financialisation and justice in the city a commentary intensification of the transformation of real property into financial instruments has worsened urban inequality in the past several decades increased financialisation in itself does not create uneven development and property investment cycles since these phenomena have always been hallmarks of real estate development under capitalism rather it is the combination of financialisation with neoliberal ideology globalisation and the constriction of state sponsored social welfare and housing affordability programs that underlies the inequities produced by property investment progressive policy makers can potentially utilise financial instruments in order to achieve greater justice if they are able to challenge neoliberal hegemony

renegotiation on incomplete procurement contracts abstractthis article examines the impact of incomplete contracts on procurement costs in road construction auctions ex ante contracts in these auctions often fail to specify all of the potential construction contingencies and consequently changes in scope are necessary after construction begins using vermont road construction contract data this study finds evidence that there is a statistically significant difference in costs of firms between auctions with and without extra work adjustments substantial adaptation costs are responsible for the higher procurement outlays in incomplete contract i also find that bidders inflate their bids to incorporate risk premiums in incomplete contracts however my estimates suggest that this bidding behaviour does not affect their profit margins

calculated inequality portfolio benchmarking and regional office property investment in the uk the paper explores the reasons for the persistence in the uk of significant relative interregional variations in office property investment in the face of economic theory and empirical evidence that would support its more even spatial distribution the argument is made from a cultural economy perspective and involves the application to property of a concept drawn from the accountancy literature calculative practice uk investment decision making is distinguished by the primacy attributed to portfolio benchmarking as an influence on investment strategy the wider logic underpinning property benchmarking is subjected to critical appraisal then evidence is presented that suggests that benchmarking is a self referential practice which results in convergence and rigidity in fund structures and in the concentration of performance around a bounded range of sub optimal returns it is a barrier to the greater geographical diversification of office property investment

public employment and the welfare state in sweden this is a nontechnical summary of a much longer study which will appear with the same title in richard freeman birgitta swedenborg and robert topel eds forthcoming i am especially indebted to henry ohlsson and birgitta swedenborg and to stan engerman vic fuchs assar lindbeck stephen lundgren and agnar sandmo for comments on initial drafts i alone am responsible for the views expressed here

reconstituting the state city powers and exposures in chicago s infrastructure leases in the 2000s cities across north america began leasing existing infrastructure to global investment consortia previous evaluations of infrastructure leases focus on the lack of transparency of th

risk allocation and the costs and benefits of public private partnerships we study the agency costs of delegated public service provision focusing on the link between organizational forms and uncertainty at project implementation we consider a dynamic multitask moral hazard environment where the mapping between efiort and performance is ex ante uncertain but new information may come along during operations our analysis points out at the e ciency gains that bundling planning and implementation as under public private partnerships can bring in terms of better project design and lower operational costs bundling also results in increasingly better performance as uncertainty is reduced by growing experience in the sector bundling should instead be viewed with caution when the private sector seeks to radically innovate on public service provision or to introduce new services but lacks the knowledge and expertise to anticipate the impact of the innovative design procedure technology on the cost of operations the compounding of asymmetric information ex post plus moral hazard and renegotiation may generate diseconomies of scope in agency costs which for high operational risk can make unbundling optimal in this context the use of private flnance can help re establishing the beneflt of bundling only if lenders have su cient expertise to help assessing project risks

the hausman macurdy controversy why do the results differ across studies the two perhaps most influential empirical labor supply studies carried out in the united states in recent years hausman 1981 and macurdy green and paarsch 1990 report sharply contradicting labor supply estimates in this paper we show that the seemingly irreconcilable views on the size of work disincentive effects and welfare losses can be attributed to the use of differing nonlabor income and wage measures in the two studies monte carlo experiments suggest that the wage measure adopted by macurdy green and paarsch 1990 might cause a severely downward biased wage effect such that data falsely refute the basic notion of utility maximization

infrastructure and development a critical appraisal of the macro level literature this survey reviews the existing macro level empirical literature on the link between infrastructure and development outcomes in a critical light after providing a general framework that casts the relevant terms of the controversy on the real effect of infrastructure on growth in the context of an aggregate production function it signals what are the relevant empirical questions to be addressed this guides the systematic review of a number of empirical studies and the discussion of the main econometric challenges to the identification of the effect of infrastructure on output and productivity finally building on related research in particular in contract theory and political economy the paper spells out several promising research avenues

the financialisation of rental housing a comparative analysis of new york city and berlin this paper compares how recent waves of private equity real estate investment have reshaped the rental housing markets in new york and berlin through secondary analysis of separate primary research projects we explore financialisation s impact on tenants neighbourhoods and urban space despite their contrasting market contexts and investor strategies financialisation heightened existing inequalities in housing affordability and stability and rearranged spaces of abandonment and gentrification in both cities conversely cities themselves also shaped the process of financialisation with weakened rental protections providing an opening to transform affordable housing into a new global asset class we also show how financialisation s adaptability in the face of changing market conditions entails ongoing but shifting processes of uneven development comparative studies of financialisation can help highlight geographically disparate but similar exposures to this global process thus contributing to a critical urban politics of finance that crosses boundaries of space sector and scale

dynamic procurement under uncertainty optimal design and implications for incomplete contracts we characterize the optimal dynamic contract for a long term basic service when an uncertain add on is required later on introducing firm risk aversion has two impacts profits for the basic service can be backloaded to induce cheaper information revelation for this service an income effect which reduces output distortions the firm must also bear some risk to induce information revelation for the add on this risk effect reduces the level of the add on but hardens information revelation for the basic service the interaction between these effects has important implications for the dynamics of distortions contract renegotiation and the value of incomplete contracts

the law of small numbers investigating the benefits of restricted auctions for public procurement abstracta commonly accepted view in the academic literature is that dispensing with competition may only be beneficial when tendering complex contracts however restricted auctions are frequently used among eu member states to procure small contracts in this article we investigate this paradox using an original data set of 180 contracts used by a local public buyer of social housing between 2006 and 2009 we show that limiting competition may enable economies to be made on transaction costs while the most efficient bidders still come forward and that abuses such as corruption or favouritism do not result to our knowledge this article is the first to shed light on the advantages of using restricted auctions when tendering small simple contracts

financialisation the valuation of investment property and the urban built environment in the uk the financialisation literature has been criticised for its limited empirical base and its failure adequately to link the everyday world with that of high finance the paper addresses these shortcomings by examining the calculative practice of property valuation the way that valuations are performed affects their results and therefore the operation of the property market the paper traces the evolving influence of finance capital on the valuation of commercial property in the uk by constructing a historiography of investment valuation since 1960 traditional approaches to valuation have been increasingly challenged by those derived from financial economics however the former remains the dominant method for undertaking market valuation its grounding in comparison a centring and standardising process offers an explanation for some of the changes in the urban built environment that are ascribed to financialisation this suggests that a more detailed and historically sensitive interpretation of financialisation is required

renegotiation of concession contracts in latin america evidence from the water and transport sectors abstract high rates of contract renegotiation have raised serious questions about the viability of the concession model to attract private participation in infrastructure in developing countries after extending in reduced form a standard regulation model in which renegotiation occurs due to the imperfect enforcement of concession contracts we use a unique data set of 307 concessions awarded in latin america from 1989 to 2000 covering the sectors of transport and water to analyze the determinants of this high incidence of renegotiations of infrastructure contracts we look in details at the impact on the probability of renegotiation of a concession of regulatory institutions institutional features economic shocks and of the characteristics of the concession contracts themselves we then derive some policy implications of our work

decentralisation and accountability in infrastructure delivery in developing countries many developing countries are experimenting with decentralisation of public service delivery to elected local governments instead of bureaucrats appointed by a central government we study the resulting implications in a theoretical model in which the central government is uninformed about local need and unable to monitor service allocations bureaucrats charge bribes for services as monopoly providers resulting in underprovision of services especially for the poor local governments are directly responsive to their citizens needs but may be subject to capture by elites effects of decentralisation on service volumes efficiency and equity are analysed under different financing arrangements for local governments the theme of the 2004 world development report is summarised by its opening paragraph too often services fail poor people in access in quantity in quality but the fact that there are strong examples where services do work means governments and citizens can do better how by putting poor people at the center of service provision by enabling them to monitor and discipline service providers by amplifying their voice in policymaking and by strengthening the incentives for providers to serve the poor problems of accountability associated with traditional modes of delivery involving centralised bureaucracies include cost padding service diversion limited responsiveness to local needs limited access and high prices charged especially to the poor 1 many developing countries have thus begun to experiment with initiatives to increase accountability of service providers by providing greater control rights to citizen groups these include decentralisation of service delivery to local governments community participation direct transfers to households and contracting out delivery to private providers and ngos the programmes include a wide range of infrastructure services water sanitation electricity telecommunications roads and social services education health and welfare programmes countries where such trends have gathered

u s fiscal policy and trade deficits a broad perspective the emergence of large government budget deficits and large international trade deficits stands out as the dominant feature of u s macroeconomic behavior since the early 1980s economists trained in the traditional keynesian theory have pointed to the budget deficit as the major cause of the trade deficit according to the mundell fleming model changes in the budget deficit trigger changes in the real interest rate the real exchange rate and the level of real income which in turn alter the trade balance others believing in the real world relevance of the ricardian equivalence proposition have argued that the deficits are not really twins but merely distant cousins if not entirely unrelated if ricardian equivalence holds shifts between taxes and borrowing have no effect on real interest rates or aggregate demand previous studies of the twin deficits have adopted a variety of approaches both theoretical and empirical theoretical treatments run the gamut from the standard mundell fleming model 18 to the ricardian model 7 to the atheoretical 1 2 3 4 12 14 17 empirical approaches range from simple single equation ols 5 6 16 to two stage least squares applied to a system of structural equations 18 to unconstrained var modeling 1 2 12 17 to cointegration 3 14 the variables used to measure the budget and trade deficits vary across studies as does the set of related variables included in the models the form in which the data are utilized e g as a ratio of gnp or as a first difference of levels also differs across studies not surprisingly a variety of results emerges table i provides a brief overview of a number of studies the estimated effects of budget deficits on the trade balance range from the substantial 12 to statistically insignificant 7 abell 1 2 finds the transmission mechanism to be primarily through interest and exchange rates while zietz and pemberton 18 find that channel to be insignificant in comparison to the domestic absorption channel yet some studies do not even include domestic income as a separate variable in their equations making cross study comparisons difficult thus it is impossible to draw with confidence any conclusions about the twin deficits relationship this confusion of results leads us to examine systematically the relationship between the two deficits using a multivariate model in this paper we report the results of a systematic analysis of the link between the deficits using a five variable system for the flexible exchange rate period 1973 1 to 1991 iv we begin with

assessing empirical approaches for analyzing taxes and labor supply recent surveys on the labor supply responses of men document a divergence in the estimates of substitution and income effects obtained using various estimation approaches generally studies accounting for nonlinear tax schedules in a static setting via a piecewise linear approach produce estimates that typically imply higher substitution and lower income responses than are suggested by empirical work applying other approaches this paper demonstrates that maximum likelihood estimation of a consumer choice problem with nonlinear budget sets implicitly relies on the satisfaction of inequality constraints that translate into behaviorally meaningful restrictions these constraints arise not as a consequence of economic theory but instead as a requirement to create a properly defined statistical model in the analysis of piecewise linear budget sets the implicit constraints required by maximum likelihood in estimation amount to imposition of slutsky conditions at all wage income combinations associated with kink points in the analysis of differentiable budget sets the tacit constraints invoked by maximum likelihood also involve inequality restrictions on slutsky terms the empirical work presented in this study supports the contention that these implicit constraints play a major role in explaining the discrepancies in estimates found in the literature on men s labor supply

toward a theory of regulation for developing countries following jean jacques laffont s lead the efficient operation and expansion of infrastructures in developing countries is crucial for growth and poverty reduction however recent reforms aimed at improving the performance of these sectors have had limited success evidence suggests that in many instances this was because the traditional regulatory theory relied on by policymakers was not suitable for the institutional context in developing countries this article surveys more recent theoretical work focusing on problems with regulation in these countries at the heart of the survey is the work of jean jacques laffont who in the last decade of his life set about developing a theoretical framework for regulation in developing countries we consider the implications of his work which focused on the key institutional limitations faced in developing countries we then discuss where experience suggests that there are important omissions from this modeling bringing in extensions and alternative approaches pursued by other authors we conclude by summarizing the key ways in which regulatory policy will be different when institutions are weak overall we find that an understanding of the institutional context and its implications are crucial when designing a regulatory framework for developing countries

nonparametric estimation of the impact of taxes on female labor supply this paper proposes a simple extension of nonparametric estimation methods for nonlinear budget set models derived in blomquist and newey 2002 to censored dependent variables the nonparametric method is applied to estimate female labor supply elasticities using data on married women from the 1985 and 1989 waves of the panel study of income dynamics exploiting the substantial variation in budget sets caused by the tax reform act of 1986 as a source of identification the estimated wage elasticities from this new method are 0 56 overall and 0 27 on the intensive margin the income elasticity estimates are close to 0 67 overall and 0 13 on the intensive margin compared with the linear labor supply model the estimated elasticities are usually larger for the nonparametric specifications that account for nonlinear budget sets copyright 2010 john wiley sons ltd

bounds on elasticities with optimization frictions a synthesis of micro and macro evidence on labor supply how can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention i derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand the size of the price change and the degree of frictions the degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum the bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities i apply these bounds to the literature on labor supply the utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1 of earnings as a result small frictions can explain the differences between micro and macro elasticities extensive and intensive margin elasticities and other disparate findings pooling estimates from existing studies i estimate a hicksian labor supply elasticity of 0 33 on the intensive margin and 0 25 on the extensive margin after accounting for frictions

renegotiation design with unverifiable information this paper considers a buyer seller relationship with observable but unverifiable investments and or random utility parameters in such situations it is known that contract renegotiation may prevent the implementation of first best outcomes in this paper we show however that efficient investments and optimal risk sharing can typically be achieved provided the initial contract is able to monitor the ex post renegotiation process specifically we focus on the following two features of renegotiation design first default options in case renegotiation breaks down second the allocation of all bargaining power to either contracting party moreover we show that these two features can be obtained in standard rubinstein bargaining games through contractual provisions such as specific performance clauses and penalties for delay or equivalently financial hostages refundable without interest

concessions of infrastructure in latin america government led renegotiation this paper analyzes government led renegotiations in infrastructure concession contracts in latin america based on the same sample used in guasch laffont and straub 2003 to examine firm led renegotiations after extending the theoretical framework to a multiple period context in which both pareto improving and rent shifting renegotiations at the initiative of the government can occur we develop an original instrumental variable strategy to address the issue of contract endogeneity and derive empirical results while some of the main insights concerning the importance of having a regulator in place when awarding concessions and the fragility of price cap regulatory schemes are unchanged significant differences arise with respect to the effect of investment and financing as well as the corruption variables we provide evidence that a good regulatory framework is especially important in contexts with weak governance and political opportunism copyright 2007 john wiley sons ltd

privatization in latin america what does the evidence say privatization is under attack criticisms run from corrupt deals to abuse of market power and social welfare losses we evaluate the empirical record on privatization relying on recent comprehensive studies from latin america the paper presents four main results first the increased profitability of privatized firms is not explained by sample selection biases second in the quest to identify the sources of increased profitability after privatization we find little evidence that validates concerns of generalized market power abuses exploitation of workers and lack of fiscal benefits third the manner in which privatization is carried out matters transparency and homogeneity in procedures speed and limited restructuring prior to privatization lead to better outcomes and less room for corruption and discretion finally privatization s success is enhanced by two complementary policies deregulation or reregulation of industries previously shielded from competitive forces and an effective corporate governance framework that facilitates privatized firms access to capital at lower cost overall the empirical record shows that privatization leads to increased profitability and productivity firm restructuring fiscal benefits output growth and even quality improvements most cases of privatization failure can be linked to poor contract design opaque processes with heavy state involvement lack of reregulation and a poor corporate governance framework

the effect of income taxation on the labor supply of married men in sweden abstract this paper presents labor supply functions estimated on a sample of prime age swedish males the model used takes account of the nonlinear character of individuals budget sets caused by the progressive income tax it also allows preferences to vary between individuals calculations with the estimated functions using a partial equilibrium framework indicate a sizeable effect of the income tax on hours of work the average expected deadweight loss of the income tax is found to be approximately 20 percent of tax revenue

nonlinear taxes and labor supply abstract many empirical studies where hours of work for males are regressed on the gross wage rate or a crudely corrected gross wage rate have yielded wage rate coefficients close to zero it is often believed that this implies that taxes do not affect labor supply in the present paper i show that this is a misinterpretation of the empirical results and that estimated wage rate coefficients often are close to zero because taxes affect labor supply i also show how the use of a proportional tax as an approximation of a nonlinear tax schedule can yield incorrect results when an estimated labor supply function is used to calculate the effect of taxes

the effect of taxes on male and female labor supply in sweden this paper estimates labor supply functions for married men and women in sweden using data from 1980 taking account of the complete form of individuals budget constraints both linear and quadratic supply functions are estimated with and without random preferences a novel feature is that for women the wage rate and labor supply functions are estimated simultaneously using a full information maximum likelihood method this method yields substantially larger wage and income elasticities than does the previously used two step methods another result is that the quadratic supply function wage elasticities for men and women are virtually the same if the elasticities are evaluated at the same net wage rate and hours of work for men and women the estimated functions are used to calculate the effect of tax reforms

contracting officer workload incomplete contracting and contractual terms this article estimates the causal effect of retirement induced workload spikes on the selection of procurement terms in a sample of 150 000 contracts from 85 procurement offices over 11 years increases in workload decrease reliance on competitive acquisition procedures decrease reliance on firm fixed price contracts increase risk of renegotiation and increase costs these estimates are consistent with a model of endogenously incomplete contracting the us federal government has experienced exceptional growth in acquisitions contracting over the past decade but limited growth in acquisitions manpower this article provides some of the facts necessary to evaluate the consequences of these shifts

bureaucracy altruisme and monetary policy a note from a forecasting perspective sets over the period 1916 1987 their structured critique is consistent with the earlier work of strong 1984 boyd 1984 allen mccrickard cartwright and delorme 1988 mester 1994 and others in general all question the findings of toma 1982 shughart and tollison 1983 boyes mounts and sowell 1988 and others that bureaucratic effects and institutional incentives have had a significant impact on the development and conduct of monetary policy an underlying issue in this debate is whether variables proxying bureaucratic or institutional effects emanating from the incentives contained in the structure

renegotiation and information revelation over time the case of optimal labor contracts the paper analyzes the issue of commitment in grossman and hart s model of optimal labor contracts under asymmetric information about firm profitability we extend their framework by allowing employment to vary over time at equidistant intervals when both parties can precommit ex ante not to renegotiate the contract this replicates the grossman hart outcome each subperiod when precommitment is not possible information revealed through the contract can create pareto improving renegotiation opportunities and the issue of optimal information revelation arises the paper analyzes the impact of ex post pareto improving renegotiations on the optimal contract

family model of contributions to non profit organizations and labour supply in this article a model is presented in which the family decides the labour supply of both spouses and their time donations to non profit organizations for the estimation spanish data was used which showed that family size and pre school children influence decisions made about time distribution of husband and wife women with fewer family responsibilities work longer hours and donate more time whilst the effect on men is the contrary also monetary donations by the family are directly related to time donations by the spouses

explaining the declined affordability of housing for low income private renters across western europe the private rented sector prs recently enjoyed a revival in particular in the years before and after the great financial crisis gfc at the same time however affordability concerns have come to the fore the main aim of this paper is to explain trends in housing affordability for lower income households in the prs across western european countries from a supply versus demand perspective to this end we 1 related trends in housing affordability to wider changes in housing systems welfare regimes demographic indicators and housing market financialisation and 2 decomposed affordability trends in terms of rents and incomes controlling for compositional shifts we incorporated the spatial dimension by distinguishing between urban and rural regions although we could not explicitly test for the more fine grained mechanisms relating housing market financialisation to increased unaffordability of prs housing our findings nevertheless warrant future research into this topic in particular in countries with strong financialisation ireland the netherlands spain and portugal decreasing affordability arises from the fact that during the period 1995 2007 private rent increases were not compensated for sufficiently by income growth we furthermore found that across urban regions between 1995 and 2007 affordability worsened through demand pressure arising from in migration changes after the gfc up to 2013 were more limited and diverse

sustainability and the anchoring of capital negotiations surrounding two major urban projects in switzerland theurillat t and crevoisier o sustainability and the anchoring of capital negotiations surrounding two major urban projects in switzerland regional studies this article deals with the anchoring of mobile financial capital in the city and urban sustainability illustrated by a case study in the swiss context it develops the theory that new forms of negotiation are appearing around urban projects development construction firms are playing a central role they are capable of evaluating and translating the multiple dimensions of a project and certain sustainability challenges into financial terms in a way that permits the anchoring of capital in the city in parallel the issue of sustainability depends greatly on the capacity of the local actors to negotiate with the promoters of urban projects

infrastructure privatization and changes in corruption patterns the roots of public discontent abstract this paper offers a theory of how the degree of corruption that prevails in a society responds to changes in the ownership structure of major public service providers we show that there are cases in which privatization even though it fosters investments in infrastructure also opens the door to more corruption the public dissatisfaction towards privatization is then crucially affected by the changes in the degree and pattern of corruption our model thus helps understand the seemingly paradoxical situation prevailing in latin america where most studies find that privatizations have been efficiency enhancing and have fostered investments and at the same time popular dissatisfaction with the process is extremely high especially among the middle class we show that this line of explanation is consistent with the evidence from surveys in the region

progressive income taxes test of efficiency upper bounds on efficient tax rates in a progressive labor income tax schedule are derived within the standard framework of optimal taxation a tax rate is efficient if it is not pareto dominated by any other tax rate the formulas derived are applied to the swedish 1982 tax schedule inefficiency is revealed for the middle income groups copyright 1990 by the editors of the scandinavian journal of economics

a theory of bot concession contracts in this paper we discuss the choice for build operate and transfer bot concessions when governments and firm managers do not share the same information regarding the operation characteristics of a facility we show that larger shadow costs of public funds and larger information asymmetries entice governments to choose bot concessions this result stems from a trade off between the government s shadow costs of financing the construction and the operation of the facility and the excessive usage price that the consumer may face during the concession period the incentives to choose bot concessions increase as a function of informational asymmetries between governments and potential bot concession holders and with the possibility of transferring the concession project characteristics to the public authority at the termination of the concession

adverse selection and renegotiation in procurement as was shown by dewatripont optimal long term contracts are generally not sequentially optimal the parties ex post renegotiate them to their mutual advantage this paper fully characterizes the equilibrium of a simple two period procurement situation and studies the extent to which renegotiation reduces ex ante welfare i a central result is that like in the non commitment case the second period allocation is optimal for the principal conditionally on his posterior beliefs about the agent ii the first period allocation exhibits an increasing amount of pooling when the discount factor grows iii with a continuum of types it is never optimal to induce full separation the paper also analyzes whether renegotiated long term contracts yield outcomes resembling those under either unnegotiated long term contracts or a sequence of short term contracts and it links the analysis with the multiple unit durable good monopoly problem

monetary aggregates as monetary targets a statistical investigation in this paper the authors analyze statistical properties of the monetary base m1 and m2 for the postwar u s data record the authors are specifically interested in answering three policy related questions first to what extent do these monetary aggregates contain information useful for predicting movements in prices and real output second how do the aggregates rank as to their predictive usefulness third how do these aggregates rank as to the stability of their relationship to the macroeconomy copyright 1992 by ohio state university press

filtering risk away global finance capital transcalar territorial networks and the un making of city regions an analysis of business property development in bangalore india halbert l and rouanet h filtering risk away global finance capital transcalar territorial networks and the un making of city regions an analysis of business property development in bangalore india regional studies this paper contributes to ongoing debates on the landing or anchoring of global finance capital into the urban built environment inspired by recent advances from the school of territorial economics it develops the concept of transcalar territorial networks ttns to explain the processes that result in fixing foreign financial capital into business properties the paper demonstrates that ttns contribute to filter away the risks that foreign investors associate with the complexity of local regional property markets it also highlights the potential consequences on the spatial economic and social dynamics of city regions

the econometrics of piecewise linear budget constraints a survey and exposition of the maximum likelihood method in this article maximum likelihood techniques for estimating consumer demand functions when budget constraints are piecewise linear are exposited and surveyed consumer demand functions are formally derived under such constraints and it is shown that the functions are themselves nonlinear as a result the econometric problems in estimating such functions are exposited and the importance of the stochastic specification is stressed in particular the specification of both unobserved heterogeneity of preferences and measurement error econometric issues in estimation and testing are discussed and the results of the studies that have been conducted to date are surveyed

financial markets developers and the geographies of housing in brazil a supply side account financialisation and housing are predominantly associated to mortgages for homeownership and securitisation techniques this paper looks at how financial markets influence the development industry

does advertising increase labour supply time series evidence from the uk wages in industrialized countries have risen considerably during the last 50 years whereas hours worked for manual workers at least have decreased only marginally in europe one policy response has been to attempt to protect workers from pressure to work long hours by placing legal restrictions on the amount of hours that may be worked each week this paper examines the possibility that in fact observed hours may be the result of a desire of workers to work longer due to a shift in their preferences from leisure to increased consumption caused by the huge increase in mass media advertising a cointegrating var framework is used to test this hypothesis on uk time series data for both males and females from 1952 to 1997 advertising is shown to be positively associated with hours worked for both male and female series causality tests indicate unidirectional causality for males and females from advertising to hours worked these results suggest that the european policy response is more likely to re

leveraging finance capital urban change and self empowerment of real estate developers in india this paper questions the effects of the financialisation of indian real estate markets with a focus on the bangalore city region research on southern cities has concluded that globally connected but locally embedded real estate developers contribute to anchoring transnational investment yet the acknowledged dearth of studies on the real estate industry in post liberalisation india limits our understanding of the ongoing empowerment of local urban actors including developers adopting a cultural political economy perspective the paper analyses how developers leverage finance capital to achieve greater economic and political agency and thus contribute to the material symbolic and political transformations of cities it first demonstrates that finance capital has sustained bangalore based developers growth strategies throughout southern india subsequently developers shape the materialities of metropolises via a piecemeal juxtaposition of medium sized developments although this may occasionally meet government strategies for modernising their cities it more often than not constitutes an understudied obstacle to states mega projects that are outdone by developers ability to work through the intricacies of local land markets and bureaucracies furthermore having become dominant city builders developers are in a situation to circulate representations concerning what the desirable city should be such narratives aim at inserting local real estate markets into globalising financial commodity chains while also legitimating developers own role consequently developers attempt to promote with some success prescriptions in favour of state reforms and the adoption of pro urban growth policies the ongoing financialisation of urban production thus participates in the self empowerment of developers in india s cities

introduction the financialisation of urban production conditions mediations and transformations a distinctive feature of urban spaces lies in their high infrastructural density because buildings roads stadiums airports are all capital intensive they rely in turn on financial infrastructures that circulate not passengers power or data but capital more or less temporarily fixed in the urban built environment harvey 2001 like many infrastructures edwards 2003 financial ones remain invisible to most but for cases of major disruptions think for instance of how the subprime crisis revealed the interconnection between households mortgages and capital markets this relative invisibility should however not obfuscate the importance of financial circuits in the design construction exploitation and ownership of the urban built environment urban production from here on researchers in urban studies unevenly pay attention to financial circuits understood here as the sociotechnical systems that channel investments in the forms of equity and debt into urban production major accounts of city making under neoliberalisation from the 1990s and 2000s are a case in point such studies mainly focus on evolving rationales for public intervention and the resulting changes in public actors modes of operation where welfare provision gives way to entrepreneurial policies harvey 1989 moulaert et al 2003 tasan kok and baeten 2012 the growing importance of private investments and the concomitant reconfiguration of public spending is mostly acknowledged as a contextual factor while the private investors and international finance capital targeted by public authorities remain in the background of analyses there is thus a dearth of conceptualisation and of evidence on how private financiers and investors collectively or individually shape or adjust to this new context and on the role played by those acting at the interface between public and private bodies it is thus important to go beyond simplistic analytical distinctions such as public subsidies versus private investments and to scrutinise financial circuits as relevant

the sensitivity of an empirical model of married women s hours of work to economic and statistical assumptions this study undertakes a systematic analysis of several theoretic and statistical assumption s used in many empirical models of female labor supply using a singl e data set psid 1975 labor supply data the author is able to replic ate most of the range of estimated income and substitution effects fo und in previous studies in this field he undertakes extensive specif ication tests and finds that most of this range should be rejected du e to statistical and model misspecifications the two most important assumptions appear to be the tobit assumption used to control for sel f selection into the labor force and exogeneity assumptions on the wi fe s wage rate and her labor market experience copyright 1987 by the econometric society

contract renegotiation and coasian dynamics consider a long term relationship between a seller and a buyer whose valuation for a per period service or a durable good is private as trade progresses the valuation will be partially revealed and it may be impossible for the parties to commit ex ante not to take advantage of this we analyse this situation first by supposing that the parties can sign a sequence of short term contracts and secondly by supposing that they can sign a long term contract but cannot commit not to renegotiate it later we find a close relationship in the second case between the optimal long term contract and the non commitment outcome in the standard coasian durable good model our results also have implications for hidden information principal agent models

regulation asymmetric information and auditing this article analyzes a model of a regulated firm that is better informed about its cost function than is the regulator by auditing at a cost however the regulator is assumed to be able to observe the realized cost of the firm if the regulator finds that the firm had misrepresented its costs at the time at which prices were set he can order a refund to consumers in the optimal policy the regulator audits when the firm reports for pricing purposes that its costs will be high and orders a refund when the auditfinds that realized costs are lower than anticipated given the original report a separation result that obtains for an important case indicates that the initial pricing decision is independent of the auditing decision the auditing decision however depends on the price that was initially set the optimal auditing strategy is characterized and the nature of the welfare gains are identified the methodology used in the analysis involves the characterization of an equilibrium of a revelation game with an ex post observable

tax arbitrage and labor supply we examine how tax avoidance in the form of trade in well functioning asset markets affects the basic labor supply model we show that tax arbitrage has dramatic implications for positive normative and econometric analysis of how taxes affect work incentives

the econometrics of nonlinear budget sets traditional empirical analysis of consumer demand has usually made the assumption of linear budget sets that is the consumer is assumed to purchase any desired quantity at a constant price subject to a budget constraint the major exception to this framework is the analysis of demand when some goods are rationed 2 in the rationed case the price is constant up to a quantity limit in contrast to the rationed case here i consider the situation where the price varies with the amount of the good purchased empirical situations with nonconstant prices come readily to mind and of course they have received much recent attention from theorists since mirrlees 44 paper on optimal nonlinear taxation the following examples are meant to give a partial listing of cases when nonlinear budget sets occur i electricity prices many electric utilities engage in declining block pricing that is the marginal price of successive kwh s of electricity decrease at a given number of points determined by total demand thus the budget set is piecewise linear houthakker 36 was the first to propose an approach to this problem taylor 51 analyzes the problem at length and hausman kinnucin and mcfadden 31 use an instrumental variables estimator to provide consistent estimates of the demand function

dynamic regulation design without payments the importance of timing abstract we consider a two period model of optimal regulation of a firm subject to marginal compliance cost shocks the regulator faces an asymmetric information problem the firm knows current compliance costs but the regulator does not both the regulator and the firm are uncertain about future costs in our basic framework the regulator may not offer payments to the firm we show that the regulator can vary the strength of regulation over time to induce the firm to reveal its costs and increase welfare in the optimal mechanism the regulator offers stronger weaker regulation in the first period and weaker stronger regulation in the second period if the firm reports low high compliance costs in the first period low cost firms expect compliance costs to rise in the future and thus prefer weaker regulation in the second period high cost firms expect costs to fall in the future and thus prefer regulation which becomes stricter over time thus the regulator offers the low high cost firms slightly weaker stronger regulation in the second period in exchange for much stronger weaker regulation in the first period thereby timing the regulation if the regulator can make payments then the optimal mechanism to some degree times the regulation as long as a positive marginal cost of funds exists if the marginal cost of funds is high enough then under the optimal mechanism the regulator will not use payments and use our timing mechanism exclusively

contract renegotiation and rent re distribution who gets raked over the coals policy shocks affect the rent distribution in long term contracts which can lead to such contracts being renegotiated we seek an understanding of what aspects of contract design in the face of a substantial policy shock affect the propensity to renegotiate we test our hypotheses using data on u s coal contracts after the policy shock of the 1990 clean air act amendments contracts are divided into two categories those that were renegotiated following the shock and those that were not characteristics of the contract are used to explain whether or not the contract was ultimately renegotiated results provide guidance on rent re distribution and contract renegotiation more generally and are applicable to contemporary policy issues such as climate change legislation

finance business property and urban and regional development halbert l henneberry j and mouzakis f finance business property and urban and regional development regional studies compared with other factors of production the supply of business property and its role in urban and regional development has received comparatively little attention traditional analyses assume that the supply of such property responds to demand in a relatively unproblematic way however there is evidence that institutional structures and processes in the property and capital markets have produced regional imbalances in the quantity quality and price of business accommodation benefiting some places and handicapping others such imbalances are present to different degrees internationally and their characteristics and causes are similarly varied the special issue addresses this gap in knowledge

building cities on financial assets the financialisation of property markets and its implications for city governments in the paris city region the 2008 global financial meltdown has redirected attention to the entwinement of financial markets and the urban built environment against that background recent works in urban political economy have focused on how city governments support the rent maximisation strategies of landowners thereby reinforcing the increasing tendency to treat land as a financial asset harvey 1982 2006 however this perspective paradoxically understates the importance of market finance actors neglecting to demonstrate how in practice such financial investors who have been shown to adopt selective investment practices shape urban redevelopment projects in this article the role of financial investors is analysed through a case study of a large scale redevelopment project on the outskirts of the paris city region city of saint ouen the analysis of negotiations over urban design and economic development issues raised by property developers seeking to fashion commercial properties as investment assets reveals the unevenness of a local authority s ability to implement an agenda that potentially diverges from the expectations of financial investors accordingly given the growing importance of investors in the ownership of the built environment the article considers urban redevelopment as the outcome of power relations that originate in the circulation of investors expectations these expectations are met through translating market finance categories risk return and liquidity into elements of the urban fabric this bears substantial consequences for policy making given the current context of austerity as municipal authorities are increasingly constrained to rely on property markets urban redevelopment projects are thereby increasingly shaped to provide investment assets for financial investors

estimation of limited dependent variable models with dummy endogenous regressors applied economists have long struggled with the question of how to accommodate binary endogenous regressors in models with binary and nonnegative outcomes i argue here that much of the difculty with limited dependent variables comes from a focus on structural parameters such as index coefcients instead of causal effects once the object of estimation is taken to be the causal effect of treatment several simple strategies are available these include conventional two stage least squares multiplicative models for conditional means linear approximation of nonlinear causal models models for distribution effects and quantile regression with an endogenous binary regressor the estimation strategies discussed in the article are illustrated by using multiple births to estimate the effect of childbearing on employment status and hours of work

contractual flexibility rent seeking and renegotiation design an empirical analysis of information technology outsourcing contracts this paper examines renegotiation design in contracts for outsourced information technology it services whereas prior literature in information systems has highlighted the likelihood of ex post rent seeking engendered by renegotiation we build upon literature on incomplete contracts to posit that renegotiation can be pareto improving by incorporating contingencies revealed ex post research on contract renegotiation has been hampered by two sets of challenges the lack of appropriate data and empirical challenges in identification we circumvent this problem both by appropriate data collection and by employing an identification strategy to address alternate causal explanations we propose a measure pareto improving amendments to assess renegotiation outcomes that enhance the value from outsourcing by hazard equilibration and by incorporating learning using a unique sample of 141 it outsourcing contracts we examine the role of decision rights delineated ex ante in enabling pareto improving amendments and in resolving the trade off between adaptation and rent seeking we find that flexibility provisions termination for convenience rights and contractual rights whereby vendors are granted rights to reuse know how are associated with pareto improving amendments the results are robust to potential endogeneity of contractual provisions when parties have feasible foresight and to the possibility of adverse selection in the sample we also examine alternate explanations from the literature on contractual breach implications for practitioners and researchers are discussed this paper was accepted by sandra slaughter information systems

identifying interdependent behaviour in an empirical model of labour supply in this paper we test a particular form of interdependent behavior namely the hypothesis that individuals choices of hours of work are influenced by the average hours of work in a social reference group there are problems to empirically disentangle the effects of interdependent behavior and preference variation across groups we show that panel data or data from several points in time are needed in the empirical analysis we combine cross section data from 1973 1980 and 1990 our results support the hypothesis of interdependent behavior the implication is that conventional tax policy predictions in which preference interdependencies are neglected will tend to underestimate the effect of a tax reform on hours of work our point estimates suggest that conventional calculations would capture only about a third of the actual change in hours of work

empirical evidence on satisfaction with privatization in latin america since the 1980s privatization of formerly state owned firms has been extensively implemented by governments across latin america despite the fact that most evaluations of the process fail to find significant adverse efficiency and welfare effects there has been a strong surge in public discontent with such policy in the region this paper performs a systematic empirical analysis of the determinants of such dissatisfaction using survey data from latinobarometro covering 17 countries over the period 1998 2008 complemented by country level data on macroeconomic political and institutional aspects as well as data on privatization dissatisfaction appears to respond to absolute and relative welfare effects and the authors find a robust u shaped effect in term of education and income levels with individuals in the middle of such distributions being more critical with the outcome of privatizations

commitment in utility regulation a model of reputation and policy applications abstract this paper builds a dynamic model of utility regulation where a government cannot commit to a time inconsistent policy of not expropriating investment by allowing the government s type to change over time i explore how reputation concerns may generate partial commitment restricting attention to equilibria that are strongly renegotiation proof i show that there is a unique perfect bayesian equilibrium this contains episodes of investment and good behaviour followed by periods of expropriation and non investment i then apply the model to consider how the power of the incentive scheme and decentralization may influence the properties of this equilibrium in the case of the power of incentives the model suggests that price caps may worsen commitment in developing countries but not in developed ones similarly the model suggests that decentralisation is likely to have a significant effect on commitment but that this effect will depend on the general ability of the government to commit overall we conclude that the effect of such policies on commitment will be different across countries depending on the institutional environment

melbourne s vertical expansion and the political economies of high rise residential development this article advances understandings of melbourne s dramatic vertical expansion over the last decade by attending to the political economies of its high rise housing development melbourne s major

household labour supply in britain and denmark some interpretations using a model of pareto optimal behaviour this paper analyses the labour supply behaviour of households in denmark and britain it employs models in which the preferences of individuals within the household are explicitly represented the households are then assumed to decide on their labour supply in a pareto optimal fashion describing the structure of the household decision in this way allows preliminary results to be obtained on the internal weighting of utilities within the household

the mirrlees approach to mechanism design with renegotiation with applications to hold up and risk sharing the paper studies the implementation problem first analyzed by maskin and moore 1999 in which two agents observe an unverifiable state of nature and may renegotiate inefficient outcomes following play of the mechanism we develop a first order approach to characterizing the set of implementable utility mappings in this problem paralleling mirrlees s 1971 first order analysis of standard mechanism design problems we use this characterization to study optimal contracting in hold up and risk sharing models in particular we examine when the contracting parties can optimally restrict attention to simple contracts such as noncontingent contracts and option contracts where only one agent sends a message

commentary from capital landing to urban anchoring the negotiated city this commentary article proposes three ideal types of anchoring of finance capital into the city i e the way in which capital as it is valued in financial markets is transformed into real cap

fiscal policy and trade adjustment are the deficits really twins i introduction the unprecedented increase of both the fiscal and trade deficits in the united states during the 1980s led many observers to posit a causal linkage a sizable contingent of economists believe that the twin deficits concept aptly characterizes the recent relationship between federal budgetary policy and the u s trade balance in this view increased federal fiscal deficits during the 1980s were a primary cause of the massive u s trade deficits experienced as the decade unfolded however this posited causal relationship does not command universal acceptance in this paper we examine data on u s trade and federal fiscal measures along with exchange and interest rates to uncover the empirical relationship between them and to discover whether fiscal policy plays an essential role in the adjustment of the massive u s trade imbalance the twin deficits concept asserts that the deficits are twins because they are related in the following manner increased government deficits are thought to put incipient upward pressure on real interest rates this induces incipient capital in flows that lift or appreciate the real exchange value of the currency which erodes competitiveness and after a time lag results in increased trade deficits a number of recent papers examine the relationship between budget and trade deficits each contributes important insights but nothing approaching a consensus has yet emerged miller and russek 1989 find evidence of a secular relationship between the deficits under two of the three statistical techniques they employ bernheim 1988 concludes that the government deficit is a prime determinant of u s trade deficits whereas evans 1989 enders and lee 1990 and dewald and ulan 1990 find no such causal impact of fiscal deficits darrat 1988 and abell 1990 report somewhat mixed results the conflicting results in the existing literature stem from wide differences in the empirical techniques data measures and samples employed further we have found in the literature and in our work reported below that the use of differenced data versus data in level form has a major impact on the results produced and inferences drawn recent empirical literature suggests that stationarity of data is a crucial element in model specification thus the question of whether or not to difference the data should be addressed before estimation and inference classical inference about stationarity of data suffers from what sims 1988 refers to as a discontinuity in the asymptotic theory hence the classical tests used in much of the previous literature have low power to reject the null hypothesis of nonstationarity in levels bayesian inference does not suffer from this problem therefore we generate posterior probabilities using monte carlo integration that estimate probabilities that suggest whether the data are better analyzed in level or difference form despite somewhat contrasting results the classical augmented dickey fuller tests and the bayesian probability estimates both suggest that a difference specification is inappropriate we analyze empirically a five variable nonstructural vector autoregressive var model the model includes both a federal government balance and a government purchases measure to summarize fiscal policy along with these two variables and a trade balance measure we constructed real interest rate and real exchange rate variables spanning a quarterly data sample from 1961 to 1989 we estimate the model in both levels and difference form using the level specification we find strong support for the twin deficit notion that government deficits are a cause of trade deficits whereas in differences we find no such relationship furthermore the results from our monte carlo work imply that the model specified in levels is likely most appropriate for estimation and inference ii contrasting theoretical frameworks the presence of both deficits in a variant of the basic savings investment identity may provide a useful reference as in bernheim 1988 and branson 1985 for discussing the hypothesized causal relationship embodied in popular twin deficits stories 1 tdef gdef i s

optimal electoral timing exercise wisely and you may live longer using insights from option pricing in finance we explore the electoral timing problem in a flexible term democracy we assume that politic ally heterogeneous voters continuously learn over time about the evolving party merits this yields a mean reverting stochastic process for the support of the parties the incumbent sees its poll support and must call an election within five years o f the last election we assume that it wishes to maximize its expected total time in office so that this resembles the optimal exercise rule for an american financial o ption we characterize how the renewable election option behaves as waiting and stopping values interact we then calibrate our model to the labour tory rivalry in the u k with polling data from 1943 2005 and the 16 elections after 1945 excluding three elections essentially forced by weak governments our maximizing story explains when the elections were called quite well we also measure the value of election options finding that over the long run they should more than double the expected time in power of a fixed term electoral cycle

more evidence on the money output relationship i introduction the empirical relationship between money and real output continues to produce conflicting evidence stock and watson 1989 using monthly u s data for the period 1960 85 report that while actual money growth m1 does not granger cause the growth of industrial production its detrended component does krol and ohanian 1990 internationalize stock and watson s study and find that both actual and detrended ml growth granger cause output growth in the u k but that neither series affects output growth in japan canada and germany friedman and kuttner 1992a 1992b 1993 question the role of money in explaining output behavior they report 1993 that even though the stock watson specification is used simply updating the sample through 1990 yields the result that detrended m1 growth no longer explains output growth friedman and kuttner also argue that the commercial paper rate or the spread between the three month treasury bill and the commercial paper rate provides a better gauge for output s reaction to monetary policy changes replacing the treasury bill rate used by stock and watson with the commercial paper rate or the spread friedman and kuttner find that m1 growth has no marginal explanatory power over output a feature of recent investigations of the money output link is the general use of a var specification based on the presumption that the series are difference stationary e g feldstein and stock 1994 several recent studies however have questioned this presumption due to the low power of unit root tests dejong et al 1992 dejong 1992 dejong and whiteman 1991a 1991b and rudebusch 1993 these studies suggest that it is difficult to distinguish between difference stationary as the null and trend stationary as the alternative hypothesis given the uncertainty about the existence of a unit root in economic time series we re examine the money output relation by specifically considering the affect of assuming that the series are trend stationary or difference stationary such an investigation is important to determine if permanent temporary changes in money and other series create permanent temporary shifts in real output for example if real output and money contain a unit root i e they are best represented by the difference stationary model permanent money shocks may produce permanent shifts in output put another way permanent money shocks may have a long run impact because they affect the stochastic trend component of output and thus change the output level for all future horizons on the other hand if output and other series are represented by a trend stationary model fluctuations around a trend level of these series are stationary mean reverting under this model a transitory money shock may only have a short run impact on output as it quickly returns to its trend level to analyze the sensitivity of results to different stationarity assumptions used we estimate two var systems one system uses the log levels of the variables along with a deterministic time trend the other uses the log difference of the series and excludes the trend term the first system represents the trend stationary specification and the second one represents the difference stationary specification there is some evidence that the money output link may be sensitive to the presence of a deterministic trend term e g eichenbaum and singleton 1986 stock and watson 1989 even so our study provides a direct comparison based on identical data sets of the effects that the two different stationarity specifications have on the money output results while testing the robustness of the money output connection is our main focus we also provide some different perspectives on the debate one is to use both long and short term data sets most studies limit the analysis to quarterly data from the post 1960 era we study the link between money interest rates and output using annual data over the extended period 1915 1993

nonparametric panel estimation of labor supply in this article we estimate structural labor supply with piecewise linear budgets and nonseparable endogenous unobserved heterogeneity we propose a two stage method to address the endogeneity iss

restrictions in labor supply estimation is the macurdy critique correct according to the macurdy critique the hausman method implicitly imposes restrictions that generate a positive slutsky effect this paper shows that the hausman method imposes no other restrictions than alternative methods do and that the macurdy critique is unfounded

piece wise or differentiable budget constraint estimating labour supply function for finnish females various estimation approaches have been used in recent literature to study the effect of nonlinear income taxation on labour supply different techniques and data sets have produced a wide range of income and substitution elasticities in this study we utilize register data provided by the tax authorities this gives us good possibilities to construct detailed budget constraints for each individual in our sample we estimate labour supply function using the piece wise linear budget constraint approach and the differentiable budget constraint approach suggested by macurdy et al 1990 our results support the view that if one is able to mimic the actual budget set closely and if the degree of progression is high then these two methods are likely to produce similar results some sensitivity analysis is also carried out using alternative assumptions concerning the budget sets

real time prediction with u k monetary aggregates in the presence of model uncertainty a popular account for the demise of the u k s monetary targeting regime in the 1980s blames the fluctuating predictive relationships between broad money and inflation and real output growth yet ex post policy analysis based on heavily revised data suggests no fluctuations in the predictive content of money in this paper we investigate the predictive relationships for inflation and output growth using both real time and heavily revised data we consider a large set of recursively estimated vector autoregressive var and vector error correction models vecm these models differ in terms of lag length and the number of cointegrating relationships we use bayesian model averaging bma to demonstrate that real time monetary policymakers faced considerable model uncertainty the in sample predictive content of money fluctuated during the 1980s as a result of data revisions in the presence of model uncertainty this feature is only apparent with real time data as heavily revised data obscure these fluctua