permanent income hedonic prices and demand for housing new evidence abstract housing demand is examined by looking quite specifically at the income and price variables based on individual household data permanent and transitory incomes are computed through instrumental variables related to human and nonhuman wealth a price is constructed by spatially varying hedonic techniques separation of measured income into permanent and transitory components substantially improves the predictive power of the housing demand estimation and leads to demand elasticities of 1 and 1 with respect to permanent income and price the permanent income elasticity is roughly twice the measured income elasticity

insiders versus outsiders in monetary policymaking this paper looks at the voting patterns of internal and external members of the mpc to investigate how far there are differences between insiders and outsiders we make three contributions first we assess the extent to which the bank of england internally generated forecasts explain the mpc members voting decisions this is important as generating forecasts on a quarterly basis is a key part of the process used by the bank of england the forecast for inflation is made public in the inflation report while the output gap forecast is not second we use a random coefficient method of estimation in which the parameters of the interest rate rule are allowed but not required to be different across members third we find evidence of some heterogeneity in the intercept a measure of experience on the mpc and the interest rate smoothing parameter but no significant differences in the members reaction to the forecasts of inflation and the output gap this abstract was borrowed from another version of this item

the introduction of price signals into land use planning decision making a proposal although directed to the british system of town and country planning this paper has relevance for many oecd countries including some with systems of land use regulation which evolved entirely independently of the british the paper starts by characterising the basic features of the british land use planning system viewed from the resource allocation point of view of an economist a conclusion is that the system explicitly excludes any use of price signals from its decisions the paper then summarises the problems which the exclusion of price information has given rise to because the uk planning system has deliberately constrained the supply of space and space is an attribute of housing which is income elastic in demand rising incomes not only drive rising real house prices but also mean that land prices have risen considerably faster than house prices several housing attributes other than garden space are to a degree substitutes for land but the underlying cause of the inelastic supply of housing in the uk is the constraint on land supply the final section proposes a mechanism which would make use of the information embodied in the price premiums of neighbouring parcels of land zoned for different uses such premiums signal the relative scarcity of land for different uses at each location and should become a material consideration in planning decision making if they were above some threshold this should provide a presumption of development unless maintaining the land in its current use could be shown to be in the public interest if combined with impact fees such a change would not only make housing supply more elastic and the system more transparent but would help to distance land availability decisions from the political process

strategic behavior of federal open market committee board members evidence from members forecasts abstract in this paper we use panel data to test whether federal open market committee fomc board members forecasts are rational rationality is rejected in the sense that forecasts by members are heavily dependent on previous own forecasts and last consensus made in fomc furthermore we reveal the strategic behavior of fomc board members forecasts by governors who always have voting rights agree much with the previous consensus of fomc members forecasts in contrast non governors who rotate voting rights exaggerate their forecasts they aggressively deviate their forecasts from previous consensus the former is herding behavior and the latter is anti herding behavior our results imply that individual members behave strategically governors want to present policy consistent forecasts to the congress and non governors utilize their forecasts to influence decision making in fomc

power sharing in monetary policy committees evidence from the united kingdom and sweden committees may make better monetary policy decisions than individuals however the benefits of group decision making could be lost if committee members cede power to a chairman we develop an econometric model to describe intracommittee power sharing across members estimation of the model permits us to classify monetary policy committees into the typology developed by blinder 2004 2007 we estimate our model for the united kingdom s bank of england boe and sweden s riksbank results for the boe suggest that the governor has little influence over other committee members while those for the riksbank indicate that the governor is highly influential

exploring spatial dynamics with land price indexes the purpose of this study is to explore the within region spatial dynamics of appreciation and depreciation rates using three different representations of geographical space mean value indexing methods are used to construct global land price indexes sub market land price indexes and local land price indexes using transaction price data for vacant residential land within the city of hamilton ontario between 1995 and 2003 the results are validated against statistics canada s series of new housing price indexes followed by a comparison of the relative performance of the three geographical representations of land price indexes the results indicate that the mean value indexing methods are robust although subject to outliers and sample selection bias and clearly illustrate the spatial dynamics of annual appreciation and depreciation rates across the study area the results also underscore the need for regular surveillance of the spatial dynamics of urban land markets

overconfidence monetary policy committees and chairman dominance abstract monetary policy decisions are typically characterized by three features i decisions are made by a committee ii the committee members often disagree and iii the chairman is almost never on the losing side in the vote we show that the combination of overconfident policymakers and a chairman with agenda setting rights can explain all these features the optimal agenda setting power to the chairman is a strictly concave function of the degree of overconfidence we also show that the quality of advice produced by the central bank staff is higher in a flat organization than in a hierarchical one

a constant quality price index for resale public housing flats in singapore largely because of the significant societal and economic aspects of public housing in singapore the current resale price index is published regularly by the housing and development board hdb based on average transaction prices this hdb index does not control for a shift in the mix of public housing resale flats transacted this paper looks into the usefulness of the current hdb resale price index that is reflective of pure price appreciation across time adopting the varying parameter technique a constant quality hdb resale price index is constructed instead for the period between january 1997 and june 2000 the usefulness of a constant quality resale price index is evaluated using three assessment criteria first through a series of comparative studies between a constant quality hdb resale price index and other resale price indices it is found that the constant quality resale price index provides a better indication of pure price appreciation secondly the parameters of price determinants are fo

the biases of federal reserve bank presidents this paper develops statistical tests which show that in federal open market committee voting federal reserve bank presidents as a group prefer less expansionary monetary policy than federal reserve board members further tests show that a subset of federal reserve bank presidents vote in a manner which is consistent with the partisanship of the u s president during whose term they were appointed membership in this subset is highly correlated with a career as an economist these results have implications for reforms which would alter the voting power of bank presidents on the fomc

publicity of debate and the incentive to dissent evidence from the us federal reserve transparency in committee decision making may have clear benefits by making members more accountable to outside observers we consider one potential cost the possibility that publishing records of deliberations will make members more reluctant to offer dissenting opinions we construct a model that compares incentives for members with career concerns to voice dissent when deliberations occur in public or in private we test the model using an original dataset based on deliberations of the federal reserve s federal open market committee asking whether the fomc s 1993 decision to begin releasing transcripts of its meetings has altered incentives for dissent we find evidence that this is indeed the case there has been much recent discussion of the advantages of transparency in agency relationships both in and outside of government while research has attempted to model this issue theoretically there has been less progress with empirical tests a problem due no doubt in large part to the fact that it is difficult to make before and after comparisons of a shift in transparency often no data are available on an agent s actions prior to the establishment of transparency in this article we focus on one specific type of transparency publishing verbatim transcripts of committee meetings and one specific reason why this type of transparency might not be desirable the possibility that the quality of deliberation on a committee will suffer if the deliberations take place in public we develop a theoretical model that helps to identify the potential costs of this type of transparency and we then test the model empirically using an original dataset on deliberations of the federal reserve s federal open market committee fomc our dataset is unique in that it records views expressed by policymakers at fomc meetings and not just their official votes our empirical tests focus in particular on the observed effect of the institutional change that occurred in 1993 when the fomc decided to begin releasing transcripts of its meetings after a delay of five years transparency is a particularly relevant issue in monetary policy because it is commonly argued that when central banks take actions such as publishing macroeconomic forecasts revealing individual votes on monetary policy committees or releasing minutes of meetings this will lead to improved economic outcomes while simultaneously facilitating democratic accountability 1

a long history of fomc voting behavior we devise and apply a method for estimating monetary policy reaction functions for individual members of the federal open market committee fomc of the federal reserve our method uses members votes on the monetary policy directive in fomc meetings as the key source of data on individual preferences the analysis provides a ranking by preference for ease for 84 fomc members who served during the 1966 1996 period

monetary policy rules work and discretion doesn t a tale of two eras this lecture examines monetary policy during the past three decades it documents two contrasting eras first a rules based era from 1985 to 2003 and second an ad hoc era from 2003 to the present during the rules based era monetary policy in broad terms followed a predictable systemic approach and economic performance was generally good during the ad hoc era monetary policy is best described as a discretion of authorities approach and economic performance was decidedly poor by considering alternative explanations of this policy performance correlation and examining corroborating evidence the paper concludes that rules based policies have clear advantages over discretion this abstract was borrowed from another version of this item

the influence of fomc member characteristics on the monetary policy decision making process abstract this paper provides new empirical evidence on a monetary policy committee with heterogeneous members whose decisions affect the efficacy of monetary policy it thereby provides a link between the literature on monetary policy committees and central bank monetary policy implementation through monetary rules using a novel dataset of the idiosyncratic characteristics of fomc members over the period from august 1979 to february 2014 the empirical findings show that characteristics such as education age and to a lesser extent work experience are not important in understanding the fomc decision making process instead the results point to the importance of time spent within the federal reserve system tenure on the fomc itself and the influence of the chair in shaping the decision making process the results are expected to have implications for the capacity of economic agents as well as various markets in the economy to more readily interpret public monetary policy information that reaches them this makes the monetary policy decision process less noisy and thus enhances the capability of agents and markets to attach the correct weight to this information

alternative views of the money transmission mechanism what difference do they make for monetary policy this paper examines how alternative views of the monetary transmission mechanism affect the choice of a monetary policy rule the main finding is that many different structural models indicate that the same simple monetary policy rule one in which the central bank s target short term interest rate reacts to inflation and to real output would perform well such rules work well even in models where the monetary transmission mechanism has a relatively strong exchange rate channel the models differ however in their implications for more complex monetary rules prepared for the oxford review of economic policy this paper is an updated revised and shortened version of an earlier paper entitled the monetary transmission mechanism and the evaluation of monetary policy rules presented at the central bank of chile in september 20 21 1999 i am grateful to david vines for very helpful comments

modelling spatial structures in local housing market dynamics a multilevel perspective there has been a long history of research into the development and estimation of hedonic house price models there is however a discrepancy between the empirical and theoretical approaches to this research a major issue lies in the integration of the conceptual and theoretical models of local housing markets with the context insensitive nature of the standard hedonic model specification this paper explores this inconsistency by using multilevel modelling to move towards a more empirically and conceptually appealing specification of the hedonic house price model it uses price data from cardiff to investigate how a multilevel approach can explicitly incorporate the spatial structures of housing market dynamics and the ad hoc nature of the valuation process the paper concludes that successful empirical analysis depends upon a clear theoretical understanding of the processes under investigation

spatial estimation of housing prices and locational rents summary this work stems from the widely accepted hypothesis that housing price is determined by two types of characteristic structural and locational under this hypothesis a methodology is presented for the spatial estimation of housing prices and locational rents the iterative residual kriging irk method the methodological aspects are complemented by the presentation of an application of this methodology to the case of housing in granada spain

the dynamics of intraurban quantile house price indexes estimating price indexes for different quantiles shows how prices vary for homes that are in different stages of the filtering process the paper describes a filtering model and its implication for the dynamic interaction of housing prices at these various stages a time series analysis of quantile price indexes for three municipalities near chicago supports the predictions of the filtering model

dissent in monetary policy decisions voting records indicate that dissents in monetary policy committees are frequent and predictability regressions show that they help forecast future policy decisions in order to study whether the latter relation is causal we construct a model of committee decision making and dissent where members decisions are not a function of past dissents the model is estimated using voting data from the bank of england and the riksbank stochastic simulations show that the decision making frictions in our

estimating neighbourhood effects in house prices towards a new hedonic model approach a hedonic equation considers ols models with independently and identically distributed errors however quality of property and location tend to exhibit highly auto regressive correlation due to spatial dependence and heterogeneity a modification is made to multiple regression analysis based on the land rent concept so that the modified hedonic house price function can be determined this paper develops a stochastic approach which is able to correct autocorrelation bias in the hedonic function others tend to model the spatial autocorrelation through the error terms while this study models it through the constant term the sample was orientated by location to reflect the neighbourhood effects thus the neighbourhood effects can be separated from the random disturbance our model using data from hong kong incorporates adjustments reflecting net floor area ratio age floor level views transport accessibility and amenities such as availability of recreational facilities the stochastic model is a more

political regime change and the real interest rate the effect of changes in policy regimes on real interest rates has important implications for financial and economic theory there is little current evidence that policy regime changes have any impact on the level of real interest rates we use large political changes as our measure of policy regime changes changes in presidential administration are more significantly correlated with real rate changes than are changes in the federal reserve chair or the mean shift points identified by garcia and perron 1996 using time series methods we also show that change of party control of congress is a significant factor explaining real rates we argue that theoretical models built on the assumptions of constant or policy invariant real interest rates are at variance with the empirical evidence

estimating central bank preferences under commitment and discretion this paper explains u s macroeconomic outcomes with an empirical new keynesian model in which monetary policy minimizes the central bank s loss function the presence of expectations in the model forms a well known distinction between two modes of optimization termed commitment and discretion the model is estimated separately under each policy using maximum likelihood over the volcker greenspan bernanke period comparisons of fit reveal that the data favor the specification with discretionary policy estimates of the loss function weights point to an excessive concern for interest rate smoothing in the commitment model but a more balanced concern relative to inflation and output stability in the discretionary model

reliable and unreliable partisan appointees to the board of governors every new appointment to the board of governors in recent years has triggered speculation as to how the new governor will vote in fomc meetings while several studies have hinted at partisan voting behavior by governors no study has yet attempted to identify reliable and unreliable partisan voting behavior and to pinpoint the background characteristics of governors that distinguish between the two this paper indicates that board members with a background in economics consistently voted in line with the economic ideology of the appointing president noneconomists on the board however displayed no such partisan voting behavior and were seen to be influenced by pressures emanating from the administration and by the monetary environment prior to their appointment over the 1951 to 1987 period most presidents have appointed reliable governors earlier in their presidential terms when the returns from being able to influence subsequent monetary policy are great and have chosen unreliable governors later in their terms when election support from the interest groups that these unreliables represent is important the results of the present paper suggest skepticism toward the recent spate of rational expectations game theoretic models which feature a dictatorial policy maker gaming atomistic market participants whose only political activity voting generates monetary surprises followed by convergence to an equilibrium because of their obsession with the ceremonial formalism of their genre these models ignore a vast complementary literature and as a consequence display conspicuously flimsy institutional and historical premises instead the present paper argues for the greater relevance of models of uncoordinated interaction between multiple political and private principals and federal reserve agents

the role of media for inflation forecast disagreement of households and professional forecasters this paper investigates the effects of media coverage about consumer price inflation on inflation forecast disagreement of german households and professional forecasters we adopt a bayesian learning model in which media coverage of inflation affects forecast disagreement by influencing information sets as well as predictor choice our empirical results show that disagreement of households depends on the heterogeneity of story content and on the reporting intensity especially of news on rising inflation disagreement of professional forecasters does not depend on media coverage with respect to the influence of macroeconomic variables we provide evidence that disagreement of professional forecasters primarily depends on the inflation rate and on inflation volatility the response of households to inflation is much less pronounced

passenger shipping cartels and their effect on trans atlantic migration abstract we investigate the impact of passenger shipping cartels on trans atlantic migration during the early twentieth century we assemble from primary sources a detailed database of passenger flows and cartel operations and show that cartel operation reduced migratory flows by approximately 20 to 25 further we show that there was no strong intertemporal substitution in migration to north america at least in the short run and therefore that the effects of cartel operation were not undone by later migration lastly we find that cartel operation had no appreciable effect on the variability of migration flows providing evidence against the notion that unfettered competition was destabilizing to turn of the century transportation markets

partisan monetary policies presidential influence through the power of appointment we investigate the channels through which partisan influence from a presidential administration could affect monetary policy making influence could be a result of direct presidential pressure exerted on members of the federal open market committee fomc or it could be a result of partisan considerations in presidential appointments to the board of governors to investigate these two channels of influence we devise and apply a method for estimating parameters of monetary policy reaction functions that can vary across individual members of the fomc our results suggest that the appointments process is the primary mechanism by which partisan differences in monetary policies arise

central bank communication and the liquidity trap central bank communication plays an important role in shaping market participants expectations this paper studies a simple nonlinear model of monetary policy where agents have incomplete information about the economic environment it shows that agents learning and the dynamics of the economy are heavily affected by central bank s transparency about its policy rule a monetary authority that does not communicate its rule can induce learning equilibria where the economy experiences prolonged periods of deflation and slow growth more generally small expectational errors can result in complex economic dynamics inducing welfare reducing fluctuations on the contrary central bank communication helps stabilizing expectations around the inflation target equilibrium

do fomc members herd abstract we show that growth and unemployment forecasts submitted by individual fomc members do not exhibit herding behavior while the inflation forecasts show strong evidence of anti herding interestingly anti herding is more important for non voting members than for voters

the structure of urban land prices abstract recognition of the existence of nonlinear land prices has an impact on the measurement of the rate at which land price declines with distance from the urban center it is hypothesized that concave parcel prices have given rise to overly large estimates of the rate of price decline with distance because parcel sizes increase with distance and increased parcel sizes would be associated with lower unit prices as a result of the concavity of the land price function this hypothesis is empirically tested using vacant residential commercial and industrial land sales from within cook county illinois an important finding is that allowing for concavity greatly reduces although it does not eliminate measured rates of price decline with distance

the definition of housing market areas and strategic planning the purpose of this paper is to develop the concept of a housing market area thereby provide insights into our understanding of the sub regional structures of the housing system and hence propose a framework for strategic planning research in the housing market to tackle this task it is first necessary to consider the criteria for a local housing market area the paper begins by reviewing previous definitions by both academics and planners and their underlying assumptions based on the principle of spatial arbitrage a local housing market area is defined by reference to criteria linked to migration self containment parallels are drawn with the principles that have been applied to define a system of spatial labour markets using travel to work areas this spatial arbitrage definition is tested empirically by developing a system of housing market areas for west central scotland using data derived from the land registry finally the paper draws together the empirical findings to discuss the nature of s

monetary policy by committee consensus chairman dominance or simple majority this paper studies the theoretical and empirical implications of monetary policy making by committee under four different voting protocols the protocols are a consensus model where a supermajority is required for a policy change an agenda setting model where the chairman controls the agenda a dictator model where the chairman has absolute power over the committee and a simple majority model where policy is determined by the median member these protocols give preeminence to different aspects of the actual decision making process and capture the observed heterogeneity in formal procedures across central banks the models are estimated by maximum likelihood using interest rate decisions by the committees of five central banks namely the bank of canada the bank of england the european central bank the swedish riksbank and the u s federal reserve for all central banks results indicate that the consensus model fits actual policy decisions better than the alternative models this suggests that despite institutional differences committees share unwritten rules and informal procedures that deliver observationally equivalent policy decisions

majority rule consensus building and the power of the chairman arthur burns and the fomc this paper investigates decision making within the federal open market committee of the federal reserve focusing on the competing pressures of majority rule consensus building and the power of the chairman to undertake this analysis we have constructed an original data set recording desired federal funds rates for each member of the committee over the 1970 78 period our results confirm a disproportionate influence of the chairman in the policy process they also confirm that other voting members of the committee have an impact on policy choices estimates indicate that the chairman exercises 40 to 50 of the voting weight in committee decisions

spatial association and heterogeneity issues in land price models urban planners frequently use regression analysis for the empirical estimation of land price models which are used to investigate the spatial structure of a city or to calculate the implicit price of environmental characteristics a concern with this kind of analysis is that often spatially associated or heterogeneous data are used which leads to estimation pitfalls most notably spatial autocorrelation and model structural instability over space in this paper we introduce a modelling methodology that combines a spatial autoregression with a switching regression to incorporate effectively both association and heterogeneity as part of the analysis in addition using sendai city in north eastern japan as a case study we use local statistics of spatial association to assist us in the exploration and definition of heterogeneous regimes finally we show how some measures commonly used to counter spatial effects fail at times thus highlighting the importance of a spatial modelling methodology such as th

house and land prices in sydney from 1931 to 1989 this paper describes and explains house and land prices in sydney from 1931 to 1989 throughout this period house and land prices fell generally exponentially with distance to the cbd however the price gradients were not constant between 1931 and 1968 the gradients flattened on the other hand between the mid 1970s and 1989 they became steeper again the changes in the gradients were caused mainly by changes in travel times and costs by road and rail real travel costs fell in the early period and rose later on other factors that affected the price gradients were changes in car ownership and the supply of urban services in the early period and gentrification of inner city areas and the greater increase in housing supply on the urban fringe in the later period the paper also shows how house size and environmental factors influenced house prices in the 1970s and 1980s

measuring changes in local house prices an empirical investigation of alternative methodologies abstract this paper investigates whether reliable house price indices can be constructed using a limited set of descriptive variables on a large number of observations four primary index methods are compared 1 median sale price 2 restricted hedonic 3 repeat sales and 4 the assessed value technique the paper examines the precision and accuracy of each of the alternative indices

environmental variables and real estate prices the aim of this paper is to compare various real estate valuation models and the manner in which they take into account environmental variables the reference model is taken to be a standard linear regression model including ordinal variables to measure environmental quality this type of model is widely used it is first compared with linear models which incorporate environmental quality notes extracted from the urban habitat database of a geographic information system gis which has been developed recently for geneva switzerland we also incorporate these quality notes in a single input parameter a so called geo index the price indices constructed in this way are quite similar to the more traditional hedonic model we additionally find that artificial neural network ann models which are non linear per se exhibit a similar general form of the price indices but that the detailed price behaviours of different models feature notable differences depending on the input choice of environmental variables

have we underestimated the likelihood and severity of zero lower bound events prior to the financial crisis most economists probably did not view the zero lower bound zlb as a major problem for central banks using a range of structural and statistical models we find that previous research understated the zlb threat by ignoring uncertainty about model parameters and latent variables focusing too much on the great moderation experience and relying on structural models whose dynamics cannot generate sustained zlb episodes our analysis also suggests that the federal reserve s asset purchases while materially improving macroeconomic conditions did not prevent the zlb constraint from having first order adverse effects on real activity and inflation