The Crisis of America’s Cities

This paper aims to show how state intervention within the European Monetary Union can have positive effects not only on growth but also on public balances and debt. The relation between centralized monetary policy and decentralized fiscal policy partly solves the lack of coordination between the two. Each time a fiscal expansion in an EU country is not accompanied by a Central Bank interest rate increase, the expansionary effect of public spending, initially financed through the emission of public bonds, will be reinforced by endogenous money creation due to the increase in growth. The final result, if growth exceeds the rate of interest, is not only an increase in equilibrium income, but also a reduction in debt.     

Effects of Unilateral Climate Policy on Terms of Trade,Capital Accumulation,and Welfare in a World Economy

We present a two-good, two-country overlapping generations model where emissions arise from production and each country has a domestic emission permit system. When one country unilaterally reduces her cap on emissions, her output available for domestic and foreign consumption diminishes more than in the other country. With unchanged consumption expenditure shares for both goods the domestic terms of trade improve, while capital stocks decline in the reducing and less strongly in the non-reducing country. Improving terms of trade in the reducing country and falling capital stocks lead in total to welfare losses in both countries. However, if the country which unilaterally reduces her emission permits is a net creditor to the world economy and the Golden Rule applies, her own welfare loss remains below that of the non-reducing country.     

Expansion Opportunity at Triple F Farms: A Case Study

Many farms and ranches consider the decision to expand as one way to remain competitive in today's marketplace. Triple F Farms is contemplating the decision to expand by buying the land and machinery of the owner/manager's retiring father. Students and outreach audiences are led through the analysis and decision-making process to evaluate the differences in farm size and financial goals and to evaluate how those goals affect the producer's expansion decision.     

Strengthening the resilience of an economy

The financial crisis has affected the real economy in stages yet nevertheless at an unexpected rate and with all regions being affected simultaneously. It advanced almost independently of the regions’ exposure to the actual initial causes, among them the subprime crisis, innovative financial products, dubious microeconomic incentives, inefficient regulation and macroeconomic imbalances. The following analysis asks how national economic structures can be made more resilient to a shock (be it a financial crisis or another turbulence) and how economic policy can act in order to stabilise the economy before and after such a shock.     

The impact of technology and trade upon the returns to education and occupation

This paper considers how technological change and globalization has influenced the return to education and occupation in Great Britain over the period 1973 to 1994. A number of papers in the literature have documented increasing demand for individuals who possess higher skill endowments than their peers. Both education and occupation can be interpreted as an individual's observable skills and how technology and trade have actually influenced returns to different educational and occupational levels is something that has not been investigated in Great Britain. For the empirical analysis estimates are based upon pooled cross sections over time and also pseudo panel techniques to control for unobservable heterogeneity.     

Pension plan accounting estimates and the freezing of defined benefit pension plans

This study provides evidence that, when “hard” freezing their defined benefit pension plans, employers select downward biased accounting assumptions to exaggerate the economic burden of their benefit plans. Downward biased expected rates of return and discount rates allow managers to increase reported pension expenses and, for discount rates, allow managers to increase reported pension liabilities. We find that prior to the Sarbanes-Oxley Act, both rates are downward biased when firms freeze their plans, whereas after SOX the bias is lower. This finding is consistent with managers opportunistically biasing pension estimates to obtain labor concessions during periods of reduced regulatory scrutiny.     

An international comparison of human resource management objectives and activities

The paper reports on mailed surveys of human resource professionals in Canada, South Africa and Zimbabwe who were asked for their views on the priorities they set in terms of human resource objectives and activities. Respondents were also asked to indicate the challenges facing the field and the resulting changes that may be required in each country. The results indicate considerable agreement between the three countries on the need for flexibility and cost effectiveness, but disagreement on priorities among some other activities. There are major differences between perceptions of immediate and long-term priorities to be set. There is a concern that short-term efficiency may be accorded a priority which prevents due consideration being given to future development and societal issues.     

Could making banks hold only liquid assets induce bank runs?

Restrictions placed on bank portfolios are analyzed in a banking model designed to capture the role of checking accounts in facilitating transactions. Forcing banks to hold only liquid assets creates the incentive for liquidity-based runs. Even when a run does not occur, welfare is reduced as a result of overinvestment in the liquid asset.     

The Last Half-Century,Societal Change and Politics in America

In a series of articles and books, John Walker and Harold Vatter extended the arguments made earlier by Evsey Domar that the U.S. economy suffers from chronically insufficient demand that leads to growth below capacity. Their analysis of secular growth complements the well-known writings of Hyman Minsky, who also emphasized the role of the “big government” and the “big bank” in stabilizing an unstable economy over the cycle. Like Minsky, Vatter and Walker argued that U.S. capitalism has evolved through several distinct forms, although they characterize the last one hundred years as a period of secular stagnation. This article will summarize, provide support for, and extend the Vatter and Walker approach, concluding with an examination of some of the dangers facing the U.S. economy today.