECM) to study their dynamic relationship. The out‐of‐sample forecasting superiority of FVECM, with respect to alternative models, is documented. The results highlight the importance of incorporating the long‐run equilibrium in volatilities to obtain better forecasts, given the information content in the volatility of futures prices. © 2011 Wiley Periodicals, Inc. Jrl Fut Mark 33:77–102, 2013     

Intellectual property marketplaces and how they work: Evidence from German pharmaceutical firms

This article examines a sample of German pharmaceutical firms to highlight the strategic reasons why firms participate in various intellectual property (IP) marketplaces, both proprietary (patents and copyrights) and non-proprietary (open source and non-patented technology). The obstacles that prevent these marketplaces from functioning efficiently are also investigated. The analysis suggests that IP policy must embrace all IP forms and must recognise that IP marketplaces do not work “automatically” but suffer many institutional failures.     

Revisiting the Effects of Remittances on Bank Credit: A Macro Perspective

We investigate the effect of remittances on bank credit in developing countries. Understanding this link is important in view of the growing relevance of remittances as a source of external finance and of the beneficial impact that financial intermediation is likely to have on economic growth. Our contribution is twofold. First, we present a theoretical model of bank credit in a hypothetical remittances‐receiving country where: (1) the banking sector is imperfectly competitive; and (2) bank rates change infrequently because of the presence of adjustment costs. We show that in equilibrium, the relationship between remittances and bank‐credit is likely to be non‐linear. Second, we look at the evidence using a panel data set for a large group of developing and emerging economies over the period 1970–2009. We find that at initially low levels of remittances, an increase in remittances reduces the volume of credit extended by banks. However, at sufficiently high levels of remittances, the effect becomes positive. The turning point of the relationship occurs at a level of remittances of about 2.5% of GDP, which would imply that approximately 50% of our sample lies to each side of this threshold.     

The characteristics of derivatives users: An analysis of the thrift industry

This paper compares the characteristics of derivatives users and non-users, using data from U.S. savings associations during 1993–1994. Unlike prior studies, the data used in this analysis are market values of assets and liabilities. Market values were obtained from the base case (no interest rate change) in the Office of Thrift Supervision's (OTS) Net Portfolio Value Model. This model calculates the value of all of a thrift's positions to calculate the value at risk. We determine the consistency of theories of derivatives use with the characteristics of derivatives users.     

SPINOFFS AND THE MARKET FOR IDEAS*

We present a theory of entry through spinoffs where workers generate ideas and possess private information concerning their quality. Because quality is privately observed, adverse selection implies that the market can only offer a price that reflects the average quality of ideas sold. Only workers with good ideas decide to spin off, whereas workers with mediocre ideas sell them. Existing firms pay a price for ideas sold in the market that implies zero expected profits. Hence, firms’ project selection is independent of firm size, which can lead to scale‐independent growth. This mechanism results in invariant firm‐size distributions that resemble the data.     

The distributive effects of institutional quality when government stability is endogenous

Redistribution is the strategic response of the incumbent to a decrease in its survival probability resulting from weak institutions and growing income inequalities. The purpose of the paper is to test empirically the validity of this conjecture. System and single equation estimations provide a consistent picture: (i) bad institutions increase income inequality, while more redistribution reduces income inequality; (ii) greater inequality increases the probability of government termination; and (iii) a higher probability of termination increases the extent of redistribution. Overall, there is strong evidence in support of the proposed conjecture.