Fiscal Policy in a Currency Union at the Zero Lower Bound

This paper constructs a two‐country core–periphery New Keynesian model of a currency union to address the interaction between the objectives of regionally directed fiscal policy constrained by a single currency and the aggregate use of fiscal policy in face of the zero lower bound (ZLB) on policy interest rates. We identify an optimal path of aggregate and relative fiscal policy responses to a negative region‐specific demand shock. Our results show that (i) in a monetary union, the optimal policy response to an asymmetric reduction in demand concentrated in the periphery always entails a relative shift of fiscal expenditure toward the worse‐affected regions, (ii) though no aggregate fiscal response is required outside the ZLB, and (iii) optimal union‐wide fiscal policy is expansionary at the ZLB. Therefore, optimal policy always entails an expansion in the periphery at the ZLB, but the optimal fiscal response in the core regions can be either expansionary or contractionary depending on the parameters of the model. However, (iv) fiscal expansion in the core is warranted if the periphery cannot implement an expansion due to constraints on public spending.     

Funded pensions and intergenerational and international risk sharing in general equilibrium

We explore intergenerational and international risk sharing in a general equilibrium multiple-country model with two-tier pensions systems. The exact design of the pension system is key for the way in which risks are shared over generations. The laissez-faire market solution fails to provide an optimal allocation because the young cannot share in the financial risks. However, the existence of wage-indexed bonds combined with a pension system with a fully funded second tier that pays defined wage-indexed benefits can reproduce the first best. If wage-indexed bonds are not available, mimicking the first best is not possible, except under special circumstances. We also explore whether national pension funds want to deviate from the first best by increasing domestic equity holdings. With wage-indexed bonds this incentive is absent, while there is indeed such an incentive when wage-indexed bonds do not exist.     

The effect of government 5G policies on telecommunication operators’ firm value: Evidence from China

To lead the world's fifth-generation mobile communication networks (5G) market, China introduced several policies to support 5G industry development that will impact telecommunication operators, the main implementers in this industry. Thus, this study examines the impact of the government's 5G policy announcements on telecommunication operators' firm value in China, where the state exerts a strong influence on industry development. We find that government policy announcement in general affects telecommunication operators' stock returns negatively, and when the government announces policies with a higher level of interference, the decline in firm value is more pronounced. To understand the comprehensive impact of 5G technology on telecommunication operators, we also examine the effect of institution-driven corporate technology R&D and investment activities on firm value. We find that the firms' 5G activities also decrease their firm value, and this effect is more significant than government policy announcements. These results imply that the market has a negative evaluation of the introduction of 5G technology due to its immaturity and uncertainty. This study provides a basis for understanding the market's views on 5G technology and development policies.     

Korea's liberalization policy directives and Korea's weakening competitiveness

Recently, Korea's export growth rate is decreasing and its trade level staggering. Since Korea has few natural resources and is highly dependent on trade, this recent trend signals a serious problem lying ahead. In this paper, we look at internal and external factors weakening Korea's competitiveness in the world market and suggest liberalization policy guidelines to improve its competitiveness.     

Pricing options on scenario trees

We examine valuation procedures that can be applied to incorporate options in scenario-based portfolio optimization models. Stochastic programming models use discrete scenarios to represent the stochastic evolution of asset prices. At issue is the adoption of suitable procedures to price options on the basis of the postulated discrete distributions of asset prices so as to ensure internally consistent portfolio optimization models. We adapt and implement two methods to price European options in accordance with discrete distributions represented by scenario trees and assess their performance with numerical tests. We consider features of option prices that are observed in practice. We find that asymmetries and/or leptokurtic features in the distribution of the underlying materially affect option prices; we quantify the impact of higher moments (skewness and excess kurtosis) on option prices. We demonstrate through empirical tests using market prices of the S&P500 stock index and options on the index that the proposed procedures consistently approximate the observed prices of options under different market regimes, especially for deep out-of-the-money options.     

How strong is the macroeconomic case for downward real wage rigidity?

We explore the existence of downward real wage rigidity (DRWR) at the industry level, based on data from 19 OECD countries for the period 1973-1999. The results show that DRWR compresses the distributions of industry wage changes overall, as well as for specific geographical regions and time periods, but there are not many real wage cuts that are prevented. More important, however, DRWR attenuates larger real wage cuts, thus leading to higher real wages. There is stronger evidence for downward nominal wage rigidity than for DRWR. Real wage cuts are less prevalent in countries with strict employment protection legislation and high union density.     

PM5成型机的嘴棒长短预警研究

文章从预防的角度分析了长短嘴棒产生的原因,叙述了针对PM5机型进行长短预防的一些思路,并详细地分析了解决措施的可行性。     

Sales recruiting—A major area of underinvestment

How does a firm decide whether the amount now being spent to generate sales force applicants is too much, not enough, or about right? This question can be answered by using information routinely generated by corporate activities and a relatively straight forward decision theory technique. To illustrate that technique, an analysis was conducted for a hypothetical but by no means atypical firm. The results suggest that many corporations could appreciably increase their overall profitability by spending more on sales force recruitment and selection.     

A Comparative Analysis of Auditor, Manager and Financial Analyst Interpretations of SFAS 5 Disclosure Guidelines

This study examines empirically whether financial analysts (users), as well as managers (preparers) and external auditors ascribe different interpretations to the SFAS 5 disclosure criteria. We find: (1) financial analysts are, on average, more conservative than managers and auditors in their numerical interpretations of both the 'remote' and 'probable' verbal phrases; (2) managers and auditors share very similar numerical interpretations of these verbal phrases; (3) audit partners' numerical interpretations of the 'remote' region are between those of managers and users, whereas audit managers align their numerical interpretations with those of managers. One danger is that preparers of financial statements may omit loss contingency information that users consider valuable.