Exchange rate and wage policies in Central and Eastern Europe

After the eastern enlargement of the European Union (EU) and due to increasing labor market integration, wage determination in Central and Eastern Europe (CEE) has become a key issue in European economic policy making. In addition, a controversial discussion concerning the monetary integration of CEE countries into the EMU has emerged. Both issues have earned particular academic and political interest because Eastern and Western Europe are at different stages of economic development and volatile international capital flows seem to require either a higher degree of wage or exchange rate flexibility. Based on the Scandinavian model of wage adjustment by Lindbeck (1979), we analyze the role of exchange rates in the wage determination process of the Central and Eastern European countries to identify which exchange rate strategy contributes to faster wage convergence in Europe. Panel estimations suggest that workers in countries with fixed exchange rates are likely to benefit in the long run from higher wage increases.     

Bayesian Dividend Optimization and Finite Time Ruin Probabilities

We consider the valuation problem of an (insurance) company under partial information. Therefore, we use the concept of maximizing discounted future dividend payments. The firm value process is described by a diffusion model with constant and observable volatility and constant but unknown drift parameter. For transforming the problem to a problem with complete information, we derive a suitable filter. The optimal value function is characterized as the unique viscosity solution of the associated Hamilton-Jacobi-Bellman equation. We state a numerical procedure for approximating both the optimal dividend strategy and the corresponding value function. Furthermore, threshold strategies are discussed in some detail. Finally, we calculate the probability of ruin in the uncontrolled and controlled situation.     

Effects of wearing a pressure redistribution belt while lying in a hospital bed

Bedsores (ulcers) are caused by multiple factors which include, but are not limited to; pressure, shear force, friction, temperature, age and medication. Specialised support services, such as specialised mattresses, sheepskin coverings etc., are thought to decrease or relieve pressure, resulting in a lowering of pressure ulcer incidence [3]. The primary aim of this study was to compare the upper/central body pressure distribution between normal lying in a hospital bed versus the use of a pressure redistribution belt. The study involved 16 healthy voluntary subjects lying on a hospital bed with and without wearing the belt. Results showed that the use of a pressure redistribution belt results in reduced pressure peaks and prevents the pressure from increasing over time.     

Unternehmensbewertung bei Inflation und Wachstum

The valuation literature partly suggests distinguishing between growth based on retained earnings and growth based on inflation. It is not clear, however, whether inflation leads to growth and how to incorporate inflation into valuation formulas. Our paper analyzes this question using a model of a firm, which makes periodically new investments that are subject to inflation and growth. In contrast to some of the literature, we show that accounting-based valuation formulas must not be adjusted for inflation. Using nominal accounting numbers and historical unadjusted book values leads to the same valuation like discounting cash flows. We conclude that the valuation procedure, suggested by the German Institute of Auditors (IDW) leads to a deviation between accounting-based and cash-flow-based valuation formulas.     

Safety and Soundness and the CRA: Is There a Conflict?

Ordered probit regressions of the supervisory ratings assigned to banks point to a conflict between the credit enhancement objectives associated with the Community Reinvestment Act (CRA) and financial safety and soundness standards. Aggressive banking strategies tend to help CRA ratings but hurt safety and soundness ratings. In addition, banks with financial problems are more likely to receive substandard CRA ratings, even though their condition may require a retrenchment from CRA objectives. Finally, there is some limited evidence to suggest that a greater focus on lending in low-income neighborhoods helps CRA ratings but at the expense of safety and soundness.     

Interpersonal Amplification of Risk? Citizen Discussions and Their Impact on Perceptions of Risks and Benefits of a Biological Research Facility

Much risk communication research has demonstrated how mass media can influence individual risk perceptions, but lacks a comprehensive conceptual understanding of another key channel of communication: interpersonal discussion. Using the social amplification of risk as a theoretical framework, we consider the potential for discussions to function as amplification stations. We explore this possibility using data from a public opinion survey of residents living in potential locations for a new biological research facility in the United States. Controlling for a variety of key information variables, our results show that two dimensions of discussion—frequency and valence—have impacts on residents’ perceptions of the facility's benefits and its risks. We also explore the possibility that an individual's overall attitude moderates the effect of discussion on their perceptions of risks and benefits. Our results demonstrate the potential for discussions to operate as amplifiers or attenuators of perceptions of both risks and benefits.     

Development and pollution in the Middle East and North Africa: Democracy matters

The Middle East and North Africa (MENA) countries are among the world’s top emitters of CO₂ and SO₂ in per capita terms. The objective of this paper is to analyze whether investing in the democratic development of these countries is an effective tool to make the economic development in this region more environmentally compatible. Using panel data on the income-emission-democracy nexus in 17 MENA countries from 1980 to 2005, we find evidence that improvements in the democratic development of the MENA countries help to mitigate environmental problems. Our results clearly show that the quality of democratic institutions has a greater influence on local environmental problems than on global environmental issues in the MENA region.