the pricing of durable exhaustible resources partial or total durability characterizes a large class of exhaustible resources hotelling s r percent rule will apply to a durable resource produced in a competitive market but will not apply if the resource is produced in a monopolistic market however the r percent rule does not mean that price is steadily rising it is shown that in general the competitive market price will fall initially as the stock in circulation increases and later will rise as the stock decreases and eventually depreciates toward zero after production ceases accounting for durability may thus help explain the u shaped long term price profiles observed for many resources 11 references 3 figures

virtual special issue editorial essay the shitty rent business what s the point of land rent theory in this introduction to a virtual special issue on land rent we sketch out the history of land rent theory encompassing classical political economy marx s political economy the marginalist turn and subsequent foundations for urban economics and the marxist consensus around rent theory during geography s spatial turn we then overview some of the contemporary strands of literature that have developed since the break down of this consensus namely political economy approaches centred on capital switching institutionalism of various stripes and the rent gap theory we offer a critical urban political economy perspective and a particular set of arguments run through the review first land is not the same as capital but has unique attributes as a factor of production which require a separate theorisation second since the 1970s consensus around land rent and the city dissipated the critical literature has tended to take the question of why how the payment exists at all for granted and so has ignored the particular dynamics of rent arising from the idiosyncrasies of land amongst the talk of an anthropocene and planetary urbanisation it is surprising that the economic fulcrum of the capitalist remaking of geography has fallen so completely off the agenda it is time to bring rent back into the analysis of land cities and capitalism

the impact of land use planning and tax subsidies on the supply and price of housing in britain this article presents new empirical estimates of the impact of two types of policy intervention tax subsidies and land use planning on the housing market in britain the estimates are derived from a set of models representing the demand and supply sides of the market for the new private housebuilding which include an explicit land supply element the models are fitted to cross sectional data at the inter urban local authority level and then employed in medium period simulations of alternative policies modelling at this level enables estimates to be made of the extent of variation between local markets in the elasticity of supply and also in the impacts of policy measures including the capitalisation of tax subsidies

capital markets and the exchange rate with special reference to the dollarization debate in latin america the paper reviews the main challenges faced by policymakers in emerging market economies em in light of recent financial crises and taking into account salient factors like the existence of partial dollarization imperfect credibility weak financial systems and contagion the standard theory of optimal currency areas is discussed and criticized for omitting the above factors when these factors are taken into account an extreme foreign exchange regime like dollarization is shown to become much more attractive the paper discusses the pros and cons of dollarization and among other things shows that the lack of a lender of last resort is not necessarily a major drawback in em the paper also discusses inflation targeting it in a formal model it is shown that it could be subject to credibility problems similar to those found in exchange rate based stabilization programs

active and passive behaviour in land ownership in recent years empirical studies of the motives and behaviour of landowners have helped enlighten theoretical understandings of the process of land supply for urban development structuralist and behaviourist approaches have both been used in empirical work this paper presents the results of recent research on the involvement of landowners in the local planning process the research points to a much greater variety of landowner behaviour than either acknowledged by structuralist typologies or contained within behaviourist characteristics involvement in the local planning process would however appear to be an early indicator of later activity by the landowner in the development process such early warnings may be useful in enabling landowner behaviour to be predicted

the exchange rate regime and the currency composition of corporate debt the mexican experience abstract this paper analyzes the effect that the change from a fixed to a floating exchange rate regime that took place in mexico in december 1994 had on the currency composition of corporate debt in particular the paper asks whether a fixed exchange rate regime biases corporate borrowing towards foreign currency due to an implicit exchange rate guarantee given by the government therefore under a predetermined regime firms will not fully internalize their exchange rate risk and will be more likely to engage in balance sheet mismatches than under a floating regime we study the main determinants of foreign currency borrowing of those firms listed in the mexican stock exchange from 1992 to 2000 to test whether balance sheet currency mismatches fell after the adoption of the floating exchange rate regime the results found support the view that the floating exchange rate regime has been useful in reducing exchange rate exposure

financial development and financing constraints international evidence from the structural investment model this article provides evidence that financial development impacts growth by reducing financing constraints that would otherwise distort efficient allocation of investment the financing constraints are inferred from the investment euler equation by assuming that the firm s stochastic discount factor is a function of the firm s financial position specifically the stock of liquid assets the magnitude of the changes in the cost of capital is twice as large in a country with a low level of financial development as in a country with an average level of financial development the size effect business cycles and legal environment effects are also considered copyright 2003 oxford university press

contractionary devaluation risk evidence from the free silver movement 1878 1900 i identify significant effects of devaluation risk on interest rates and output using us silver coinage policy news between 1878 and 1900 as clean shocks to exchange rate expectations the free sil

land conversion at the urban fringe a comparative study of japan britain and the netherlands in the 1980s the multiplier between land values for agricultural and urban uses was found to run at 50 200 times or even higher in the areas surrounding expanding cities in japan and britain co

corporate dollar debt and depreciations much ado about nothing abstract emerging markets firms often carry foreign currency debt on their balance sheets following a depreciation the expanding peso value of dollar liabilities could via a net worth effect offset the expansionary competitiveness effect to assess which effect dominates we use accounting data including the currency composition of liabilities for 450 nonfinancial firms in five latin american countries in the 1990s we find that firms holding more dollar debt do not invest less than their peso indebted counterparts following a depreciation we also show that these firms match the currency denomination of their liabilities with the exchange rate sensitivity of their profits

exploring different views of exchange rate regime choice the empirical distinction between de facto and de jure exchange rate regimes raises a number of interesting questions which factors may induce a de facto peg why do countries enforce a peg but do not announce it why do countries break their promises we show that a stable socio political environment and an efficient political decision making process are a necessary prerequisite for choosing a peg and sticking to it challenging the view that sees the exchange rate as a commitment device policymakers seem rather concerned with regime sustainability in the face of adverse economic and socio political fundamentals

pedagogic comment and the supply of land for a particular use this article continues the recent debate in urban studies on the supply of land it specifies the analytical framework corrects misinterpretations of wiltshaw 1985 emphasises the possibility of the individual possessing a powerful welfare effect and a backward bending land supply curve and stresses the need to consider the distributions of non land income and landownership as well as the form of the utility function when aggregating supply for a particular use

currency crises and monetary policy in an economy with credit constraints this paper presents a simple model of currency crises which is driven by the interplay between the credit constraints of private domestic firms and the existence of nominal price rigidities the possibility of multiple equilibria including a currency crisis equilibrium with low output and a depreciated domestic currency results from the following mechanism if nominal prices are sticky a currency depreciation leads to an increase in the foreign currency debt repayment obligations of firms and thus to a fall in their profits this reduces firms borrowing capacity and therefore investment and output in a credit constrained economy which in turn reduces the demand for the domestic currency and leads to a depreciation we examine the impact of various shocks including productivity fiscal or expectational shocks we then analyze the optimal monetary policy to prevent or solve currency crises we also argue that currency crises can occur both under fixed and flexible exchange rate regimes as the primary source of crises is the deteriorating balance sheet of private firms

foreign currency debt financial crises and economic growth a long run view what are the costs of hard currency liabilities after being implicated in the global financial instability of the late 1990s the costs are widely believed to be large and as a result many emerging markets have pushed to minimize currency mismatches we study the growth effects of exposure to foreign currency debt using data from two periods of international financial integration 1880 1913 and 1973 2002 for over 45 countries hard currency debt is associated with increased risks of currency and debt crises in both periods especially when a country s macroeconomic financial fundamentals are weak we find the risk of financial crisis associated with hard currency debts translated into significantly diminished growth rates however we also find evidence that strong financial development and policy credibility attenuate the crisis risks associated with high exposure to hard currency debt which has implications for eastern european countries where large current account deficits and high levels of hard currency debt are believed to pose financial risks in this region some countries have adopted flexible exchange rates and avoided foreign currency debt several others have built up large net foreign currency liabilities and are exposed to a significant likelihood of a financial crisis in the near future

national accounts and environmental resources in the paper optimal growth theory is used to derive the appropriate definition of the net national product concept when there are environmental resources and environmental damage to take into account the basic conclusions are that conventional defined np should be corrected by deducting environmental damage and adding the value of the net change of all resources

national accounting with natural and other types of capital we do double entry national accounting and incorporate zero profit arbitrageconditions euler equations for different types of capital includingnatural capital in non balanced growth capital gains terms for capitalgoods appear in the income side of the accounts depreciation terms appearon the product or expenditure side we consider renewable natural capital aswell as non renewable of both durable and non durable types

endogenous growth with public education abstract we investigate balanced aggregate growth in a model in which new knowledge is produced as an intermediate input and becomes embodied in all workers knowledge is a public input in the public goods sense we examine the institutional arrangement of taxing all labor income to pay for new knowledge production an optimal tax rate is characterized

maturity mismatch and financial crises evidence from emerging market corporations substantial attention has been paid in recent years to the risk of maturity mismatch in emerging markets although this risk is microeconomic in nature the evidence advanced thus far has taken the form of macro correlations we evaluate this mechanism empirically at the micro level by using a database of over 1500 publicly traded firms from fifteen emerging markets with special focus on latin america and east asia while east asia corporates have tended to issue more debt at short maturities than their latin american counterparts we show that this is generally matched by greater holdings of liquid assets as a result the distribution of net shortterm exposure is remarkably similar across regions we attempt to measure the risk of such exposure by estimating at the firm level the eect on investment of short term exposure under capital account volatility for the whole sample and in both regions individually this eect is statistically zero contrary to the prediction of the maturity mismatch hypothesis this conclusion is robust to using a variety of dierent estimators alternative measures of capital flows and controls for devaluation eects and access to international capital

the impact of foreign liabilities on small firms firm level evidence from the korean crisis abstract using korean firm level data on publicly listed and privately held firms together with firm exit data we find strong evidence that holdings of foreign currency denominated debt negatively affected the economic performance of small firms during the 1997 98 crisis the large exchange rate depreciation that occurred during the crisis resulted in a decline in net worth for firms with foreign currency denominated debt on their balance sheets small firms with more short term foreign debt were more likely to declare bankruptcy conditional on surviving the crisis small firms that had more short term foreign debt experienced larger declines in sales the exit bankruptcy margin accounts for a large fraction of small firms adjustment during the crisis

corporate debt firm size and financial fragility in emerging markets abstract the post global financial crisis period shows a surge in corporate leverage in emerging markets and a number of countries with deteriorated corporate financial fragility indicators altman s z score firm size plays a critical role in the relationship between leverage firm fragility and exchange rate movements in emerging markets while the relationship between firm leverage and distress scores varies over time the relationship between firm size and corporate vulnerability is relatively time invariant all else equal large firms in emerging markets are more financially vulnerable and also systemically important consistent with the granular origins of aggregate fluctuations in gabaix 2011 idiosyncratic shocks to the sales growth of large firms are positively and significantly correlated with gdp growth in our emerging markets sample relatedly the negative impact of exchange rate shocks has a more acute impact on the sales growth of the more highly levered large firms

structural path analysis and multiplier decomposition within a social accounting matrix framework the main purpose of this paper is to apply structural path analysis to a social accounting matrix sam framework because the sam is a comprehensive essentially general equilibrium data system the whole network through which influence is transmitted can be identified and specified through structural path analysis the latter provides an alternative and much more detailed way to decompose multipliers as compared with the traditional treatment of stone 1978 and pyatt and round 1979 this paper consists of five sections the first one reviews the sam framework as a basis for multiplier analysis and multiplier decomposition in particular the additive decomposition in terms of transfer open loop and closed loop effects is succinctly presented section ii applies this conventional decomposition to a sam of south korea to illustrate with eleven specific cases the effects of an exogenous injection on the endogenous accounts of the sam i e the incomes of the factors household groups and production activities section iii is devoted to the presentation of the elements of structural analysis and more particularly the transmission of economic influence within a structure finally section iv applies structural path analysis to the south korean sam and compares and contrasts the multiplier decomposition which it yields with the alternative decomposition discussed in section ii the comparison is the more significant in that the two decomposition methods are applied to the same eleven selected cases spanning a variety of sectors i e poles of origin for the injection and sectors poles of destination the empirical analysis in section iv suggests that structural path analysis applied to a sam is a potentially operationally useful technique within which a whole series of policy issues can be addressed the final section is devoted to a brief summary and conclusions

the effect of financial liberalization on the capital structure and investment decisions of indonesian manufacturing establishments this article analyzes the consequences of financial liberalization using a large panel of indonesian manufacturing establishments it discusses whether financial reforms have had an impact on investment and on the allocation of credit and whether the effects differ depending on the type of firms the overall conclusion is that shifting from administrative toward market based allocation of credit has increased borrowing cost particularly for smaller firms but at the same time has benefited firms by giving them widened access to finance

reason for reserve reserve requirements and credit this paper considers the impact of a regulatory policy action on bank credit and traces its incidence across banks i make use of a reserve requirement increase in lebanon that was considerably greater on foreign currency deposits than on domestic currency deposits all banks cut lending as they scrambled to adjust portfolios but the policy shock disproportionately affected banks with a greater reliance on dollar funding and with low buffers of dollar liquid assets exposed domestic owned banks also adjusted more slowly than similar foreign owned banks that obtained outside funding descriptive firm bank matching evidence reveals a disproportionate impact on small firms

foreign currency borrowing by small firms in emerging markets when domestic banks intermediate dollars this paper investigates what induces small firms in an emerging market economy to borrow dollar credit from domestic banks our data are from a unique survey of firms in lebanon the findings complement studies of large firms with foreign currency loans from foreign lenders exporters naturally hedged against currency risk are more likely to incur dollar debt firms also partly hedge themselves by passing currency risk to customers and suppliers less opaque firms with easily verifiable collateral and higher net worth are more likely to access dollar credit firms reliant on formal financing banks and supplier credit are more likely to contract dollar debt than firms reliant on informal financing family friends and moneylenders bank relationships however do not increase the dollar debt likelihood and finally profitable firms are less likely to have dollar debt information frictions and limited collateral therefore constrain dollar credit even when it is intermediated domestically

natural resources national accounting and economic depreciation abstract the current value hamiltonian in an aggregate optimal growth problem with heterogeneous capital stocks including exhaustible renewable and environmental stocks is the nnp function routine substitutions reveal that the using up of natural resource stocks is representable as easy to interpret economic depreciation magnitudes we obtain true nnp inclusive of natural resource stock diminution implications for actual national accounting practices are also discussed

the determination of the price of land received theories of the land market are inadequate since they ignore the supply of land it is known that occupiers of land are usually unwilling to sell at the market price but require compensation for being forced to move incorporating this as a theory of supply into land market theory allows us to explain or predict that a urban sprawl will occur in the absence of planning controls b a development gains tax will slow down the rate of development of land and increase its price c whether land is owner occupied or occupied by tenants will affect its development and d powers of compulsory purchase may be necessary for certain kinds of development but may cause social costs

accounting for cultural heritage a theoretical and empirical exploration with focus on swedish reindeer husbandry the aim of this paper is to explore some of the theoretical and empirical aspects of an economy which includes cultural capital we use a simple dynamic growth model and the concept of a social acc

corporate structure liquidity and investment evidence from japanese industrial groups this paper presents evidence suggesting that information and incentive problems in the capital market affect investment we come to this conclusion by examining two sets of japanese firms the first set has close financial ties to large japanese banks that serve as their primary source of external finance and are likely to be well informed about the firm the second set of firms has weaker links to a main bank and presumably faces greater problems raising capital investment is more sensitive to liquidity for the second set of firms than for the first set the analysis also highlights the role of financial intermediaries in the investment process

internal debt crises and sovereign defaults internal and sovereign debt crises occur together and happen more frequently in economies with weak bankruptcy institutions this paper provides a novel explanation internal crises arise because of the inability to liquidate private debtors when many default in an optimal contract a successful entrepreneur repays yet an unsuccessful one defaults and liquidates his assets the bounds on liquidation generate however a second equilibrium where domestic borrowers default because others are also defaulting during these coordinated defaults tax collections fall which increases sovereign default risk in the model joint debt crises are an optimal response to informational problems in private sector lending

the supply of land the supply of land to a use may result from individual suppliers maximizing utility as a consequence the slope of the supply curve cannot be determined a priori supply will be influenced by the distribution of non land income different tenure categories will behave according to the balance of substitution and welfare effects compulsory purchase may be necessary to surmount individual preferences and the effect of a development gains tax on change of use will depend upon the relation between the rate of tax the tax base and the supplier s compensating variation

the relationship between investment and large exchange rate depreciations in dollarized economies abstract we use a simple financial friction in an economy with high degree of liability dollarization and currency mismatch to show that the negative balance sheet effect of an exchange rate depreciation may be observable only if the magnitude of the depreciation is large enough this result justifies the difficulty to find strong empirical evidence for balance sheet effects and suggests the convenience of including a large depreciation term in empirical analyses we review some of the related empirical literature and provide some new evidence of this large depreciation effect

the role of inflation targeting in international debt denomination in developing countries abstract this paper analyzes the inflation targeting experience of developing countries as an effective monetary policy framework to promote changes in the currency composition of their international debt using matching with difference in differences to address the self selection bias we find that inflation targeting has led to a 3 6 percentage point reduction in the foreign currency share of international debt in targeting countries when compared to non targeting countries with the effect especially pronounced for sovereign international debt differentiating by type of owner we find a reduction of the foreign currency share in foreign held total sovereign debt but no effect on domestic held debt furthermore from the analysis of the us dollar and euro shares we find that inflation targeting has contributed to a 9 percentage points lower dollar share in international debt in targeting countries compared to non targeting countries while the effect on the euro share is negligible this not only provides evidence that the structural features of international financial markets matter but also that monetary policy can help developing countries reduce their reliance on foreign currency debt especially if it is held by foreign investors