A Phillips curve interpretation of error-correction models of the wage and price dynamics

This paper presents a model of employment, distribution andinflation in which a modern error correction specification ofthe nominal wage and price dynamics (referring to claims onincome by workers and firms) occupies a prominent role. It isbrought out, explicitly, how this rather typical error-correctionsetting, which actually seems to capture the wage and pricedynamics of many large-scale econometric models quite well,is fully compatible with the notion of an old-fashioned Phillipscurve with finite slope. It is shown how the steady-state impactof various shocks to the model can be profitably conceived ofand interpreted in terms of (and to some extent even calculatedby means of) this long-run Phillips curve.     

Public Policy for Venture Capital

This paper proposes a simple partial equilibrium model to investigate the effects of government policy on venture capital backed investments. Giving up an alternative career, entrepreneurs focus their effort on a single, high risk venture each. Venture capitalists acquire an equity stake and offer a base salary as well. In addition to providing incentive compatible equity finance, they support the venture with managerial advice to raise survival chances. We analyze several policy measures addressed at venture capital activity: government spending on entrepreneurial training, subsidies to equipment investment, and output subsidies at the production stage. While these measures stimulate entrepreneurship, only cost-effective government services can improve welfare.     

The Role of Prices for Excludable Public Goods

When a public good is excludable it is possible to charge individuals for using the good. We study the role of prices for publicly provided excludable public goods within an extension of the Stern-Stiglitz version of the Mirrlees optimal income tax model.We show that for a public consumer good there is a range of circumstances in which charging a price for the public good decreases welfare. We find that a necessary condition for a positive price to be desirable is that the marginal valuation of the public good is increasing in leisure. However, even under this condition, welfare is initially decreasing in the price, implying that charging a lower than optimal price may be less efficient than setting a zero price. Thus, even when there is a case for charging a price for the public good, an attempt to implement the optimum in practice may be risky, as even setting a modest price to avoid overshooting the optimum may be Pareto inferior to charging no price at all. The policy case for a price may thus appear rather weak. We also find that producers using an intermediate excludable public good as an input should not be charged a price for using the good.     

Science,technology and engineering: Building lifelong bridges

In response to what is envisaged as a crisis in scientific and technological literacy, various organizations and governmental agencies have put forward recommendations for enriching students' science and technology experiences in formal and informal learning environments. This paper examines one such organization — the Professional Engineers Ontario — and their Innovators in the School initiative. Through this student outreach programme, engineers, scientists and technologists volunteer their time to visit elementary and secondary level students, encouraging them to pursue science, technology and engineering careers. In particular, this research identifies issues that the Innovators (interestingly, over half are women) consider to be important for promoting a positive image of science to young people. First, the paper considers what an image of science might potentially be. Second, it addresses the question of how Innovators and other educators (teachers, policy-makers, curriculum planning teams) might promote this positive image in the classroom and school.     

Tax policy, venture capital, and entrepreneurship

The paper studies the effects of tax policy on venture capital activity. Entrepreneurs pursue a single high risk project each but have no own resources. Financiers provide funds, covering investment cost plus an upfront payment, in exchange for a share in the firm. The contract must include incentives to enlist full effort of entrepreneurs. Venture capitalists also assist with valuable business advice to enhance survival chances. The paper develops a general equilibrium framework with a traditional and an entrepreneurial sector and investigates the effects of taxes on the equilibrium level of managerial advice, entrepreneurship and welfare. It considers differential wage and capital income taxes, a comprehensive income tax, progressive taxation as well as investment and output subsidies to the entrepreneurial sector.     

Open space, residential property values, and spatial context

We use hedonic analysis of home transaction data from the Minneapolis–St. Paul metropolitan area to estimate the effects of proximity to open space on sales price. We allow the effects of proximity to vary with demographic and location-specific characteristics and include fixed effects to control for observed and unobserved neighborhood characteristics. We find that the value of proximity to open space is higher in neighborhoods that are dense, near the central business district, high-income, high-crime, or home to many children. Using the metropolitan area's average value may substantially overestimate or underestimate the value of open space in particular neighborhoods.     

Start-ups, venture capitalists, and the capital gains tax

A model of start-up finance with double moral hazard is proposed. Entrepreneurs have ideas and technical competence, but lack own resources as well as commercial experience. Venture capitalists (VCs) provide start-up finance and managerial support. Both types of agents thus jointly contribute to the firm's success, but neither type's effort is verifiable. We find that the market equilibrium is biased towards inefficiently low entrepreneurial effort and venture capital support. In this situation, the capital gains tax is particularly harmful. The introduction of a small tax impairs effort and advice and leads to a first-order welfare loss. Several other policies towards venture capital and start-up entrepreneurship are also investigated.     

Barriers to Increased Market-Oriented Activity: What the Literature Suggests

Most research on market orientation has dealt with assessing how market orientation behaviour is related to business performance. This work has established an intense market-oriented activity as significantly and positively related to business performance under most circumstances. In a maturing field of research and practice the question on how to design programs for building market orientation is about to be answered. This branch looks deeper into the nature of market orientation and into designing and managing the increase of market orientation. However, the question on why marketing and related activities still seem to attract relatively few resources is not answered by supplying another checklist or package of facilitators. Based on published conceptual writings and empirical studies this article makes an account of what the intra-organizational barriers may be to increased market-oriented activity. A framework of six generic domains is suggested: Organizational structure, human resource management, market-oriented activity competence, psychological climate, managers' personality characteristics, and individually held beliefs. A model is suggested interrelating the domains.     

The Intergenerational Transmission of Automobile Brand Preferences

We document a strong correlation in the brand of automobile chosen by parents and their adult children, using data from the Panel Study of Income Dynamics. This correlation could represent transmission of brand preferences across generations, or it could result from correlation in family characteristics that determine brand choice. We present a variety of empirical specifications that lend support to the former interpretation and to a mechanism that relies at least in part on state dependence. We then discuss implications of intergenerational brand preference transmission for automakers’ product‐line strategies and for the strategic pricing of vehicles to different age groups.