Economics Insights @ CBS

This paper deals primarily with forecast disclosure rules, a topic that has attracted the attention of both the Securities and Exchange Commission and the accounting profession. We consider two fundamental and related aspects of such a rule: 1) the extent to which the type of information to be disclosed conveys information pertinent to valuing firms; and 2) the extent to which a rule requiring public forecast disclosure is consistent with Pareto optimal allocations of resources.

In recent years productivity bargaining has been heralded as a promising means of increasing productivity in government, particularly at state and local levels. However, analysis of the literature and practice of productivity bargaining indicates that certain inherent conceptual and implementational problems have not been adequately recognized by academics and practitioners. The central problem concerns the failure to recognize that productivity gains may be counterproductive if accompanied by excessive unit cost increases.

In his fundamental works and Douglas Vickers integrates the production, investment and financing decisions of the firm into a useful and illuminating model. He deals with uncertainty using risk-adjusted capitalization and interest rates, assumes constant business risk and treats financial risk as a function of leverage. This paper extends Vickers' analysis by allowing business risk to depend on production and investment decisions.

Can collective bargaining and the merit system co-exist in public employment? Many writers in the field think that concepts of merit must give way to seniority in government service, as it has in the private sector. The authors believe that view is incorrect. Indeed, by pressing for equity, and an end to patronage, unions may even be contributing to the strengthening of the merit system.