Monetary Policy Delegation, Contract Costs, and Contract Targets

We reconsider the optimal central banker contract derived in Walsh (1995). We show that if the government's objective function places weight (value) on the cost of the contract, then the optimal inflation contract does not completely neutralize the inflation bias. That is, a fraction of the inflation bias emerges in the resulting inflation rate after the central banker's monetary policy decision. Furthermore, the more concerned the government is about the cost of the contract or the less selfish (more benevolent) is the central banker, the smaller is the share of the inflation bias eliminated by the contract. No matter how concerned the government is about the cost of the contract or how unselfish (benevolent) the central banker is, the contract always reduces the inflationary bias by at least half. Finally, a central banker contract written in terms of output (i.e., incorporating an output target) can completely eradicate the inflationary bias, regardless of concerns about contract costs.

Transaction Costs, Production Costs, and the Passage of Time

No abstract available.

Varying Injurer Costs of Care, Negligence, and Self-Selection

Standard economic models of negligence set a single standard of care to which all injurers must conform. When injurers differ in their costs of care, this leads to distortions in individual care choices. This paper derives the characteristics of a negligence rule that induces optimal care by all injurers by means of self-selection. The principal features of the rule are (1) the due standard is set at the optimal care of the lowest cost injurer, and (2) liability increases gradually rather than abruptly as care falls below this standard. The results are consistent with the gradation in liability under certain causation rules and under comparative negligence.

Bilateral Accidents with Intrinsically Interdependent Costs of Precaution

The standard economic model of bilateral precaution postulates an interdependency between the care taken by injurers and victims that operates through the effects of each on the expected accident loss. This paper considers situations in which each party's precaution affects not only expected accident loss, but also directly affects the other party's cost of taking precaution. Generalizing the economic model of tort law in this way allows for a more complete analysis of when standard tort rules can and cannot induce optimal precaution. When this additional externality is introduced into a model of unilateral harm (where all accident losses are borne by the victim), none of the standard tort liability rules induces socially optimal behavior by both parties. Moreover, under a contributory negligence rule, the only equilibrium is in mixed strategies; this gives rise to the possibility of litigation in equilibrium. A 'tort-like' liability rule that induces socially optimal behavior by both parties is then characterized; this involves a payment by victims to non-negligent injurers whenever an accident occurs. The model is then extended to consider the case of bilateral harm (where both parties suffer accident losses). It is shown that, as long as both parties can sue to recover their accident losses, all negligence-based tort rules lead to socially optimal behavior by both parties.

Bankruptcy Costs, Liability Dollarization, and Vulnerability to Sudden Stops

Emerging market countries that have improved institutions and attained intermediate levels of institutional quality have experienced severe financial crises following capital flow reversals. However, there is also evidence that countries with strong institutions and deep capital markets are less affected by external shocks. We reconcile these two observations using a calibrated DSGE model that extends the financial accelerator framework developed in Bernanke, Gertler, and Gilchrist (1999). The model captures financial market institutional quality with creditors. ability to recover assets from bankrupt firms. Bankruptcy costs affect vulnerability to sudden stops directly but also indirectly by affecting the degree of liability dollarization. Simulations reveal an inverted U-shaped relationship between bankruptcy recovery rates and the output loss following sudden stops. We provide empirical evidence that this non-linear relationship exists.

The Secret Life of Mundane Transaction Costs

Transaction costs, one often hears, are the economic equivalent of friction in physical systems. Like physicists, economists can sometimes neglect friction in formulating theories; but like engineers, they can never neglect friction in studying how the system actually does let alone should work. Interestingly, however, the present-day economics of organization also ignores friction. That is, almost single-mindedly, the literature analyzes transactions from the point of view of misaligned incentives and (especially) transaction-specific assets. The costs involved are certainly costs of running the economic system in some sense, but they are not obviously frictions. Stories about frictions in trade are not nearly as intriguing as stories about guileful trading partners and expensive assets placed at risk. But I will argue that these seemingly dull categories of cost what Baldwin and Clark (2003) call mundane transaction costs actually have a secret life. They are at least as important as, and quite probably far more important than, the more glamorous costs of asset specificity in explaining the partition between firm and market. These costs also have a secret life in another sense: they have a secret life cycle. I will argue that these mundane transaction costs provide much better material for helping us understanding how the boundaries among firms, markets, and hybrid forms change over time.

Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire

Risk and transaction costs often provide competing explanations of institutional outcomes. In this paper we argue that they offer opposing predictions regarding the assignment of fixed and variable taxes in a multi-tiered governmental structure. While the central government can pool regional risks from variable taxes, local governments can measure variable tax bases more accurately. Evidence on tax assignment from the mid-sixteenth century Ottoman Empire supports the transaction cost explanation, suggesting that risk matters less because insurance can be obtained in a variety of ways.

Transportation in America's future: potentials for the next half century. Part 1: societal context. Final report.

Transportation Department, Washington, D.C.

Attaching unit costs to Australia's National Survey of Mental Health and Wellbeing

Background: In mental health, policy-makers and planners are increasingly being asked to set priorities. This means that health economists, health services researchers and clinical investigators are being called upon to work together to define and measure costs. Typically, these researchers take available service utilisation data and convert them to costs, using a range of assumptions. There are inefficiencies, as individual groups of researchers frequently repeat essentially similar exercises in achieving this end. There are clearly areas where shared or common investment in the development of statistical software syntax, analytical frameworks and other resources could maximise the use of data. Aims of the Study: This paper reports on an Australian project in which we calculated unit costs for mental health admissions and community encounters. In reporting on these calculations, our purpose is to make the data and the resources associated with them publicly available to researchers interested in conducting economic analyses, and allow them to copy, distribute and modify them, providing that all copies and modifications are available under the same terms and conditions (i.e., in accordance with the 'Copyleft' principle), Within this context, the objectives of the paper are to: (i) introduce the 'Copyleft' principle; (ii) provide an overview of the methodology we employed to derive the unit costs; (iii) present the unit costs themselves; and (iv) examine the total and mean costs for a range of single and comorbid conditions, as an example of the kind of question that the unit cost data can be used to address. Method: We took relevant data from the Australian National Survey of Mental Health and Wellbeing (NSMHWB), and developed a set of unit costs for inpatient and community encounters. We then examined total and mean costs for a range of single and comorbid conditions. Results: We present the unit costs for mental health admissions and mental health community contacts. Our example, which explored the association between comorbidity and total and mean costs, suggested that comorbidly occurring conditions cost more than conditions which occur on their own. Discussion: Our unit costs, and the materials associated with them, have been published in a freely available form governed by a provision termed 'Copyleft'. They provide a valuable resource for researchers wanting to explore economic questions in mental health. Implications for Health Policies: Our unit costs provide an important resource to inform economic debate in mental health in Australia, particularly in the area of priority-setting. In the past, such debate has largely, been based on opinion. Our unit costs provide the underpinning to strengthen the evidence-base of this debate. Implications for Further Research: We would encourage other Australian researchers to make use of our unit costs in order to foster comparability across studies. We would also encourage Australian and international researchers to adopt the 'Copyleft' principle in equivalent circumstances. Furthermore, we suggest that the provision of 'Copyleft'-contingent funding to support the development of enabling resources for researchers should be considered in the planning of future large-scale collaborative survey work, both in Australia and overseas.

Technology valuation within the context of transfer collaborations with Chinese machine tool companies

The point of departure for this study was a recognition of the differences in suppliers' and acquirers' judgements of the value of technology when transferred between the two, and the significant impacts of technology valuation on the establishment of technology partnerships and effectiveness of technology collaborations. The perceptions, transfer strategies and objectives, perceived benefits and assessed technology contributions as well as associated costs and risks of both suppliers and acquirers were seen to be the core to these differences. This study hypothesised that the capability embodied in technology to yield future returns makes technology valuation distinct from the process of valuing manufacturing products. The study hence has gone beyond the dimensions of cost calculation and price determination that have been discussed in the existing literature, by taking a broader view of how to achieve and share future added value from transferred technology. The core of technology valuation was argued as the evaluation of the 'quality' of the capability (technology) in generating future value and the effectiveness of the transfer arrangement for best use of such a capability. A dynamic approach comprising future value generation and realisation within the context of specific forms of collaboration was therefore adopted. The research investigations focused on the UK and China machine tool industries, where there are many technology transfer activities and the value issue has already been recognised in practice. Data were gathered from three groups: machine tool manufacturing technology suppliers in the UK and acquirers in China, and machine tool users in China. Data collecting methods included questionnaire surveys and case studies within all the three groups. The study has focused on identifying and examining the major factors affecting value as well as their interactive effects on technology valuation from both the supplier's and acquirer's point of view. The survey results showed the perceptions and the assessments of the owner's value and transfer value from the supplier's and acquirer's point of view respectively. Benefits, costs and risks related to the technology transfer were the major factors affecting the value of technology. The impacts of transfer payment on the value of technology by the sharing of financial benefits, costs and risks between partners were assessed. The close relationship between technology valuation and transfer arrangements was established by which technical requirements and strategic implications were considered. The case studies reflected the research propositions and revealed that benefits, costs and risks in the financial, technical and strategic dimensions interacted in the process of technology valuation within the context of technology collaboration. Further to the assessment of factors affecting value, a technology valuation framework was developed which suggests that technology attributes for the enhancement of contributory factors and their contributions to the realisation of transfer objectives need to be measured and compared with the associated costs and risks. The study concluded that technology valuation is a dynamic process including the generation and sharing of future value and the interactions between financial, technical and strategic achievements.

The evaluation of information systems in the organisational context of the National Health Service. Available in 2 volumes.

This thesis describes a project which has investigated the evaluation of information systems. The work took place in, and is related to, a specific organisational context, that of the National Health Service (NHS). It aims to increase understanding of the evaluation which takes place in the service and the way in which this is affected by the NHS environment. It also investigates the issues which surround some important types of evaluation and their use in this context. The first stage of the project was a postal survey in which respondents were asked to describe the evaluation which took place in their authorities and to give their opinions about it. This was used to give an overview of the practice of IS evaluation in the NHS and to identify its uses and the problems experienced. Three important types of evaluation were then examined in more detail by means of action research studies. One of these dealt with the selection and purchase of a large hospital information system. The study took the form of an evaluation of the procurement process, and examined the methods used and the influence of organisational factors. The other studies are concerned with post-implementation evaluation, and examine the choice of an evaluation approach as well as its application. One was an evaluation of a community health system which had been operational for some time but was of doubtful value, and suffered from a number of problems. The situation was explored by means of a study of the costs and benefits of the system. The remaining study was the initial review of a system which was used in the administration of a Breast Screening Service. The service itself was also newly operational and the relationship between the service and the system was of interest.

Conclusion : on multiple levels of analysis, context, contingency and capital

In this concluding chapter, we bring together the threads and reflections on the chapters contained in this text and show how they relate to multi-level issues. The book has focused on the world of Human Resource Management (HRM) and the systems and practices it must put in place to foster innovation. Many of the contributions argue that in order to bring innovation about, organisations have to think carefully about the way in which they will integrate what is, in practice, organisationally relevant — but socially distributed — knowledge. They need to build a series of knowledge-intensive activities and networks, both within their own boundaries and across other important external inter-relationships. In so doing, they help to co-ordinate important information structures. They have, in effect, to find ways of enabling people to collaborate with each other at lower cost, by reducing both the costs of their co-ordination and the levels of unproductive search activity. They have to engineer these behaviours by reducing the risks for people that might be associated with incorrect ideas and help individuals, teams and business units to advance incomplete ideas that are so often difficult to codify. In short, a range of intangible assets must flow more rapidly throughout the organisation and an appropriate balance must be found between the rewards and incentives associated with creativity, novelty and innovation, versus the risks that innovation may also bring.

Agency Costs, Bankruptcy Costs and the Use of Debt in Multinational Restaurant Firms

The purpose of this paper is to understand whether multinational restaurant firms (MNRF’s) have higher agency and expected bankruptcy costs. Given this expectation, this may have an impact on the amount of debt incurred by MNRF’s. Overall, the findings are consistent with the existing literatue in terms of the positive relationship between MNRF’s and agency and bankruptcy cost. However, it was found that MNRF’s also have more total debt. This is surprising given the higher agency and bankruptcy costs. The importance of this research is that there may be considerations other than agency and bacnkruptcy costs affecting the capital structure decisions of MNRF’s.

Wellness and Obesity: Implications for Health Care Costs Among Restaurant Managers

Overeating, inadequate exercise, work-related stress, and long working hours are accepted issues among restaurant managers. The underlying question was whether such life styles affect employers' health care cost and restaurant managers' health and ability to cope with imposed business requirements. The author discusses strategies to help employers reduce health care costs, increase employee productivity, and improve job satisfaction.