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Ebook Labor-Supply Shifts and Economic Fluctuations

Submitted by wulan on Sat, 02/06/2010 - 06:36

A leading question in macroeconomics is the identification of forces that cause the cyclical allocation of time. Modern dynamic stochastic general equilibrium analysis emphasizes random shifts in labor demand due to technological progress. Empirical studies on the decomposition of working hours, e.g., Shapiro and Watson (1988) and Hall (1997), have called for an attention to labor-supply movements. For example, Hall (1997) finds a predominant role of labor-supply shifts for fluctuations in hours worked. He suggests non-market activities such as job-search or home production as possible causes for labor-supply shifts.

This paper examines the importance of labor-supply shifts as a source of economic fluctuations. First, we develop and apply a new identification procedure for vector autoregressions (VAR) to decompose the fluctuation of aggregate hours and output into movements along the short-run labor demand schedule and shifts of the demand curve itself. The former is interpreted broadly as response to a labor supply shock. Our identifying restrictions are based on the notion that in reaction to a temporary labor supply shock hours will rise and labor productivity will fall, as the production capacity is fixed in the short-run and the economy operates along the decreasing marginal product-of-labor schedule. Second, we impose additional restrictions by estimating a fully-specified dynamic stochastic general equilibrium (DSGE) model. The DSGE model potentially yields a more precise estimate of the relative importance of labor supply shifts. We consider a model in which labor supply shifts are caused by changes in home production activities. This model was developed by Benhabib, Rogerson, and Wright (1991) and Greenwood and Hercowitz (1991).

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Ebook The number of bank relationships, borrowing costs and bank competition

Submitted by wulan on Tue, 02/09/2010 - 05:37

For more than two decades researchers have been debating on the relationship between the number of bank relationships and the cost of borrowing. On one hand, Diamond’s (1984) classical delegated monitoring theory suggests that exclusive lending relationships minimize loan rates by avoiding duplication of monitoring costs. On the other hand, other authors (e.g. Sharpe (1990) and Rajan (1992)) predict that firms can reduce interest rates by borrowing from several banks.

While international empirical studies have so far found mixed results, the ongoing process of deregulation, globalization and consolidation of the banking industry brings more complexity to the picture: it is still unclear how credit market competition affects the impact of bank relationships on interest rates. This study seeks to make progress in answering these two questions: How does the number of banks that a firm borrows from influence the cost of loans? And what is the impact of the credit market competition on the linkage between the number of banks and the cost of borrowing?

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PDF Ebook Environmental accounting: A management tool for enhancing corporate environmental and economic performance

Submitted by antoq on Sun, 01/10/2010 - 04:44

Industries are becoming progressively more aware of the environmental and social liabilities pertaining to their operations and products, with associated financial effects. Uncertainties in measuring these financial effects can be addressed by using environmental evaluation and accounting techniques. Environmental accounting assists in expressing environmental and social liabilities as environmental costs. While environmental accounting systems now form part of industrial decision making in first world countries, there is a lack of similar systems in South Africa. The EEGECOST model was developed to promote environmental accounting in South Africa. Implementation of the model will provide South African industries with the framework for corporate evaluation of alternative investments, projects and processes and for estimating economic and environmental performance at present and especially in the future. The model identifies, records and allocates internal and external environmental costs to five identified cost types, categorised into several environmental media groups.

It also assists in the capital budgeting process for alternative investments. Applicability of the model was tested in a case study conducted on the life cycle assessment of a functional unit of one million cigarettes. The model indicated that Type V costs (external costs, with Types I to IV being different internal cost types) contributed 12% of the total production costs of a functional unit of cigarettes. As Type V costs are subjective, it is recommended that further research be conducted to structure an objective framework to evaluate and determine cost factors involved in the development of Type V costs.

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