Government Hedging: Motivation, Implementation, and Evaluation

This article examines option hedging strategies that enable politicians to manage budgetary risk. While the theoretical risk management arguments are general, the simulation analysis considers the example of oil revenue risk in Texas, and estimates the costs and benefits of an option hedging program. To evaluate government option hedging strategies, the study develops a hedge quotient measure that compares the future value of realized revenues plus net option proceeds to the future value of expected revenue. The average hedge quotient is found to be lower for the option hedging strategy than for the unhedged position, illustrating the cost of an option hedging program. Nevertheless, option hedging effectively manages extreme downside risk and stops large budget deficits from occurring. Politicians may also like option hedging because it preserves the potential of realizing budget surpluses.     

The Welsh Devolution Referendum

This article seeks to place the 1997 referendum on the Labour government's plans to establish an elected Welsh Assembly into the context of the debate on devolution as it has developed in Wales since 1979, when broadly similar proposals were overwhelmingly rejected by the Welsh electorate. The authors argue that given the belated decision to hold the referendum, the particular difficulties created by the Welsh political landscape, and the fact that there was no real attempt to develop a broad-based consensus behind the proposals before the 1997 general election, the fact that the proposals were finally approved – albeit by the narrowest of margins – represents a substantial achievement for the pro-devolutionists.     

Model Workers or Hardened Nazis? The Australian Debate about Admitting German Migrants, 1950-1952

Immigration policies implemented in the early 1950s by the Menzies government embraced several principles defined by the postwar Labor government, trying to accommodate employers, unions, veterans and ethnic voters within a framework of international considerations. The issue of admitting Germans severely tested the government's ability to reconcile these divergent interests. While anti-communism and established ethnic stereotypes were the undercurrents driving the debate, the practical demands of the Australian labour force, on the one hand, and the memories of the Second World War, on the other, also assumed much prominence in the public rhetoric. This study suggests that despite the existence of a common set of assumptions, both sides in the debate constructed opposing viewpoints to exploit them for partisan purposes. Groups or individuals whose concerns indeed focused on the advantages and disadvantages of admitting German migrants were shunted aside in this essentially political battle.     

Reviews

Dark Age: The Political Odyssey of Emperor Bokassa by Brian Titley. McGill‐Queen's University Press, Québec (Canada) and Liverpool University Press, Liverpool, (UK), 1997. xii. plus 5pp. of illustrations (photographs and a map of the Central African Republic) plus 257pp. including notes, bibliography and index. £22.95 hardback.

The Making of a Periphery: Economic Development and Cultural Encounters in Southern Tanzania edited by Pekka Seppala and Bertha Koda. Nordiska Afrikainstitutet, Uppsala (Sweden), 1998. 344 pp. including figures, tables, maps, notes, bibliography and index. Paperback.

Farewell to Farms: De‐agrarianization and Employment in Africa edited by D.F. Bryceson and V. Jamal. Ashgate Publishing Ltd., Aldershot, 1997. iv plus 265pp. including figures, tables, notes and index.

The World Bank and Nigeria: Cornucopia or Pandora's Box? by Rufai Ahmed Alkali. Kaduna, Baraka Press, 1997. 205pp. including selected references.

Sustaining the Future: Economic, Social and Environmental Change in Sub‐Saharan Africa edited by George Benneh, William B.Morgan and Juha I.Uitto. The United Nations University Press, Tokyo, New York and Paris, 1996.