Shunto, Rational Expectations, and Output Growth in Japan

This paper describes a theoretical and empirical study of the Japanese macroeconomy that focuses on the role of predetermined nominal wages in the relation between monetary policy and aggregate output. The main features of the model are that nominal wage rates set at Shunto are equal to rational expectations of the nominal wage rates that would be consistent with target levels of real output and that firms determine employment and output by equating marginal productivities to real wage rates. The essential implication of the model is that the current deviation of aggregate output from its target level depends only on innovations in inflation and productivity since the last Shunto. The equation derived to implement the model empirically relates current aggregate output growth in a precise way to past values of output growth and inflation since the last Shunto and includes an explicit specification of a white noise error term. The results of econometric analysis of this restricted model equation are consistent with the hypothesis that nominal wages predetermined according to Shunto with rational expectations are important tor the determination of real aggregates. The empirical analysis, however, also suggests that the assumptions about monetary policy used to close the model are not adequate, a result that leads to directions for further research.

FOUR GOALS FOR A STRONGER U.S. FINANCIAL SERVICES INDUSTRY (AND FIVE WAYS FOR CONGRESS TO HELP US GET THERE)

For at least the past 15 years, the preferred model for financial modernization among U.S. lawmakers and regulators has been based on the concept of the financial services holding company (FSHC) with functional regulation of its financial subsidiaries. Such an approach makes eminently good sense in a world where it is possible to make clear distinctions among different financial functions and between financial services and other information-based businesses. Although this may have been the case 15 years ago, today the FSHC model will not deal with financial convergence and the broader convergence of information-based businesses in a completely satisfactory way. 1997 Morgan Stanley.

STRENGTHENING THE GLOBAL FINANCIAL SYSTEM: ASSESSING THE CRISIS AND THE POLICY RESPONSE

The financial crisis that began with Thailand's devaluation in the summer of 1997 exposed significant weaknesses both in the structure of markets in emerging countries and in the crisis-prevention and crisis-management mechanisms built into the international financial system. Since then numerous efforts have been made to assess the causes of the crisis, and official institutions such as the Group of 7, the IMF, and the World Bank have laid out an agenda for reform. 1999 Morgan Stanley.

How Do Head and Neck Cancer Patients Prioritize Treatment Outcomes Before Initiating Treatment?

PURPOSE: To determine, pretreatment, how head and neck cancer (HNC) patients prioritize potential treatment effects in relationship to each other and to survival and to ascertain whether patients’ preferences are related to demographic or disease characteristics, performance status, or quality of life (QOL). PATIENTS AND METHODS: One hundred thirty-one patients were assessed pretreatment using standardized measures of QOL (Functional Assessment of Cancer Therapy-Head and Neck) and performance (Performance Status Scale for Head and Neck Cancer). Patients were also asked to rank a series of 12 potential HNC treatment effects. RESULTS: Being cured was ranked top priority by 75% of patients; another 18% ranked it second or third. Living as long as possible and having no pain were placed in the top three by 56% and 35% of patients, respectively. Items that were ranked in the top three by 10% to 24% of patients included those related to energy, swallowing, voice, and appearance. Items related to chewing, being understood, tasting, and dry mouth were placed in the top three by less than 10% of patients. Excluding the top three rankings, there was considerable variability in ratings. Rankings were generally unrelated to patient or disease characteristics, with the exception that cure and living were of slightly lower priority and pain of higher priority to older patients compared with younger patients. CONCLUSION: The data suggest that, at least pretreatment, survival is of primary importance to patients, supporting the development of aggressive treatment strategies. In addition, results highlight individual variability and warn against making assumptions about patients’ attitudes vis-à-vis potential outcomes. Whether patients’ priorities will change as they experience late effects is currently under investigation