Optimal reserve management and sovereign debt

Most models currently used to determine optimal foreign reserve holdings take the level of international debt as given. However, given the sovereign`s willingness-to-pay incentive problems, reserve accumulation may reduce sustainable debt levels. In addition, assuming constant debt levels does not allow addressing one of the puzzles behind using reserves as a means to avoid the negative effects of crisis: why do not sovereign countries reduce their sovereign debt instead? To study the joint decision of holding sovereign debt and reserves, we construct a stochastic dynamic equilibrium model calibrated to a sample of emerging markets. We obtain that the reserve accumulation does not play a quantitatively important role in this model. In fact, we find the optimal policy is not to hold reserves at all. This finding is robust to considering interest rate shocks, sudden stops, contingent reserves and reserve dependent output costs. (c) 2008 Elsevier B.V. All rights reserved.

Nominal versus indexed debt: A quantitative horse race

The main arguments in favor and against nominal and indexed debts are the incentive to default through inflation versus hedging against unforeseen shocks. We model and calibrate these arguments to assess their quantitative importance. We use a dynamic equilibrium model with tax distortion, government outlays uncertainty, and contingent-debt service. Our framework also recognizes that contingent debt can be associated with incentive problems and lack of commitment. Thus, the benefits of unexpected inflation are tempered by higher interest rates. We obtain that costs from inflation more than offset the benefits from reducing tax distortions. We further discuss sustainability of nominal debt in developing (volatile) countries. (C) 2010 Elsevier Ltd. All rights reserved.

Non-linear pathways of corporate environmental management: a survey of ISO 14001-certified companies in Brazil

A study was conducted to verify whether the theory on the evolution of corporate environmental management (CEM) is applicable to organizations located in Brazil. Some of the most important proposals pertaining to the evolution of CEM were evaluated in a systematic fashion and integrated into a typical theoretical framework containing three evolutionary stages: reactive, preventive and proactive. The validity of this framework was tested by surveying 94 companies located in Brazil with ISO 14001 certification. Results indicated that the evolution of CEM tends to occur in a manner that is counter to what has generally been described in the literature. Two evolutionary stages were identified: 1) synergy for eco-efficiency and 2) environmental legislation view, which combine variables that were initially categorized into different theoretical CEM stages. These data, obtained from a direct study of Brazilian companies, suggest that the evolution of environmental management in organizations tends to occur in a non-linear fashion, requiring a re-analysis of traditional perceptions of CEM development, as suggested by Kolk and Mauser (2002). (C) 2010 Elsevier Ltd. All rights reserved.

Transformational leadership, corporate cultism and the spirituality paradigm: An unholy trinity in the workplace?

Leadership is a perennially popular topic in the academic and practitioner literature on management. In particular, the past twenty years have witnessed an explosive growth of interest in what has been termed 'transformational leadership' (henceforth, TL). The theory is closely linked to the growth in what has been defined as corporate culturism - an emphasis on the importance of cohereat cultures, as a means of securing competitive advantage. This article outlines the central components of TL theory, and subjects the concept to a critical analysis. In particular, similarities are identified between the components concerned and the characteristics of leadership practice in organizations generally defined as cults. This connection has been previously unremarked in the literature. These similarities are comprehensively reviewed. Trends towards what can be defined as corporate cultism in modem management practice are also discussed. We conclude that TL models are overly concerned with the achievement of corporate cohesion to the detriment of internal dissent Such dissent is a vital ingredient of effective decision-making. It is suggested that more inclusive and participatory models of the leadership process are required.