The bank lending survey for the euro area

This occasional paper explains why the bank lending survey was developed by the ECB and describes its main features. It discusses the importance of credit developments for both the economy and the functioning of monetary policy, and further clarifies why the survey was introduced. Furthermore, the paper demonstrates that the value added of implementing a bank lending survey for the euro area lies in particular in the way it provides greater insight into developments in credit standards, non-interest rate credit conditions and terms, the risk perception of banks and the willingness of banks to lend. Credit standards are the internal guidelines or criteria of a bank which reflect the bank’s loan policy. The terms and conditions of a loan refer to the specific obligations agreed upon by the lender and the borrower. This occasional paper also considers similar surveys conducted by the Federal Reserve System in the US and by the Bank of Japan.Survey; Banks; Credit Standards; Credit Markets; European Central Bank; Federal Reserve; Bank of Japan

NPD-Process and Planning in Japanese engineering companies: Findings from an interview research

In this paper we report on the results of an interview research about new product development (NPD) processes and planning in 15 Japanese mechanical and electrical engineering companies. We asked the companies to describe one successful and one less successful project. All in all, we collected data for 29 projects, 15 of which were successful. We explore how these companies structure their NPD processes and conduct their planning activities in order to strike a balance between the needs for efficiency and flexibility, which often carry opposing implications for organizing and managing new product development projects. While the majority of the companies in our sample build their NPD efforts on a similar process model, we find them to employ diverse procedures to achieve their aims. In the companies we interviewed, there is a strong inclination towards planning R&D activities. New product development projects are based on well-defined procedures and written documents, which represent a standard approach to the companies' ; R&D efforts. However, not all aspects are planned in equal depth and later phases of NPD projects, such as the implementation of the product concept into production, which exhibit lower uncertainty, are planned in much more detail. The need for flexibility in planning is highlighted by our finding that the less successful projects failed to anticipate changes - especially within the environment - and therefore were often carried out according to outdated plans and information. Our results suggest that the quality of the initial project plan with regard to the information it is based upon is closely linked to success. Despite the environmental turbulence, there seem to be no pronounced differences between successful and less successful projects concerning changes of the plan throughout the course of the project. Consequently, our interview partners consider the project managers of the unsuccessful projects to be less skilled in marketing and management than their successful counterparts. --New product development,Japanese firms,planning,success innovation,project management

Arts Funding Snapshot: GIA's Annual Research on Support for Arts and Culture, 2011

Includes: Foundation Grants to Arts and Culture, 2009: A One-year Snapshot, Public Funding for the Arts: 2011 Update, State Arts Agencies in the FY2012 Legislative Session: Challenges, Headlines, What's Working, and How Are Private Funders Responding to Cuts in Public Funding

The decline of activist stabilization policy : natural rate misperceptions, learning, and expectations

We develop an estimated model of the U.S. economy in which agents form expectations by continually updating their beliefs regarding the behavior of the economy and monetary policy. We explore the effects of policymakers' misperceptions of the natural rate of unemployment during the late 1960s and 1970s on the formation of expectations and macroeconomic outcomes. We find that the combination of monetary policy directed at tight stabilization of unemployment near its perceived natural rate and large real-time errors in estimates of the natural rate uprooted heretofore quiescent in inflation expectations and destabilized the economy. Had monetary policy reacted less aggressively to perceived unemployment gaps, in inflation expectations would have remained anchored and the stag inflation of the 1970s would have been avoided. Indeed, we find that less activist policies would have been more effective at stabilizing both in inflation and unemployment. We argue that policymakers, learning from the experience of the 1970s, eschewed activist policies in favor of policies that concentrated on the achievement of price stability, contributing to the subsequent improvements in macroeconomic performance of the U.S. economy

Price setting in turbulent times

This price setting survey among Icelandic firms aims to make two contributions to the literature. First, it studies price setting in an advanced economy within a more turbulent macroeconomic environment than has previously been done. The results indicate that price adjustments are to a larger extent driven by exchange rate fluctuations than in most other advanced countries. The median Icelandic firm reviews its prices every four months and changes them every six months. The main sources of price rigidity and the most commonly used price setting methods are the same as in most other countries. A second contribution to the literature is our analysis of the nexus between price setting and exchange rate movements, a topic that has attracted surprisingly limited attention in this survey-based literature. A novel aspect of our approach is to base our analysis on a categorisation of firms in the domestic market by their direct exposure to exchange rate movements captured by imported input costs as a share of total production costs. More exposed firms are found to be more likely to use state-dependent pricing, to adjust their prices in response to exchange rate changes, and to rely on increasing prices rather than decreasing costs to restore profit margins after an exchange rate depreciation. They also review their prices more often but nevertheless, surprisingly, have the same price change frequency as the median firm. On the other hand, price review frequency declines and time-dependent pricing increases as domestic labour costs rise relative to total production costs. The results provide important insight into inflation dynamics due to an interaction between high and asymmetric exchange rate pass-through and price indexation. This interaction causes an exchange rate depreciation to spread to sectors less exposed to such changes through the use of price indexation. Exchange rate pass-through, price indexation and backward-looking behaviour in price setting therefore pose challenges for monetary policy in Iceland.

2013 Report on the State of the Legal Market

As we enter 2013, the legal market continues in the fifth year of an unprecedented economic downturn that began in the third quarter of 2008. At this point, it is becoming increasingly apparent that the market for legal services in the United States and throughout the world has changed in fundamental ways and that, even as we work our way out of the economic doldrums, the practice of law going forward is likely to be starkly different than in the pre-2008 period. The challenge for lawyers and law firms is to understand the ways in which the legal market has shifted and to adjust their own strategies, expectations, and ways of working to conform to the new market realities. While there is certainly evidence that some firms and lawyers have begun to make these adjustments, many others seem to be in denial, believing (or perhaps hoping) that the world will go back to normal as soon as demand for legal services begins to grow again. Legend has it that in 1519, when he and his cohort of some 500 soldiers and 100 sailors landed on the shores of the Yucatan intent on conquering the large and powerful Aztec empire, Spanish conquistador Hernando Cortez promptly ordered his men to burn the ships. Cortez knew that, unless more tempting alternatives were removed, it would be difficult to motivate his men to take on an empire with a large army that had been in power for more than six centuries. Hence, his bold and decisive order. The legal market today is an increasingly difficult and challenging environment, one that calls for clear thinking, strategic focus, and flexibility in addressing rapidly changing realities. To an unfortunate extent, however, many lawyers and law firms seem stuck in old models–traditional ways of thinking about law firm economics and structure, legal work processes, talent management, and client relationships–that are no longer well suited to the market environment in which they compete. Perhaps it\u27s time for us, like Cortez, to burn the ships–to force ourselves to think outside our traditional models and, however uncomfortable it might be, to imagine new and creative ways to deliver legal services more efficiently and build more sustainable models of law firm practice. This report describes the trends that have been observed in the legal market in 2012, exploring the longer term implications of those trends for the future, and suggesting some ways in which lawyers and law firms can better position themselves to deal with new emerging market realities

GPs are from Mars, Administrators are from Venus: The Role of Misaligned Occupational Dispositions in Inhibiting Mandated Role Change

Research on mandated occupational role change focuses on jurisdictional conflict to explain change failure. Our study of the English National Health Service highlights the role of occupational dispositions in shaping how mandated role change is implemented by members of multiple occupational groups. We find that tension stemming from misaligned dispositions may emerge as members of different occupations interact during their role change implementation efforts. Depending on dispositional responses to tension, change may fail as members of the different occupations avoid interactions. This suggests that effective role change can be elusive even in the initial absence of conflicting occupational interests

Loud and clear? Can we hear when the SARB speaks?

Inflation targeting is a forward-looking framework for monetary policy that has brought unprecedented transparency to the process of monetary policy. This paper aims to assess the degree to which the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has, since the introduction of inflation targeting, successfully communicated to the public its policy analysis, and, in particular, the expected future policy changes. This paper follows international literature (Rosa and Verga (2007), Ehrmann and Fratszcher (2005)) in constructing a numerical index that is used to reflect the information content of the SARB’s communications, specifically the monetary policy statements that accompanied each of the MPC meetings since 2000. Relating this index to subsequent policy decisions reveals the informativeness of the index and, by implication, the informativeness of the underlying monetary policy statements. This method allows us to judge, systematically, the degree to which the MPC has communicated successfully, and the evolution of that success over the past nine years. We find evidence that the MPC has succeeded in signalling their likely future policy decision with consistency over this period.South Africa, Inflation targeting, Central bank communication, Effective monetary policy, forward-looking policy framework

The Effect of Historical Entitlements in Cooperative Bargaining Over Evironment Policy: An Experimental Test

Collaborative policy making has been an increasingly popular method of solving use conflicts on public lands. Representatives of interested groups are authorized to negotiate land use policy in the shadow of a government imposed backstop policy. This process can be modeled using cooperative game theory over multiple goods in an Edgeworth Box framework, and its outcomes predicted using axiomatic bargaining theories (e.g. Pareto efficiency or the Nash bargain). A challenge for collaborative policymaking arises when users’ historical land use entitlements differ from the backstop the government will impose if negotiations fail. A challenge for the predictive power of axiomatic bargaining theory arises when the government’s backstop policy (and the Nash bargain it generates) creates substantial inequality of benefits among users. In this paper, we use laboratory experiments to test the effect on bargaining of 1) the divergence of historical entitlements from the prospective backstop and 2) the divergence of the Nash bargain generated by the backstop policy from the outcome that equalizes benefits. We examine the effects of both types of divergence on agreement rates, and on the likelihood that parties settle inside the bargaining lens, on the contract curve, and at the Nash bargain. We find that divergence of historical entitlements from the backstop significantly changes bargaining outcomes when the historical benefits were equally distributed and the benefits at the backstop and Nash are not. At the same time, historical entitlements do not affect outcomes when they were unequal but the backstop and Nash bargain generate equal benefits. We also find the outcomes parties reach are affected by the divergence of equality from the Nash bargain, independent of historical entitlement.Historical entitlements; Collaborative policy making; Land use conflicts