welfare implications of the transition to high household debt abstract aggressive deregulation of the mortgage market in the early 1980s triggered innovations that greatly reduced indebted households required home equity and a borrowing surge followed this paper uses a calibrated general equilibrium model of lending from the wealthy to the middle class to evaluate the welfare effects of this reform quantitatively we find that the indirect effects of endogenous interest rate and other relative price changes dominate the direct effect of relaxing the constraint the borrowing household s welfare falls even though the reform directly relaxes a constraint on its trade the saving household s welfare rises substantially

purchase bidding strategies of an energy coalition with demand response capabilities the implementation of demand response programs drp has gained interest as a means to alleviate energy consumption during peak hours two explanations account for the success of such programs which involve both utilities and electricity consumers with the latter often organized into coalitions the system operator meets its goal of reducing the load peak simultaneously electricity consumers achieve economic benefits when reducing consumption during peak hours in this paper a monte carlo based algorithm has been proposed for the formulation of multiple purchase offers in the day ahead energy market daem by coalitions in which consumers vary in their sensitivity to drp manifesting different responsiveness to hourly tariffs based on the hourly market clearing prices being able to monitor how coalition members use air conditioning in the presence of variable hourly energy tariffs the coordinator can then define a purchase bidding strategy depending on how price sensitive the coalition is simulation results show that the presence of a price sensitive demand leads not only to a subsequent reduction in energy prices during peak hours but also leads to a decrease in their inter hour volatility

credit supply and the housing boom an increase in credit supply driven by looser lending constraints in the mortgage market is the key force behind four empirical features of the housing boom before the great recession the unpreced

heterogeneity and the evaluation of efficiency the case of italian universities a random parameters stochastic frontier model is applied to italian data in order to evaluate the cost function and efficiency of higher education institutions the method yields useful information about inter institutional variation in cost structure and technical efficiency returns to scale and scope are evaluated for the typical university and it is found that these returns are almost ubiquitously decreasing a finding with clear policy implications

stochastic modelling of renewable energy sources from operators point of view a survey abstract high penetration of renewable energy sources especially weather dependent sources has increased the power systems uncertainties for any analysis in power systems such as planning and operation it is essential to confront the stochastic nature of these sources in order to get much more precise results since operators need proper strategies and methods to decline negative effects of the stochastic behaviour of renewable power generators such as total operation cost growth this paper provides a review of different state of the art approaches from the operator s viewpoint for handling the stochastic behaviour of renewable sources hence in this paper three different strategies are categorized for stochastic analysis of these sources the first strategy is mathematical modelling including stochastic dependency and independency multi dimensional dependence forecast and scenarios afterwards demand side management which is one of the other approaches for dealing with these uncertainties is investigated and different demand response programs and some methods to model them are presented finally the effect of different electricity market schemes and relevant optimization methods to mitigate the variations of renewable energy sources are discussed the study demonstrates that an operator should choose one or a combination of these three approaches based on its requirements

comparing centralized and decentralized contract design enabling direct load control for reserves demand response could provide reserves to power systems and market designs should enable cost efficient exploitation of these resources in direct load control programs consumers provide demand response in exchange for incentive payments the success of such contracts is a function of level of information sharing consumer costs and power system constraints costs in this paper we compare three approaches to contract design each of which assumes different levels of consumer privacy our aim is to explore tradeoffs between privacy resource exploitation and the reward earned by the load aggregator the first approach assumes full and truthful information exchange between the consumer and the system operator we then develop a novel centralized approach in which an aggregator applies mechanism design to offer contracts to consumers who reveal partial cost information a novel decentralized approach is developed in which consumers act cooperatively to pool demand response reserves enabling them to keep individual cost information private through simulation studies we find that in the centralized approach resource exploitation rewards are highly sensitive to the accuracy of the load aggregator s consumer cost curves approximations we also find that in the decentralized approach rewards can be small especially if information exchange is costly

inflation and welfare in a monetary economy it is in everyone s private interest to try to get someone else to hold non interest bearing cash and reserves but someone has to hold it all so these efforts must simply cancel out all of us spend several hours per year in this effort and employ thousands of talented and highly trained people to help us these person hours are simply thrown away wasted on a task that should not have to be performed at all

public sector efficiency leveling the playing field between oecd countries in this paper we seek a robust methodology for the measurement of the relative public sector efficiency of 19 oecd countries over the period 1980 2000 we estimate relative efficiency scores for five disaggregated accounts of public spending as well as for aggregate public spending then we use a semi parametric econometric method to isolate the impact of government inefficiency from the inefficiency arising from the socioeconomic environment and luck to verify the validity of our index we use it to examine a number of well established relationships in the public choice literature which have only been tested using local government data

performance indicators in higher education a survey of recent work this article surveys recent work on the construction of performance indicators in higher education focusing particular attention on degree results student wastage and research output performance indicators ought to provide measures of value added by the various institutions under review as such crude measures of output which fail to take account of input differences across institutions are inappropriate so it is necessary to investigate what factors underlie inter institution differences in measured output in order to correct for input variations in assessing overall performance the absence of market prices for teaching and research outputs severely hinders the construction of composite measures of the performance of higher education institutions since in their absence no objective weights can be assigned to the different roles of these institutions the resource implications of performance measurement exercises need to be clarified if rankings exercises are to have the desired incentive effects copyright 1992 by oxford university press

financial intermediation house prices and the welfare effects of the u s great recession abstract this paper quantifies the welfare costs of the great recession in the united states and their distribution between borrowing and saving households we use a calibrated dynamic general equilibrium model with shocks to aggregate income and to the financial intermediation sector the model matches the boom bust cycle in house prices the dynamics of household leverage and the increase in inequality of wealth observed in the u s after 2007 we find large welfare costs for financially constrained households the borrowers savers instead benefited from a redistribution of housing wealth due to the de leveraging of borrowers caused by the plunge in house prices this redistribution mechanism was exacerbated by the financial intermediation shock we also show that the welfare costs for borrowers would have been lower if aggregate leverage had remained at pre 2001 levels

modeling load recovery impact for demand response applications in this paper we develop a novel mathematical model to describe the localized economic impact of load recovery by electricity consumers following demand response dr event participation in this model termed securitization cost and benefit associated with an amount of load recovery change exponentially with time varying stochastic discount rates these volatile rates which can be estimated using the principle of brownian motion are further examined via case studies on the roy billinton test system a formal application of the proposed recovery model to the crucial task of global dr scheduling is then studied the study indicates that it is possible to optimize a dr schedule to cater for uncertainty in the subsequent load recovery

housing dynamics over the business cycle housing construction measured by housing starts leads gdp in a number of countries measured as residential investment the lead is observed only in the united states and canada elsewhere residential investment is coincident variants of existing theory however predict housing construction lagging gdp in all countries in the sample nominal interest rates are low ahead of gdp peaks introducing long term nominal mortgages and an estimated process for nominal interest rates into a standard model aligns the theory with observations on starts as mortgages transmit nominal rates into real housing costs longer time to build makes residential investment cyclically coincident abstract from author

the housing market s of san diego this paper uses an assignment model to understand the cross section of house prices within a metro area movers demand for housing is derived from a lifecycle problem with credit market frictions equilibrium house prices adjust to assign houses that dier by quality to movers who dier by age income and wealth to quantify the model we measure distributions of house prices house qualities and mover characteristics from micro data on san diego county during the 2000s boom the main result is that cheaper credit for poor households was a major driver of prices especially at the low end of the market

on walrasian equilibrium for pool based electricity markets we present a single time period decentralized electricity market clearing model that includes reactive power and demand responsiveness in addition to the more common framework of generation side competition for the real power commodity the approach allows self interested agents namely producers and consumers independently to maximize their individual surpluses subject to prices this is consistent with the very notion of a competitive market as defined in equilibrium theory an auctioneer computes equilibrium prices that achieve power balance at every network node as required by kirchhoff s laws the overall scheme is justified by duality theory for which there is a rich theoretical support and convergence is achieved using a newton price updating algorithm

housing finance and monetary policy we document three facts concerning how the structure of housing finance affects the monetary transmission mechanism first the characteristics of residential mortgage markets differ markedly across industrialized countries second the impact of monetary policy shocks to residential investment and house prices is significantly stronger in those countries with larger flexibility development of mortgage markets third the transmission to consumption is stronger only in those countries where mortgage equity release is common and mortgage contracts are predominantly of the variable rate type we then build a two sector dsge model with financial constraints to rationalize those facts

foreign owned banks in the united states earning market share or buying it foreign owned u s banks have been chronically unprofitable for more than a decade the authors employ a profit efficiency model introduced by allen n berger diana hancock and david b humphrey 1993 modified to be less sensitive to variations in asset size to estimate the relative profit efficiency of 62 foreign owned and 240 u s owned banks between 1985 and 1990 their results indicate that foreign owned banks were significantly less profit efficient than were u s owned banks primarily due to foreign banks reliance on expensive purchased funds for foreign owned banks the results are consistent with a strategy of sacrificing profits in exchange for fast growth and increased market share during the 1980s copyright 1996 by ohio state university press

the cost structure of american research universities 1597 this study estimates translog variable cost functions for 147 american doctorate granting universities accounting for three major products of these institutions undergraduate and graduate instruction and research explicit measures of research output and quality are employed evidence is found for considerable economies of scale for the average institution as well as economies of scope related to the joint production of undergraduate and graduate instruction the public or private ownership of an institution is not significant for the explanation of variable costs the intensity of state regulation in the public sector does not have a significant impact on production efficiency copyright 1991 by mit press

evaluating the productive performance of uk universities as cost constrained revenue maximizers an empirical analysis the study presents an empirical analysis of the relative revenue efficiency of uk universities in providing teaching and research with government policies pressurizing the largely public funded universities to secure efficiency in both input usage and output revenue university producers are modelled as cost constrained revenue maximizers taking explicit account of the quality of research output the methodology uses linear programming techniques to construct nonparametric cost indirect production frontiers and to compute revenue efficiency relative to these frontiers revenue efficiency is then decomposed into its output allocative and technical components further analysis investigates the sources of allocative and technical inefficiencies

a stochastic multi layer agent based model to study electricity market participants behavior this paper presents a new stochastic multi layer agent based model to study the behavior of electricity market participants the wholesale market players including renewable power producers are modeled in the first layer of the proposed multi agent environment the players optimize bidding offering strategies to participate in the electricity markets in the second layer responsive customers including plug in electric vehicle pev owners and consumers who participate in demand response dr programs are modeled as independent agents the objective of the responsive customers is to increase their benefit while retaining welfare the interaction between market players in day ahead and real time markets is modeled using an incomplete information game theory algorithm due to the uncertainties of resources and customers behavior the model is developed using a stochastic framework a case study containing wind power producers wpps pev aggregators and retailers providing dr is considered to demonstrate the usefulness and proficiency of the proposed multi layer agent based model

risk based capital requirements and bank portfolio risk abstract we construct a linear programming model and analyze the effectiveness of r b capital adequacy standards when bank deposits are fully insured we derive a set of optimal asset risk weights given a constraint in raising equity and using these weights the r b capital plan is an effective regulation mechanism without a constraint on equity maximum leverage restrictions and r b capital plans are mutually exclusive alternatives as we deviate from the optimal risk weights a combination of a leverage restriction and a r b equity ratio seems to be the more appropriate approach to controlling bank portfolio risk

competition and diversification in public and private higher education the development of mass higher education and growing competition between higher education institutions has given increasing visibility to the issue of diversification this article analyses the issue of programme diversification using a panel of 181 portuguese higher education institutions over the period 1995 to 2007 by comparing the behaviour of public and private institutions the results show that the legal status of institutions is the major determinant of programme diversification as private institutions are far more specialized than their public counterparts the study also evaluates the role of other institutional variables such as the institution s size age location institutional mission and research intensity to explain differences in the diversification behaviour of higher education institutions the results provide important insights as competition has been thought to improve the performance of higher education institutions

inequality leverage and crises the paper studies how high leverage and crises can arise as a result of changes in the income distribution empirically the periods 1920 1929 and 1983 2007 both exhibited a large increase in the income share of the rich a large increase in leverage for the remainder and an eventual financial and real crisis the paper presents a theoretical model where these features arise endogenously as a result of a shift in bargaining powers over incomes a financial crisis can reduce leverage if it is very large and not accompanied by a real contraction but restoration of the lower income group s bargaining power is more effective

institutions of higher education as multi product firms economies of scale and scope a multiple output cost function is estimated for institutions of higher education in the united states employing data for 1981 82 the authors flexible fixed cost quadratic function includes three outputs undergraduate teaching graduate teaching and research grants and one input price average faculty salaries results indicate the existence of scope economies at least up to a point for both public and private institutions of higher education ray economies of scale are more pronounced in the private sector and product specific economies of scale are observed only in the public sector for research and graduate teaching copyright 1989 by mit press

economics of academic research and its implications for higher education the principal output of the highereducation system is knowledge the system generates two kinds of knowledge a disembodied form which appears as information in journals and books and an embod ied form in the grey matter of its graduates these outputs are produced by the activities of research and teaching respectively moreover many of the resources used to produce these outputs are used for both albeit in somewhat different proportions this applies to buildings office space laboratories computer rooms libraries etc staff academic and support staff and equipment computers ex perimental machines measuring instruments etc other resources are more specialized devoted ei ther to research alone research assistants or to teaching lecture rooms finally to function at all all higher educational institutions have to provide a range of central services such as maintaining finan cial staff and student records building mainte nance and repairs catering facilities and so on

costs efficiency and economies of scale and scope in the english higher education sector an understanding of the production and cost technology of higher education institutions is of considerable policy interest as it motivates the structure of the sector how large universities should be and what mix of outputs they should produce we review the literature and using data for english institutions in 2013 14 apply appropriate frontier methods to model the structure of costs in this diverse sector in doing so we uncover information about the returns to scale and scope within the higher education sector in particular the class of institutions comprising larger research intensive universities and small specialist institutions could benefit from further concentrating postgraduate and research activity we find that the universities comprising the english higher education sector are largely efficient measured relative to observed practices and that there is little scope for gains in technical efficiency from allocating resources on the basis of efficiency scores

the rise of agile demand response enabler and foundation for change abstract the distributed resources distributed generations storage electric vehicles and smart appliances have fueled many disruptions in the conventional grid dynamics increasing tough and competitive situations at demand side have led the stakeholders of power system to reform because people are more informed and can make decisions that has given rise to turbulent and volatile electricity markets in such highly diversified and open market environment the integrated control strategy has expedited the concept of demand response currently the important questions in the area of demand response are likely to shift from whether to adopt dynamic pricing to how to achieve fast demand response by the combination of technology and a competitive retail electricity market this paper assembles the part and parcel in the light of existing technologies for the development of the concept of agility in demand response that can play a role as a service package which is designed to meet the customer satisfaction efficiently and reliably as well as improve the market responsiveness for the first time this paper encompasses the concept of agile demand response that is defined as the ability of power system to survive and prosper in the competitive retail market by reacting to the market needs fast and effectively which are driven by the customers this paper also presents the key enablers of the agile demand response which are 1 retail market 2 virtual supply demand matching mechanism 3 integrated information system and 4 stay committed the paper concludes that by bringing the enablers together agile dr improves the responsiveness to the retail market changes unambiguously

wind power offering strategy in day ahead markets employing demand response in a two stage plan this paper deals with wind power offering strategies in day ahead markets a new plan is proposed in which a wind power producer participates in the day ahead market while employing demand response dr to smooth its power variations in this context a new dr scheme is presented through which the wind power producer is able to achieve dr by establishing various dr agreements with dr aggregators the proposed offering plan involves two stages the first stage clears on the day ahead market the wind power producer decides on day ahead offers as well as dr agreements with the aggregator the second stage takes place on the balancing market in a successive approach the wind power producer determines its energy trading for each period until the whole day is covered additionally proper dr agreements for each period are confirmed here the proposed plan is formulated in a stochastic programming approach where its validity is assessed on a case of the nordic market

a dynamic model of housing demand estimation and policy implications in the u s macroeconomic policy makers are concerned about how consumers will respond to falling incomes nominal home prices falling income rising mortgage interest rates and tightening credit standards in order to address these questions we estimate and simulate a dynamic structural model of housing demand in the model consumers maximize expected discounted lifetime utility from housing services and a composite consumption good the model allows for realistic features of the housing market including non convex adjustment costs from buying and selling a home and credit constraints from minimum downpayment requirements we use the forward simulation procedure of bajari benkard and levin 2007 to estimate the structural parameters especially the elasticity of substitution between consumption and housing services using data from the panel study of income dynamics given the estimated model parameters we simulate the partial equilibrium consumption and housing and

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

house prices borrowing constraints and monetary policy in the business cycle i develop a general equilibrium model with sticky prices credit constraints nominal loans and asset prices changes in asset prices modify agents borrowing capacity through collateral value changes in nominal prices affect real repayments through debt deflation monetary policy shocks move asset and nominal prices in the same direction and are amplified and propagated over time the financial accelerator is not constant across shocks nominal debt stabilises supply shocks making the economy less volatile when the central bank controls the interest rate i discuss the role of equity debt indexation and household and firm leverage in the propagation mechanism finally i find that monetary policy should not target asset prices as a means of reducing output and inflation volatility

the efficiency of german universities some evidence from non parametric and parametric methods due to tight public budget constraints the efficiency of publicly financed universities in germany is receiving increasing attention in the academic as well as in the public discourse against this background we analyse the efficiency of 72 public german universities for the years 1998 2003 applying data envelopment and stochastic frontier analysis contrary to earlier studies we account for the faculty composition of universities which proves to be an essential element in the efficiency of higher education our main finding is that east german universities have performed better in total factor productivity change compared to those in west germany however when looking at mean efficiency scores over the sample period west german universities still appear at the top end of relative efficiency outcomes

credit crises precautionary savings and the liquidity trap we use a model a la bewly huggett ayagari to explore the eects of a credit crunch on consumer spending households borrow and lend to smooth idiosyncratic income shocks facing an exogenous borrowing constraint we look at the economy response after an unexpected permananent tightening of this constraint the interest rate drops sharply in the short run and then adjusts to a lower steady state level this is due to the fact that after the shock a large fraction of agents is far below their target holdings of precautionary savings and this generates a large temporary positive shock to net lending we then look at the eects on output here two opposing forces are present as households can deleverage in two ways by consuming less and by working more we show that under a reasonable parametrization the eect on consumer spending dominates and precautionary behavior generates a recession if we add nominal rigidities two things happen i supply side responses are muted and ii there is a lower bound on the interest rate adjustment these two elements tend to amplify the recession caused by the credit tightening

a dynamic model of housing demand estimation and policy implications a dynamic model of housing demand using data from the panel study of income dynamics psid we specify estimate and simulate a dynamic structural model of housing demand our model generalizes previous applied econometric work by incorporating realistic features of the housing market including non convex adjustment costs from buying and selling a home credit constraints from minimum downpayment requirements and uncertainty about the evolution of incomes and home prices we argue that these features are critical for capturing salient features of housing demand observed in the psid after estimating the model we use it to simulate how consumer behavior responds to house price and income declines as well as tightening credit these experiments are motivated by the u s recession starting in december of 2007 that saw large falls in home prices large negative income shocks for many households and tightening credit standards in the short run relatively few households adjust their housing stock households respond instead by reducing non housing consumption and reducing wealth because they wish to avoid losing their home and the associated adjustment costs households that adjust in the short run are those hit with a series of bad shocks such as a negative income shock and a home price decline a larger proportion of households do adjust their consumption in the long run increasing their housing stock since housing is less expensive however such changes may occur several years after the shocks listed above

the transient and persistent efficiency of italian and german universities a stochastic frontier analysis despite measures on the european level to increase the compatibility between the higher education sectors the recent literature exposes variations in their efficiencies to gain insights into thes

walrasian market clearing for demand response exchange this paper presents the design and evaluation of an effective market clearing scheme for trading demand response dr in a deregulated power system the proposed scheme is called demand response exchange drx in which dr is treated as a public good to be exchanged between two groups of participating agents namely dr buyers and dr sellers while buyers require dr and are willing to pay for it sellers have the capacity to curtail customer loads to supply dr on request the drx market clearing scheme uses walrasian auctions where agents update their dr quantity bids in response to prices adjusted by the market operator this auction is repeated iteratively until market equilibrium is obtained at the point where the market outcome is proven to be pareto optimal the proposed scheme is tested on a small power system and its effectiveness substantiated

firm and industry level profit efficiency analysis using absolute and uniform shadow prices we discuss the nonparametric approach to profit efficiency analysis at the firm and industry levels in the absence of complete price information two new insights are developed first we measure profit inefficiency in monetary terms using absolute shadow prices second we evaluate all firms using the same input output prices this allows us to aggregate firm level profit inefficiencies to the overall industry inefficiency besides the measurement of profit losses the presented approach enables one to recover absolute price information from quantity data we conduct a series of monte carlo simulations to study the performance of the proposed approach in controlled production environments

credit booms and lending standards evidence from the subprime mortgage market this paper links the u s subprime mortgage crisis to demand side factors that contributed to the rapid expansion of the u s mortgage market we show that denial rates were relatively lower in areas that experienced faster credit demand growth and that lenders in these high growth areas attached less weight to applicants loan to income ratios the results are robust to controlling for supply side factors including house price appreciation mortgage securitization and other economic fundamentals and to several robustness tests controlling for endogeneity the results are consistent with the notion that a relaxation of lending standards triggered by an increased demand for loans contributed to the boom and the ensuing crisis together with other supply side explanations these findings shed new light on the relationship between credit booms and financial instability

ranking and clustering of the faculties of commerce research performance in australia there is a growing policy focus in australian higher education on quantitative research performance assessment however most of the analysis has addressed aggregate performance at the institutional level an approach inconsistent with recent policy emphasis on diversity among universities and one that ignores performance variations across disciplines using averaged and all available data for 2000 2004 cluster analysis is used to classify australian commerce faculties into groups that exhibit similar research performance measured by publication phd completion and secured competitive research grant funding we also use factor analysis to generate full multidimensional rankings within the resulting two or three clusters it is found that in terms of total research output with the exception of adelaide all the group of 8 go8 members plus university of technology sydney and griffith always belong to clusters a however when research performance is expressed in per academic staff terms an additiona

evaluating the performance of higher education institutions in europe a nonparametric efficiency analysis of 944 institutions abstractalthough a long tradition exists of studying the economics of education performance comparisons of different kinds have traditionally been difficult to undertake an important impediment has been the lack of comparable data to a large extent this study remedies the shortcomings of earlier studies our contribution is twofold first the current higher education policy of contraction and economizing common to most european countries make knowledge of potential efficiency gains crucial second a unique database allows us to study a broad diversity of organizations as well as organizations located in a number of different european countries the study suggests evaluating higher education institution hei performance in a production theory context applying the well known data envelopment analysis dea method to a cross section of 944 heis in 17 european countries the dea approach is particularly suitable in this context where little is known about production technologies and economic behavio

unit costs some explanations of the differences between uk universities considerable interest is currently being shown in the funding of university education the uk university sector has suffered a series of major cuts in public funding since 1980 and these have been accompanied by demands for higher standards and increased efficiency policy statements issued during the present decade have frequently emphasized the need for methods of assessing the performance of universities the comparison of universities on the basis of their performance it is argued would lead to a more efficient use of resources the essentials of performance measurement in education are to introduce into considerations of policy and the management of the education system at national and institutional level some concrete information on the extent to which the benefits expected from education expenditure are actually secured and to facilitate comparisons in terms of effectiveness and efficiency as between various parts of the system and as between different points in time des 1987a p 49 variou

efficiency in the provision of university teaching and research an empirical analysis of uk universities summary a flexible three output two input cost function model is used to examine the cost efficiency of uk universities as producers of teaching and research outputs unlike previous studies a comprehensive peer review of research quality is incorporated overall product specific and input specific economies of scale global and product specific economies of scope marginal costs and cost complementarities are estimated overall and product specific scale results indicate considerable increasing returns while the scope results generally suggest neither economies nor diseconomies sensitivity analysis is used to simulate the impact of current government policy regarding the expansion of undergraduate teaching output on these results

the great recession lessons from microeconomic data crises and sharp economic downturns while undesirable provide economists with a unique opportunity to test and hone economic theory indeed some of the most influential advance ments in economic thought including milton friedman s monetarist tradition john maynard keynes fiscal theory and irving fisher s debtdeflation hypothesis emerged from analysis of the great depression the current economic malaise which we refer to as the great recession provides another watershed moment to reevaluate our core economic beliefs however in contrast to our peers in previous crises we are fortunate to have access to large scale microeconomic datasets and advancements in computational capacity these advantages allow for a more rigorous analysis of the current recession and therefore a more informed understanding of its origins propagation and consequences our purpose is to highlight how a micro level analysis of the great recession provides us with important clues to understand the origins of the crisis the link between credit and asset prices the feedback effect from asset prices to the real economy and the role of household leverage in explaining the downturn we hope that our discussion also serves as an example of the useful ness of incorporating microeconomic data and techniques in answering traditional macroeco nomic questions i what were the origins of the credit cycle credit demand or credit supply

monetary policy when households have debt new evidence on the transmission mechanism in response to an unanticipated change in interest rates households with mortgage debt adjust their expenditure signicantly especially on durable goods renters react to a lesser extent and outright home owners do not react at all all housing tenure groups experience a signicant change in disposable income over and above the direct impact on mortgage repayments the response of house prices is sizable driving a signicant adjustment in loanto income ratios but little change in loan to value ratios a simple collateral constraint model augmented with durable goods and a renting decision generates predictions consistent with these novel empirical ndings and suggests that heterogeneity in housing debt positions plays an important role in the transmission of monetary policy

the effect of risk based capital requirements on profit efficiency in banking the purpose of this paper is twofold to show how to measure profit efficiency in banking using a newly developed technique and to use that technique to determine the effect of risk based capital requirements on the profit performance of us banks the measure of profit efficiency used captures deviations from profit maximization arising from technical inefficiency caused by a lack of managerial oversight and allocative inefficiency which is caused by managers choosing a nonoptimal mix of inputs and outputs a leverage ratio constraint and a risk weighted capital ratio constraint are explicitly included in the model which allows identification of the effect on profits of those constraints the techniques are applied to random samples of us banks for 1990 1992 and 1994 the results indicate that allocative inefficiency is a larger source of profit loss than technical inefficiency and that the risk based capital standards have a significant effect on bank allocative efficiency

global banks and crisis transmission abstract we study the effect of financial integration through banks on the transmission of international business cycles in a sample of 18 20 developed countries between 1978 and 2009 we find that in periods without financial crises increases in bilateral banking linkages are associated with more divergent output cycles this relation is significantly weaker during financial turmoil periods suggesting that financial crises induce co movement among more financially integrated countries we also show that countries with stronger direct and indirect financial ties to the u s experienced more synchronized cycles with the u s during the recent 2007 2009 crisis we then interpret these findings using a simple general equilibrium model of international business cycles with banks and shocks to banking activity the model suggests that the relation between integration and synchronization depends on the type of shocks hitting the world economy and that shocks to global banks played an important role in triggering and spreading the 2007 2009 crisis

best practice benchmarking in uk higher education new nonparametric approaches using financial ratios and profit efficiency methodologies the neglected issue of using profit efficiency for the best practice benchmarking of uk universities is explored to see whether this supports the policy stance of encouraging more specialized university production the article also investigates whether nonparametric modelling with financial ratios in contrast to nonparametric modelling based on the prices and quantities of each university s inputs and outputs can yield ready insights into this profit efficiency issue the empirical results using two new approaches confirm that more specialized university production yields relatively higher performance on average than less specialized production the results also highlight certain advantages of financial ratios modelling

the benefits of higher education a comparison of universities and polytechnics the binary divide between the universities and polytechnics is ending should university teaching become more like polytechnic teaching or do the older universities provide a better model for the expanded university sector polytechnic teaching is often regarded as being cheaper but one should not look at the costs without also looking at the benefits one obvious measure of these is given by a comparison of the incomes earned by the gradu ates of the two types of institutions

cost of business cycles with indivisibilities and liquidity constraints it is almost universally agreed that individuals face incomplete insurance markets and cannot perfectly insure against the idiosyncratic risk in this paper simple general equilibrium models with incomplete insurance markets are examined in order to assess the impact of imperfect insurance on the magnitude of the welfare costs of business cycles two versions of incomplete insurance markets are considered and certain statistical properties of the equilibrium stochastic processes in these environments are compared with those of a perfect insurance economy

intergenerational redistribution in the great recession in this paper we construct a stochastic overlapping generations general equilibrium model in which households are subject to aggregate shocks that aect both wages and asset prices we use a calibrated version of the model to quantify how the welfare costs of severe recessions are distributed across dierent household age groups the model predicts that younger cohorts fare better than older cohorts when the equilibrium decline in asset prices is large relative to the decline in wages asset price declines hurt the old who rely on asset sales to nance consumption but benet the young who purchase assets at depressed prices in our preferred calibration asset prices decline more than twice as much as wages consistent with the experience of the us economy in the great recession a model recession is approximately welfare neutral for households in the 20 29 age group but translates into a large welfare loss of around 10 percent of lifetime consumption for households aged 70 and over

a technically level playing field profit efficiency analysis of enforced competition between publicly funded institutions abstract the study demonstrates how recent advances in the data envelopment analysis dea of profit efficiency and in combining dea and stochastic frontier analysis sfa to measure producer performance can be used to obtain a technically level playing field profit efficiency performance measure a three stage analysis is used to provide an empirical investigation of public sector universities facing regulatory pressures to attain both profit efficiency and output quality stage one employs directional distance function analysis to decompose dea profit efficiency measures into technical and allocative components as these performance measures incorporate the impacts of managerial inefficiency the operating environment and luck statistical noise stage two applies sfa to total radial and non radial slacks to obtain a degree of disentanglement from the latter two impacts the stage two results are used to define a common environment and common luck scenario thus permitting university producers inputs to be adjusted so as to reflect operation within this more level playing field scenario stage three recomputes the first stage dea for this scenario to yield an input focused technically level playing field measure of profit efficiency that unifies the regulatory financial audit and output quality indicators in a single best practice benchmarked performance measure

stationary equilibria in asset pricing models with incomplete markets and collateral we consider an infinite horizon exchange economy with incomplete markets and collateral constraints as in the two period model of geanakoplos and zame 2002 households can default on their liabilities at any time and financial securities are only traded if the promises associated with these securities are backed by collateral we examine an economy with a single perishable consumption good where the only collateral available consists of productive assets in this model competitive equilibria always exist and we show that under the assumption that all exogenous variables follow a markov chain there also exist stationary equilibria these equilibria can be characterized by a mapping from the exogenous shock and the current distribution of financial wealth to prices and portfolio choices we develop an algorithm to approximate this mapping numerically and discuss ways to implement the algorithm in practice a computational example demonstrates the performance of the algorithm and shows some quantitative features of equilibria in a model with collateral and default

an indirect approach to the evaluation of producer performance in this paper we suggest a somewhat new analytical approach to producer performance evaluation the suggested approach is somewhat new in that it synthesizes existing analytical techniques from three areas and uses them to look at performance evaluation in a new way the approach is particularly relevant to public sector or service sector contexts in which the performance of alternative providers of a public service is to be evaluated in these contexts any of the following conditions may hold 1 the standard profit maximizing cost minimizing or revenue maximizing paradigms are inappropriate 2 prices of some services being provided or of some resources being consumed are either nonexistent or unobserved 3 observed prices are not exogenous due to monopoly or monopsony power examples abound it is frequently argued that the provision of medical legal educational transportation employment and many other services by public or private agencies is driven by goals other than the maximization of profit moreover these and many other services such as police and fire protection do not always have market prices with which to value them in addition the lack of competition in the provision of many such services and thus in the employment of specialized resources used in their provision makes it dangerous to use existing but distorted market prices to compare the performance of providers on the basis of revenue or cost much less profit