Sequential Malmquist Indices of Productivity Growth: An Application to OECD Industrial Activities

The paper applies both the standard DEA methodology with contemporaneous frontiers and DEA with sequential frontiers to study changes in productivity and efficiency in manufacturing for a sample of eleven OECD countries over a twenty-year period. It uses a decomposition of the industrial Malmquist productivity indices to locate the sources of productivity growth: 'technical progress' and 'catching up.' The alternative indices are interrelated in a unifying framework that provides an interpretation to their difference. We argue that for manufacturing industries, in which technological regress is unlikely to occur, DEA with sequential frontiers provides a more adequate measure for the contribution of technical changes than standard DEA.     

A cost analysis of SIR-Spheres yttrium-90 resin microspheres versus tyrosine kinase inhibitors in the treatment of unresectable hepatocellular carcinoma in France,Italy, Spain and the UK

Abstract

Background and aims: A wide range of treatment options are available for hepatocellular carcinoma (HCC), including systemic treatment with tyrosine kinase inhibitors (TKIs) such as sorafenib and lenvatinib, immunotherapies, locoregional therapies such as selective internal radiation therapy (SIRT) and treatments with curative intent such as resection, radiofrequency ablation and liver transplantation. Given the substantial economic burden associated with HCC treatment, the aim of the present analysis was to establish the cost of using SIRT with SIR-Spheres yttrium-90 (Y-90) resin microspheres versus TKIs from healthcare payer perspectives in France, Italy, Spain and the United Kingdom (UK).

Methods: A cost model was developed to capture the costs of initial systemic treatment with sorafenib (95%) or lenvatinib (5%) versus SIRT in patients with HCC in Barcelona Clinic Liver Cancer (BCLC) stages B and C. A nested Markov model was utilized to model transitions between progression-free survival (PFS), progression and death, in addition to transitions between subsequent treatment lines. Cost and resource use data were identified from published sources in each of the four countries.

Results: Relative to TKIs, SIRT with SIR-Spheres Y-90 resin microspheres were found to be cost saving in all four country settings, with the additional costs of the microspheres and the SIRT procedure being more than offset by reductions in drug and drug administration costs, and treatment of adverse events. Across the four country settings, total cost savings with SIR-Spheres Y-90 resin microspheres fell within the range 5.4–24.9% and SIRT resulted in more patients ultimately receiving treatments with curative intent (4.6 vs. 1.4% of eligible patients).

Conclusion: SIR-Spheres Y-90 resin microspheres resulted in cost savings relative to TKIs in the treatment of unresectable HCC in all four country settings, while increasing the proportion of patients who become eligible for treatments with curative intent.     

Motivating Through Delegating Tasks or Giving Attention

An important role of managers is to motivate subordinates. Monetaryrewards have been the focus of economic analysis. Managers alsouse other means to influence subordinates. If a manager canbetter assess the subordinate's ability than the subordinatehimself, and if ability and effort are complements, the managerfinds it hard not to overstate a junior's ability. Talk is cheap.We analyze under what conditions a manager can use organizationalpractices such as delegation and the selective provision ofattention to credibly communicate his assessment. We comparetheir desirability. Delegation is preferable in case the manager'sassessment is fairly accurate; attention is inescapable if itis inaccurate.     

Problems evaluating sales representative performance?: Try activity-based costing

Activity-based costing (ABC) offers a way to improve performance evaluation by providing estimates of the cost of satisfying sales terms to which a sales representative may agree, such as number of batches in which an order is produced and number of training hours provided to customer employees. It also provides estimates of the cost of resources that a sales representative may use while engaging in marketing activities, such as making sales calls and attending trade shows. Traditional costing, which assumes that costs only vary at the unit level, does not provide estimates of the costs of many of these terms and activities.     

Chinese Walls in German Banks*

Analysts in a bank’s research department cover firms that have no relationship with the bank as well as companies in which the bank has a strategic interest. Officially, banks must establish Chinese Walls around their research departments to allow the analysts to work independently and to avoid the flow of insider information. We examine analyst behavior under long-term bank-firm relationships using ownership data and analysts’ earnings per share forecasts for German companies from 1994 to 2001. We find evidence that is consistent with analysts reconciling their employers’ interests with their own career concerns. They seem to use their information advantage strategically by releasing favorable and thereby more precise reports when the market underestimates earnings. In order not to jeopardize the bank-client relationship, they suppress negative information when the market is too optimistic. Combining situations where the market over- and underestimates earnings, we can replicate the unconditional positive bias in analyst forecasts found in the previous literature. Despite the bias in affiliated analysts’ forecasts, they nonetheless selectively communicate valuable information to investors. *We gratefully acknowledge the contribution of I/B/E/S International Inc. for providing earnings per share forecast data. This data has been provided as part of a broad academic program to encourage earnings expectations research. We thankfully acknowledge financial support from the Austrian National Bank (OeNB) under the Jubil?umsfonds grant number 8523. We thank Werner Antweiler, Michael Halling, Helmut Elsinger, Evelyn Hayden, Greg Hebb, Cornelia Kullmann, Kai Li, Colin Mayer, Stefan Pichler, Duane Seppi, Alex Stomper, Neal Stoghton, Michael Stutzer, Suresh Sundaresan, Yishay Yafeh, Josef Zechner, Christine Zulehner, an anonymous referee, and seminar participants at UBC, the Northern Finance Association meetings, the Western Finance Association meetings, and the European Finance Association meetings for helpful comments and Eva Smolen for excellent research assistance.     

Firm heterogeneity, productivity and spatially bounded knowledge externalities

In this paper, we argue that conceptually disentangling the ‘context versus composition’ aspects of regional growth is a multilevel issue. By applying multilevel models (also called random-effects models), we show (1) the importance of considering firm-specific characteristics simultaneously with region-specific characteristics, as we find that a large part of what is traditionally assigned to the impact of the region should be assigned to firm-specific characteristics and (2) that existing single-level methodologies can be problematic, as they are vulnerable to the charge of estimating significance levels that are too liberally assigned and promote exaggerations. This is illustrated empirically by showing that single-level approaches would lead to the conclusion that innovation spillovers are highly significant in a setting of Dutch urban growth differentials, while multilevel analyses shows less liberally assigned significance levels. We conclude that multilevel-effect models better fit research questions that combine firm and spatial characteristics simultaneously, especially because they allow firm-specific characteristics to be differently linked to their regional contexts.     

Moving markets? Government bond investors and microeconomic policy changes

Do sovereign bond markets react systematically to microeconomic policy reforms? Some observers suggest that investors are very attentive to supply‐side policies such as those related to labor markets, corporate taxation, and product standards. They argue that, along with macroeconomic outcomes and broad financial market conditions, such reforms affect sovereign bond premiums, for developed as well as emerging economies. In contrast, we predict few systematic effects of supply‐side policy reforms on sovereign bond market outcomes. Our theory draws on a standard three‐equation model of the economy, widely accepted among economic and finance professionals. That model makes few clear predictions regarding the anticipated effects of microeconomic policy changes; as a result, we expect that such reforms will not generate systematic market reactions. Our analyses, based on daily data from 37 countries from 2004 to 2012, indeed reveal little evidence of a systematic bond market reaction to the 47 most significant reforms to corporate taxation and labor market regulation. These results call into question the notion that “bond market vigilantes” play a central role in compelling governments to enact specific microeconomic policy changes.