Current debate on monetary and fiscal policies is much concerned with the effects of such policies, and of changes in the budget and money supply. I propose here to discuss some taxonomic problems related to the concept of policy effects. Their resolution bears directly upon the controversy between Keynesians and Monetarists. I shall show that it is largely a sham-dispute, and it will appear that the empirical findings of the Monetarists have little relation to the Keynesian creed. Even negative effects of the budget with strong positive effects of money supply are fully consistent with strong positive effects of fiscal action and weak or strong effects of monetary action. The examination of the concept of effects of economic policy will be undertaken in relation to a model that is specified so as to include both the conventional Keynesian set-up for determining effective demand, and a credit mechanism that links effective demand to the banking system in the spirit of the Monetarists

Accounting research contains two distinct approaches to the interaction between accounting management and the independent auditor. Game theory suggests that the auditor's testing strategy will affect the manager's reporting strategy and that the two strategies form an equilibrium. The game‐theoretic approach views the auditor as active, in that the auditor acknowledges the effect that his or her testing strategy has on the manager's reporting. In contrast, in the decision‐theoretic approach, the auditor tests reports, but ignores the effect that such testing might have on the manager's reporting behavior. Essentially, the decision‐theoretic approach views the auditor as passive, taking the reporting strategy as given when designing tests. We use United Kingdom data to estimate both models and test their validity using nested hypothesis tests. Our results demonstrate that the active, game‐theoretic model better describes the auditor‐manager interaction. This is the first empirical validation of the game‐theoretic model using archival accounting data.

Issues surrounding the allocation of sunk capacity costs to products are among the oldest in managerial accounting. On the one hand, such costs are generally deemed to be irrelevant, but on the other hand, actual accounting systems commonly make these allocations. This paper examines a decision maker who incurs costs to acquire capacity and then uses an opportunity cost to allocate that capacity among a sequence of product proposals. Under specified circumstances, the sunk cost of capacity is shown to approximate the optimal opportunity cost of capacity. As the number of product proposals grows, the expected opportunity loss from using a simple sunk cost based capacity allocation rule goes to zero. The model is extended to consider different types of products and a multiperiod setting. Résumé. Les questions qui entourent la répartition des coûts irrécupérables relatifs à la capacité entre les différents produits comptent parmi les plus vieux problèmes en comptabilité de gestion. D'une part, ces coûts sont généralement réputés n'être pas pertinents, tandis que d'autre part, en réalité, les systèmes de comptabilité assurent couramment ces répartitions. Les auteurs examinent le cas d'un décideur qui engage des frais pour acquérir une certaine capacité et utilise ensuite un coût d'option pour répartir cette capacité entre une série de projets de fabrication de produits. Dans des circonstances données, les auteurs démontrent que les coûts irrécupérables de la capacité acquise se rapprochent du coût d'option optimal de cette capacité. À mesure que croît le nombre de projets de fabrication de produits, la perte d'option prévue, si l'on utilise une règle de répartition simple de la capacité fondée sur les coûts irrécupérables, se rapproche de zéro. Le modèle est élargi de façon à englober différents types de produits et plusieurs périodes.

I. Smuggling and welfare, 173. — II. Exogenously specified objectives: target increase in importable production, 184. — III. Overinvoicing and underinvoicing of transactions, 186. — IV. Conclusions, 187.