Over the past year, euro area sovereign yields have exhibited an unprecedented degree of volatility. In March 2009 the spread between the yield on a 10-year Greek government bond and the yield on a German Bund of equivalent maturity was as high as 280 basis points (bp). By September 2009 the same spread had dropped below 120 bp. In January 2010, it had climbed back up to over 380 bp. Other government bonds have followed a similar trajectory with volatility being higher among higher-debt, lower-rated sovereigns. Likewise, the credit default swap, in other words the premium investors are willing to pay to insure the same Greek bond against a credit event, during the same period has also moved from a level of around 50 bp, up to almost 300bp, down to 100 bp, and up again to 350 bp.
Movements in government bonds yields can have significant macroeconomic consequences. A rise in sovereign yields tend to be accompanied by a widespread increase in long-term interest rates in the rest of the economy, affecting both investment and consumption decisions. On the fiscal side, higher government bond yields imply higher debt-servicing costs and can significantly raise funding costs. This could also lead to an increase in rollover risk, as debt might have to be refinanced at unusually high cost or, in extreme cases, cannot be rolled over at all. Large increase in government funding costs can thus cause real economic losses, in addition to the purely financial effects of higher interest rates.
The book starts with a fairly simple overview of the translation process, of the constituent parts of a compiler, and of the concepts of porting and bootstrapping compilers. This is followed by a chapter on machine architecture and machine emulation, as later case studies make extensive use of code generation for emulated machines, a very common strategy in introductory courses. The next chapter introduces the student to the notions of regular expressions, grammars, BNF and EBNF, and the value of being able to specify languages concisely and accurately.
Two chapters follow that discuss simple features of assembler language, accompanied by the development of an assembler/interpreter system which allows not only for very simple assembly, but also for conditional assembly, macro-assembly, error detection, and so on. Complete code for such an assembler is presented in a highly modularized form, but with deliberate scope left for extensions, ranging from the trivial to the extensive.
Three chapters follow on formal syntax theory, parsing, and the manual construction of scanners and parsers. The usual classifications of grammars and restrictions on practical grammars are discussed in some detail. The material on parsing is kept to a fairly simple level, but with a thorough discussion of the necessary conditions for LL(1) parsing. The parsing method treated in most detail is the method of recursive descent, as is found in many Pascal compilers; LR parsing is only briefly discussed.
There is widespread agreement that investment decisions are the most important decisions made by firms. In fact, most large firms pay considerable attention to designing capital budgeting systems, and do so in a manner suggesting that firms recognize incentive problems in the internal allocation of capital across organizational units. For example, firms use hurdle rates that are higher than their cost of capital, possibly as a crude measure of addressing managerial attempts to overstate cash flow projections (Poterba & Summers, 1995). In addition, there is a popular trend toward ‘charging’ divisions for the cost of capital by using economic value added (EVA) as a performance measure in determining executive pay (Ittner & Larcker, 1998). Finally, capital rationing is a common practice (Taggart, 1987) and theories suggest that it is used partially to address decentralized information and incentive problems (Harris & Raviv, 1996; Holmstrom & Ricart i Costa, 1986). The purpose of the paper is to explore the use of various instruments by multi-divisional firms as a means to control information and incentive problems in the allocation of capital across divisions.
