THE DIGITAL REVOLUTION IS OVER. LONG LIVE THE DIGITAL REVOLUTION!

Many businesses are now involved in the digital marketplace. Yet Gianvito Lanzolla and Jamie Anderson argue that the new reality of numerous companies offering overlapping digital products means that it is critical for managers to understand digital convergence and to observe the imperatives for remaining competitive.     

Inflation Volatility and Forecast Accuracy

We examine the statistical properties of inflation in a sample of inflation‐targeting (IT) and non‐IT countries. It is hard to distinguish in which monetary regime inflation is less volatile. Inflation became easier to forecast in both groups of countries after the introduction of IT. The improvement was greater for IT countries, but forecast errors remain smaller for non‐IT countries. Our analysis is based on a stochastic volatility model proposed by Stock and Watson and its novel modification. Forecasts from the modified model are generally superior to both simple benchmarks and the original Stock and Watson model.     

Valuing low probability risk: survey and experimental evidence

This study uses a survey question and an economics experiment to elicit the value of a risk mitigation investment. For 93 subjects (48 males and 45 females) the responses to hypothetical questions are compared with a risk mitigation decision that has a salient outcome. We find no gender-differentiated responses to either the maximum accepted price in the economics experiment or hypothetical willingness to pay questions from the survey. In our design, the two procedures generate aggregate measures that were in close agreement, however individual decisions were seldom consistent.     

Bayesian data augmentation methods for the synthesis of qualitative and quantitative research findings

The possible utility of Bayesian methods for the synthesis of qualitative and quantitative research has been repeatedly suggested but insufficiently investigated. In this project, we developed and used a Bayesian method for synthesis, with the goal of identifying factors that influence adherence to HIV medication regimens. We investigated the effect of 10 factors on adherence. Recognizing that not all factors were examined in all studies, we considered standard methods for dealing with missing data and chose a Bayesian data augmentation method. We were able to summarize, rank, and compare the effects of each of the 10 factors on medication adherence. This is a promising methodological development in the synthesis of qualitative and quantitative research.     

CRISES AND GOVERNMENT: SOME EMPIRICAL EVIDENCE

We examine a panel of 70 countries during 1966–2010 and utilize Reinhart and Rogoff crisis dates to estimate the effects of crises on the size and scope of government over both 5‐year and 10‐year horizons. We also estimate cross‐section regressions using 40‐year (1970–2010) changes in government variables. In general, the estimated effects of crises on government size/scope are statistically insignificant. We report reasonably robust evidence that inflation and currency crises lead to decreases in the extent of government regulations throughout an economy over a 10‐year horizon. Also, over the 40‐year period, countries that spent more years in crisis are associated with weaker legal systems and property rights. The size and scope of government appear to be persistent to the extent that even crisis episodes fail to leave a significant mark upon them. A notable exception may be that, over 40‐year periods, countries that spend more years in crisis are associated with weaker legal systems and property rights. (JEL E02, O11, O43)     

The purpose of local industrial policy

It is argued that the local investment strategy proposed by Best in Local Economy 1 is incapable of creating jobs in the way that it claims, and that it tends to perpetuate and create divisions and inequalities within the workforce. Instead local investment strategies need to be centred, not on increasing productivity but on helping to strengthen the collective organisation of workers. Some ways are discussed in which local authorities might begin to do this but to carry this through consistently will require national planning of industries and compulsory powers over investment decisions by private firms.     

Book Reviews

Richard W. Baker, M. Hadi Soesastro, J. Kristiadi and Douglas E. Ramage (eds) (1999), Indonesia: The Challenge of Change, Institute of Southeast Asian Studies, Singapore; KITLV Press, Leiden, pp. xvii + 305. Cloth: S$76.00; US$49.00; Paper: S$49.90; US$32.90.

Edward Aspinall, Herb Feith and Gerry van Klinken (eds) (1999), The Last Days of President Soeharto, Monash Asia Institute, Monash University, Melbourne, pp. x + 171. A$24.95.

Geoff Forrester and R.J. May (eds) (1998), The Fall of Soeharto, Crawford House Publishing, Bathurst NSW, pp. x + 261. A$30.00.

Stefan Eklö f (1999), Indonesian Politics in Crisis: The Long Fall of Suharto, 1996–98, Studies in Contemporary Asia Series, no. 1, Nordic Institute of Asian Studies (NIAS), Copenhagen, pp. xii + 272. Cloth: £30.00; US$45.00; A$75.00; Paper: £12.99; US$19.95; A$33.00.

Jim Schiller (1996), Developing Jepara in New Order Indonesia, Monash Asia Institute, Centre of Southeast Asian Studies, Monash University, Melbourne, pp. xii + 312. A$29.95.

Richard Mathews (1999), A Business Survival Guide to Eastern Indonesia, North Australia Research Unit, The Australian National University, Darwin, pp. 189.     

Economics,Insurance, and Flood Hazards

This article introduces the Symposium Economics, Insurance, and Flood Hazards. We provide background on the magnitude of recent extreme weather events and subsequent flooding in terms of lives and property damage. After a brief background of the National Flood Insurance Program and its renewal, we describe the papers contributed to the symposium and their relationship to the challenges described by the U.S. General Accountability Office (GAO).     

Understanding expressed low concern and latent concern near a hazardous waste treatment facility

This paper discusses local small town residents’ concerns about risk and safety near a hazardous waste facility at Swan Hills, Alberta, Canada. The majority of the residents studied outwardly express that they have low concern about the facility. The purposes are to both elaborate existing theory that potentially explains low concern and to explore new explanations of low concern in everyday life. Theories or concepts which potentially explain expressed low concern are start-points for this qualitative case study. These include: economic risk theory, psychometric risk theory, cultural risk theory, cognitive dissonance (threat denial), community identity and stigma, and risk attenuation. Thirtyeight in-depth resident interviews involving views of facility risks, as well as community life, are used to better understand the social construction of risk. It is found that despite the fact that 31 residents outwardly insist they have no or low concern about facility risks when first prompted, 11 actually do show latent concerns when probed further, expressed as uncertainty, reservations and doubt. It is argued that juxtaposing the views of insiders against those perceived to be held by outsiders furthers understanding of why facility concern is rarely expressed in such a community. There is a heightened sense of pride and positive community identity manifest as a defensive reaction by insider residents to outsiders who are perceived to hold negative, stigmatizing views of the facility as well as the town. Implications relating to community and industry vigilance as well as the impacts of outsiders sensationalising risk are discussed.