Differentiating conflicts in beliefs versus value tradeoffs in the domestic intelligence policy debate

Since the 9/11 terrorist attacks, there has been an increase in public discussion regarding U.S. domestic intelligence activities. Domestic intelligence activities focus on gathering information about potential threats from individuals within the United States, and completely rational members of the public can have different opinions about the acceptability of various alternatives depending on one's values toward privacy, civil liberty, and security. Past studies have demonstrated that construction of a multiobjective value model can help clarify public values in controversial risk debates. This research explores a range of domestic intelligence alternatives that vary on multiple objectives, and applies value-focused thinking to develop a multiattribute utility model to evaluate and compare the alternatives. The process demonstrates the feasibility of eliciting model parameters from individuals and provides a method for identifying the locus of possible disagreements among individuals. The development of the model is described first, followed by insights found from participants who provided both value tradeoffs and performance scores for six different domestic intelligence alternatives. The participants were two student groups and a group of police officers. The analysis showed differences among weights for an additive model for different stakeholder groups and differences among the performance scores. In particular, there is a "halo" effect for alternatives, such that its supporters ranked the alternative higher on all attributes compared to respondents who find the alternative unacceptable. This modeling approach and results offer organizations such as the Department of Homeland Security insights into the debate surrounding new policy initiatives, particularly those requiring sensitive value tradeoffs.     

Who Should Pay for Interdependent Risk? Policy Implications for Security Interdependence Among Airports

We study interdependent risks in security, and shed light on the economic and policy implications of increasing security interdependence in presence of reactive attackers. We investigate the impact of potential public policy arrangements on the security of a group of interdependent organizations, namely, airports. Focusing on security expenditures and costs to society, as assessed by a social planner, to individual airports and to attackers, we first develop a game-theoretic framework, and derive explicit Nash equilibrium and socially optimal solutions in the airports network. We then conduct numerical experiments mirroring real-world cyber scenarios, to assess how a change in interdependence impact the airports' security expenditures, the overall expected costs to society, and the fairness of security financing. Our study provides insights on the economic and policy implications for the United States, Europe, and Asia.     

Labour Market Policies in Times of Crisis: A Reaction Function Approach for the Period 1985–2010

This article examines the reaction function of labour market expenditure to unemployment in 24 OECD countries, over the period 1985–2010, using the OECD panel data. The level of public debt is also introduced as a factor that is likely to influence these expenditures. Using a fixed‐effect model with interaction terms, this research focuses on two periods of crisis (1992–93 and 2007–09). The results confirm the counter‐cyclical variation of labour market policy expenditures. Nevertheless, the sensitivity of labour market expenditure to the economic cycle has in general decreased and the policy mix has changed. This could result from the important labour market reforms undertaken in the last 20 years.     

A SIMULATION OF INTERACTIVE MAINTENANCE DECISIONS

In this day of automation, effective maintenance decisions are a legitimate concern. This paper broadens the traditional concept of maintenance to include any policies which tend to reduce the frequency or severity of failures. A simulation model is used to demonstrate the inter-relatedness of multiple maintenance policies for a truck depot. It is demonstrated that the proper selection of a maintenance policy set should consider the variability of the system outputs due to the daily dynamics, as well as the transient behavior of the system. It is also shown that the choice of an appropriate maintenance policy should recognize the distribution of total annual costs and should not base the analysis solely upon average total annual costs.     

THE INTERACTION OF TRANSPORTATION AND INVENTORY DECISIONS

The management of inventories and determination of transportation policy are normally carried out by different groups of people in an organization. These activities interact, however, when the transportation is used to replace inventory and when the transportation alternatives have different speed, reliability, and cost characteristics. This paper presents exact and heuristic procedures for jointly determining the inventory reorder points, order quantities, and transportation alternatives that provide minimum total transportation and inventory costs. The effectiveness of each procedure is demonstrated for a broad range of problems. The heuristic procedure was also applied to actual company data to determine the potential for cost savings. The results showed that savings were possible both from improving the current procedures and from applying the procedure developed in this study.     

Managing Nuclear Waste from Power Plants

National strategies to manage nuclear waste from commercial nuclear power plants are analyzed and compared. The current strategy is to try to operate a repository at Yucca Mountain, Nevada, to dispose of high-level nuclear waste underground. The main alternatives involve temporary above-ground storage at a centralized facility or next to nuclear power plants. If either of these is pursued now, the analysis assumes that a repository will be built in 2100 for waste not subsequently put to use. The analysis treats various uncertainties: whether a repository at Yucca Mountain would be licensed, possible theft and misuse of the waste, innovations in repository design and waste management, the potential availability of a cancer cure by 2100, and possible future uses of nuclear waste. The objectives used to compare alternatives include concerns for health and safety, environmental and socioeconomic impacts, and direct economic costs, as well as equity concerns (geographical, intergenerational, and procedural), indirect economic costs to electricity ratepayers, federal government responsibility to manage nuclear waste, and implications of theft and misuse of nuclear waste. The analysis shows that currently building an underground repository at Yucca Mountain is inferior to other available strategies by the equivalent of $10,000 million to $50,000 million. This strongly suggests that this policy should be reconsidered. A more detailed analysis using the framework presented would help to define a new national policy to manage nuclear waste.     

Tax Expenditure Limitations (TELs) and State Expenditure Structure in the USA

This paper analyzes the impact of TELs on different types of state expenditures. This study provides comparison analysis of different types of TELs on state level and aims to evaluate the effect of TEL policy on state expenditure structures. Using panel data analysis, this work finds that states with Tax Expenditure Limitations (TELs) - in addition to financial factors- are associated with higher level of state expenditures for corrections and lower levels of state expenditures for police, parks, natural resources, and highway expenditures. Looking at 50 states from 2006 to 2011, this relationship is both statistically and substantively significant.     

OPTIMAL AND NEAR OPTIMAL CONTROL OF A TWO-PART-TYPE STOCHASTIC MANUFACTURING SYSTEM WITH DYNAMIC SETUPS

This paper deals with a manufacturing system consisting of a single machine subject to random failures and repairs. The machine can produce two types of parts. When the production is switched from one part type to the other, a random setup time is incurred at a constant cost rate. The objective is to track the demand, while keeping the work-in-process as close as possible to zero for both products. The problem is formulated as an optimal stochastic control problem. The optimal policy is obtained numerically by discretizing the continuous time continuous state opti-mality conditions using a Markov chain approximation technique. The discretized optimality conditions are shown to correspond to an infinite horizon, discrete time, discrete state dynamic programming problem. The optimal setup policy is shown to have two different structures depending on the parameters of the system. A heuristic policy is proposed to approximate the optimal setup policy. Simulation results show that the heuristic policy is a very good approximation for sufficiently reliable systems.     

Applications and Implementation A MANAGEMENT SYSTEMS ANALYSIS OF THE ARMS TRANSFER PROCESS*

The decision and information structure of the arms transfer process from major powers (especially the United States) to third-world countries is discussed. System behavior as a result of system structure, political forces, and economic factors is the focus of analysis. A system-dynamics model of transfer structures is developed and discussed. Examples of policy alternatives in arms transfer are illustrated and discussed.     

INFLATION STABILIZATION AND WELFARE: THE CASE OF A DISTORTED STEADY STATE

This paper considers the appropriate stabilization objectives for monetary policy in a micro‐founded model with staggered price‐setting. Rotemberg and Woodford (1997) and Woodford (2002) have shown that under certain conditions, a local approximation to the expected utility of the representative household in a model of this kind is related inversely to the expected discounted value of a conventional quadratic loss function, in which each period's loss is a weighted average of squared deviations of inflation and an output gap measure from their optimal values (zero). However, those derivations rely on an assumption of the existence of an output or employment subsidy that offsets the distortion due to the market power of monopolistically competitive price‐setters, so that the steady state under a zero‐inflation policy involves an efficient level of output. Here we show how to dispense with this unappealing assumption, so that a valid linear‐quadratic approximation to the optimal policy problem is possible even when the steady state is distorted to an arbitrary extent (allowing for tax distortions as well as market power), and when, as a consequence, it is necessary to take account of the effects of stabilization policy on the average level of output. We again obtain a welfare‐theoretic loss function that involves both inflation and an appropriately defined output gap, though the degree of distortion of the steady state affects both the weights on the two stabilization objectives and the definition of the welfare‐relevant output gap. In the light of these results, we reconsider the conditions under which complete price stability is optimal, and find that they are more restrictive in the case of a distorted steady state. We also consider the conditions under which pure randomization of monetary policy can be welfare‐improving, and find that this is possible in the case of a sufficiently distorted steady state, though the parameter values required are probably not empirically realistic. (JEL: D61, E52, E61)     

THE POLITICAL COLOR OF FISCAL RESPONSIBILITY

We propose a dynamic general equilibrium model that yields testable implications about the fiscal policy run by governments of different political color. Successive generations of voters choose taxation, expenditure, and government debt through repeated elections. Voters are heterogeneous by age and by the intensity of their preferences for public good provision. The political equilibrium switches stochastically between left‐ (pro‐public goods) and right‐leaning (pro‐private consumption) governments. A shift to the left (right) is associated with a fall (increase) in government debt, an increase (fall) in taxation, and an increase (fall) in government expenditures. However, left‐leaning governments engage in more debt accumulation during recessions. These predictions are shown to be consistent with the time‐series evidence for the United States in the postwar period, and also with the evidence for a panel of OECD countries. (JEL: D72, E62, H41, H62, H63)     

Assessing the risks in acquisitions—The risk-chance analysis

Every company encounters a dangerous gap of information by evaluating various decision alternatives on the base of objective achievement alone. It is at least as important to assert and quantify the expected risk of the chosen alternative. The Risk-Chance Analysis described in this article provides a goal-related and risk-related evaluation of alternatives without additional expenditures for providing information, and with the convenience of data processing. It is more comprehensive than risk analysis, which only calculates the probability of risk.     

THE IMPACT OF POLLUTION CONTROL ON CONSUMER INCOME A METHODOLOGICAL STUDY

This paper develops a methodology for assessing the impact of a comprehensive pollution control program on income distribution. A regional input-output table is employed to determine the overall effect of pollution control costs on prices. These price changes, are then translated into changes in consumption expenditures by income groups, which serve as a measure of the impact on consumers. The validity of this methodology is tested on the metropolitan Philadelphia region. It was found that the EPA air quality standards would raise the spending of middle income groups by about 3 percent as compared to about 2 percent increase for the highest and the lowest income groups. The paper concludes with an examination of the advantages and limitations of the proposed methodology.     

Labour Policy in the Federal Republic of Germany: Challenges and Concepts

ABSTRACT: This paper describes how German labour policy, both employment policy and active labour market policies, has developed between 1974 and 1987. Government intervention for full employment in a welfare state, a cooperative system of industrial relations, an active labour market policy, and a comparatively efficient system of vocational and adult education did not prevent the loss of full employment in 1974. But persistent labour market slack until today has not fundamentally changed the climate of relative political and social calm. The basic concepts, programmes and specific measures of labour policies pursued in the FRG are surveyed with special reference to their costs and effects on employment and the structure of unemployment. The challenges to labour policy stem from three complete business cycles around a slightly falling trend in employment and the bad prospectives of the German labour market until the year 2000. Four major measures of labour market policy now reduce registered unemployment by about 400,000 in the mid 1980s. Total costs of unemployment amounting to 57 billion DM per year offer financial alternatives to create jobs and to reduce working hours. Finally, actual proposals under discussion in Germany are examined in order to combat unemployment in a determined commitment to full employment immediately.     

The Economic Impact of Health Policy Interventions

The rapid aging of the U.S. population, increases in the absolute prevalence of chronic diseases, and the associated rise in the proportion of the GNP expended on medical care all indicate the need for methods to accurately forecast future health care expenditures for specific chronic diseases. Additionally, if these methods are biomedically realistic, they can be used to evaluate the economic implications of specific prevention strategies designed to reduce chronic disease incidence, prevalence, and mortality. Projection strategies that are not biomedically realistic, such as models that assume that risks for demographic subgroups do not change over time (e.g., "static component" models), though possibly accurate over the short run, are not suitable for assessing the long term effects of specific proposed health policy interventions which are designed to alter risks.
In this paper we present a strategy for forecasting health care costs which is based on a model that represents the natural history of a chronic disease in terms of a preclinical state, a clinical state, case fatality rates, cures, and the implications of exogenous medical factors. Using this model we project that the treatment costs associated with respiratory cancer in the white male population of the U.S. may undergo a two-thirds increase in real dollars over the period 1977 to 2000. About one-half of this increase is due to a demographic shift to an older population structure, with the remainder due to higher respiratory cancer incidence rates in younger cohorts. Alteration of certain parameters of the model to simulate various interventions suggests that about three-quarters of the cost of this disease could be eliminated, though realization of any significant part of this savings would require a lengthy phase-in period.     

The Costs of Future Polio Risk Management Policies

Decisionmakers need information about the anticipated future costs of maintaining polio eradication as a function of the policy options under consideration. Given the large portfolio of options, we reviewed and synthesized the existing cost data relevant to current policies to provide context for future policies. We model the expected future costs of different strategies for continued vaccination, surveillance, and other costs that require significant potential resource commitments. We estimate the costs of different potential policy portfolios for low-, middle-, and high-income countries to demonstrate the variability in these costs. We estimate that a global transition from routine immunization with oral poliovirus vaccine (OPV) to inactivated poliovirus vaccine (IPV) would increase the costs of managing polio globally, although routine IPV use remains less costly than routine OPV use with supplemental immunization activities. The costs of surveillance and a stockpile, while small compared to routine vaccination costs, represent important expenditures to ensure adequate response to potential outbreaks. The uncertainty and sensitivity analyses highlight important uncertainty in the aggregated costs and demonstrates that the discount rate and uncertainty in price and administration cost of IPV drives the expected incremental cost of routine IPV vs. OPV immunization.     

Understanding Life-Threatening Risks

Modern science and medicine, and increasing prosperity, have brought many benefits to our society, but not without costs. One cost is that some of the technological innovations and new activities bring with them different and perhaps greater risks that threaten our lives. Any problem involving life-threatening risks is complex, so it is difficult to think through all the implications of the alternatives proposed to address it. This paper presents a number of "facts" to guide constructive thinking about decisions concerning life-threatening risks. The intent is to help us appraise alternatives, design public policy and laws, and communicate about specific risk problems.     

货币供应机制与财政支出的乘数效应——基于DSGE的分析

本文通过构建包括货币供应机制的DSGE模型,分析了中国政府购买支出和公共投资支出的乘数效应,发现两类财政支出对私人消费和私人投资都产生了挤出效应,公共资本的产出弹性低是产生挤出效应的结构性原因,在中国货币供应机制减小对通货膨胀负向反应和增大对产出正向反应的配合下,政府购买支出和公共投资支出能够对私人消费和私人投资产生正向的挤入效应。     

Consumption Dynamics During Recessions

Are there times when durable spending is less responsive to economic stimulus? We argue that aggregate durable expenditures respond more sluggishly to economic shocks during recessions because microeconomic frictions lead to declines in the frequency of households' durable adjustment. We show this by first using indirect inference to estimate a heterogeneous agent incomplete markets model with fixed costs of durable adjustment to match consumption dynamics in PSID microdata. We then show that aggregating this model delivers an extremely procyclical Impulse Response Function (IRF) of durable spending to aggregate shocks. For example, the response of durable spending to an income shock in 1999 is estimated to be almost twice as large as if it occurred in 2009. This procyclical IRF holds in response to standard business cycle shocks as well as in response to various policy shocks, and it is robust to general equilibrium. After estimating this robust theoretical implication of micro frictions, we provide additional direct empirical evidence for its importance using both cross‐sectional and time‐series data.