canadian city housing prices and urban market segmentation the authors provide a detailed empirical analysis of canadian city housing prices they examine the long run relationship between city house prices in canada from 1981 to 2005 as well as idiosyncratic relations between city prices and city specific variables

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

inflation proof currency the feasibility of variable commodity standards under a proposal by robert l greenfield and leland b yeager 1989 the value of currency is tied to the value of a defined basket of goods by indirect convertibility the note issuing bank offers to redeem its currency for sufficient gold to buy the basket in the market the authors find that this arrangement cannot be applied to the currency that is the medium of account for quoting prices of goods and that it would imply unlimited change in the gold price when the price of the basket deviates from unity a feedback rule with slower price adjustment may however be feasible copyright 1993 by ohio state university press

valuing public goods the time to capitalization and network externalities a spatial hedonic regression analysis valuation studies of public goods such as a bike trail typically fail to consider the time to capitalization expanding upon previous hedonic housing models we show that the years since development of the good is an important factor in estimating its value using spatial analysis for housing in bloomington illinois we find the development of a bike trail has an initial negative impact on prices but over time the value of the trail turns positive suggesting network effects and information costs impact valuation estimates additional analysis finds that networked trail access has a greater impact than nonnetworked trail access

competitive search equilibrium in this paper i construct an equilibrium for markets with frictions which is competitive in the sense that all agents are price takers and maximize utility subject to a set of market parameters i show that the equilibrium allocation is socially optimal i also show how the competitive search equilibrium can be achieved if employers with vacancies can advertise publicly the wages they pay

a model of the bfh payments system the bfh payments system was introduced by robert l greenfield and leland b yeager in a laissez faire approach to monetary stability 6 the key element of their proposal is to dispense with base money and instead tie the means of payment to a nearly comprehensive bundle of goods and services by the institution of indirect convertibility their system promises to be free from inflation and several sources of recession while bfh was named to credit fischer black i eugene fama 3 4 and robert hall 10 11 it must not be confused with their specific institutions or arguments greenfield and yeager modified their ideas and have continued to develop the system 20 5 21 8 9 the purpose of this paper is to present a model of bfh consistent with simple textbook macroeconomics contrary to first impressions bfh is best understood using the concept of money but the absence of base money makes the quantity theory inappropriate for analysis instead a simple keynesian model illustrates the determination of interest rates real income the price level and the quantity of money aggregate supply the is relationship and money demand are conventional only the money supply process is unusual

hedging index exchange traded funds this paper presents an empirical comparison of the out of sample hedging performance from naive and minimum variance hedge ratios for the four largest us index exchange traded funds etfs efficient hedging is important to offset long and short positions on market maker s accounts particularly imbalances in net creation or redemption demands around the time of dividend payments our evaluation of out of sample hedging performance includes aversion to negative skewness and excess kurtosis the results should be of interest to hedge funds employing tax arbitrage or leveraged long short equity strategies as well as to etf market makers

commitment and costly signaling in decentralized markets i propose a search model of a decentralized market with asymmetric information in which sellers are unable to commit to asking prices announced ex ante relaxing the commitment assumption prevents sellers from using price posting as a signaling device to direct buyers search private information about the gains from trade and inefficient entry on the demand side then contribute to market illiquidity endogenous sorting among costly marketing platforms can facilitate the search process by segmenting the market to alleviate information frictions seemingly irrelevant but incentive compatible listing fees are implementable provided that the market is not already sufficiently active abstract from author

the development of the new monetary economics this paper looks into the history of economic thought to examine the forerunners of the new monetary economics this approach emphasizes the role of regulations on private financial intermediation in determining the particular institutional arrangements that contemporary monetary theory treats as data the new view investigates the possibility that under laissez faire the unit of account and means of payment traditionally bundled together in the item called money may become separated the earlier writers who share this perspective have been overlooked by historians of economic thought as well as by recent contributors to the new monetary economics an examination of these theorists is of more than historical interest for many of their insights and analyses are relevant to modern monetary theory

the decision to move house and aggregate housing market dynamics using data on house sales and inventories this paper shows that housing market dynamics are driven mainly by listings and less so by transaction speed thus the decision to move house is key to understanding the housing market the paper builds a model where moving house is essentially an investment in match quality implying that moving depends on macroeconomic developments and housing market conditions the endogeneity of moving means there is a cleansing effect those at the bottom of the match quality distribution move first which generates overshooting in aggregate variables the model is applied to the 1995 2004 housingmarket boom

the evolution of a free banking system the institutional features of models of unregulated monetary systems have often been arbitrarily and implausibly assumed this paper instead provides realistic grounding for important features by constructing a logical evolutionary account of free banking sophisticated and orderly arrangements are shown to emerge from competition and the pursuit of less costly methods of payment the emergence of standardized commodity money is followed by the development in turn of basic money transfer banking easily transferable bank liubilities and clearinghouses the features of an evolved free banking system differ from those assumed in recent models of competitive payments systems

imperfect information and the house price in a general equilibrium model abstract house prices have inertia which may be because housing market participants need time to recognize long booms and recessions within a dynamic stochastic general equilibrium model with an endogenous market for housing i consider the case of rational expectations subject to imperfect information about the persistence of exogenous shocks i evaluate the performance of the model against the last 40 years of key u s macroeconomic data bayesian comparison strongly favors the model over the baseline case with perfect information under imperfect information agents rely on learning to form expectations which improves the ability of the model to generate realistic low frequency house price dynamics however as long as the agents form expectations rationally the improvement is limited furthermore to confine price inertia within the housing market is a challenge for the general equilibrium approach

a theory of monetary exchange the transactions cost for alternative exchange mechanisms for the household exchange problem can be characterized by the computational complexity of the exchange process the computational complexity for any exchange mechanism is at least nh where n is the number of goods and h is the number of households imposing the conditions of conservation nonnegativity and quid pro quo results in a command exchange mechanism whose computational complexity is nh multiparty barter exchange formalized using graph theory has computational complexity

immigration and housing rents in american cities is there a local economic impact of immigration immigration pushes up rents and housing values in us destination cities the positive association of rent growth and immigrant inflows is pervasive in time series for all metropolitan areas i use instrumental variables based on a shift share of national levels of immigration into metropolitan areas an immigration inflow equal to 1 of a city s population is associated with increases in average rents and housing values of about 1 the results suggest an economic impact that is an order of magnitude bigger than that found in labor markets

mortgage debt consumption and illiquid housing markets in the great recession using a model with housing search endogenous credit constraints and mortgage default this paper accounts for the housing crash from 2006 to 2011 and its implications for aggregate and cross sectional consumption during the great recession left tail shocks to labor market uncertainty and tighter down payment requirements emerge as the key drivers an endogenous decline in housing liquidity amplifies the recession by increasing foreclosures contracting credit and depressing consumption balance sheets act as a transmission mechanism from housing to consumption that depends on gross portfolio positions and the leverage distribution low interest rate policies accelerate the recovery in housing and consumption

is indirect convertibility impossible comment norbert schnadt and john whittaker 1993 criticize proposals for defining the dollar by a broad basket of goods but making money redeemable otherwise than directly in this composite medium of account indirect redemption would be more convenient for all parties involved each dollar of face value of banknotes and deposits would be redeemable in whatever changeable quantity of some specified redemption medium had an actual market value equal to the total value of the dollar defining basket this convertibility into a basket s worth of redemption medium would keep a one dollar banknote or deposit always equal in value to the basket itself in challenging this idea sw and schnadt and whittaker we and others devoted a session to it at the january 1992 american economic association meetings this worry turns out to be a red herring in the central meaning of that metaphor following the earlier literature s w suppose that a bank redeems each dollar of notes and deposits in enough gold to be worth at its market price the total market price of the composite medium of account they recognize that if this basket s total price somehow came to exceed 1 gold s hitherto prevailing market price would exceed in the same proportion its price implied by the quantity of gold delivered for each dollar bill at the bank s redemption window gold s market price they ar

depreciation of housing capital maintenance and house price inflation estimates from a repeat sales model abstract the rate at which physical capital depreciates is fundamental to investment in the economy nevertheless although housing capital accounts for one third of the total capital stock the rate at which housing capital depreciates has only rarely been directly estimated in part because prior studies do not control for maintenance for that same reason widely publicized measures of house price appreciation overstate the capital gain from homeownership using data from the american housing survey we examine these issues over the 1983 to 2001 period results indicate that gross of maintenance housing depreciates at roughly 2 5 percent per year while net of maintenance housing depreciates at approximately 2 percent per year moreover although the typical home appreciated at an annual real rate of roughly 0 75 percent after allowing for depreciation and maintenance the average homeowner experienced little capital gain

housing markets with endogenous search theory and implications abstract in this model buyers and sellers enter a housing market with imperfect elasticity buyers screen houses for sale in two segments of the market select a set of houses for search in each segment and then control their intensities of costly search among houses in their preferred sets their truncated distributions of acceptable match values are assumed to be power law partial equilibrium is calculated explicitly and steady state is characterized analytically the analysis is extended to multiple segments and markets empirical implications include higher average prices and price rent ratios in preferred segments and markets as well as spatial diffusion across segments and markets of average prices price rent ratios and search the predictions are consistent with existing empirical evidence

discount shock price rent dynamics and the business cycle the price rent ratio is highly volatile and predicts future returns for commercial real estate price rent variations in commercial real estate also tend to comove with investment and output we develop a general equilibrium model that explicitly introduces a rental market and incorporates collateral constraints on production as a key ingredient our estimation identifies discount rate shocks as the most important factor in 1 driving price rent variations 2 producing the long horizon predictability of real estate returns and 3 linking the dynamics in commercial real estate to those in the production sector

search liquidity and the dynamics of house prices and construction the dynamics of house prices sales construction and population growth in response to city specific income shocks are characterized for 106 us cities a dynamic model of search in the housing market in which construction the entry of buyers house prices and sales are determined in equilibrium is then developed the theory generates dynamics qualitatively consistent with the observations and a version calibrated to match key features of the us housing market offers a substantial quantitative improvement over models without search in particular variation in the time it takes to sell induces transaction prices to exhibit serially correlated growth jel d83 r21 r23 r31 we explore the consequences of time consuming search and matching for the dynamics of house prices sales and construction at the city level first we char acterize the impact of city specific income shocks on the short run dynamics of average house prices home sales construction and population growth for a panel of us cities we then develop a model in which the entry of new buyers and the construction of new houses in response to such shocks are endogenously determined our theory generates serial correlation in the growth rates of house prices and construction even if income is strictly mean reverting following shocks 1 when calibrated to data on us cities our model accounts for over 80 percent of the variance of house price movements driven by city specific income shocks and nearly half of the observed autocorrelation of house price growth in our empirical analysis we estimate a structural panel vector autoregressive var model using city level observations on the variables listed above we focus

the mechanics of indirect convertibility this paper sets out the mechanics and equilibrating processes of indirectly convertible monetary systems in which currency issuing banks redeem their currency with redemption media of the same value as the commodity or commodity basket that defines the dollar it goes on to investigate the paradox of indirect convertibility and suggests that indirect convertibility is feasible despite the paradox finally it assesses the systems of fisher hall and others that have been suggested as alternatives to indirect convertibility but concludes that these alternative systems are open to serious objections copyright 1995 by ohio state university press

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

asset level risk and return in real estate investments relatively little is known in the academic literature about the idiosyncratic returns of individual real estate investments though quite a few commercial properties command prices commensurate with the market values of small to medium publicly traded companies i use purchase and sale data from the national council of real estate investment fiduciaries ncreif to compute holding period price appreciation returns for commercial properties in stark contrast with liquid asset returns idiosyncratic drift and volatility estimates diverge as the holding period shrinks this puzzling phenomenon survives a variety of controls for vintage effects systematic risk heterogeneity and sample selection biases i derive an equilibrium search based illiquid asset pricing model which when calibrated fits the data very well thus a structural model of illiquidity seems crucial to a descriptive theory of real estate investment returns the model can be extended to other illiquid asset classes and used to price derivatives such as debt claims

computing currency invariant indices with an application to minimum variance currency baskets this paper provides an exact and computable invariant currency value index icvi which is independent of base currency choice thus given a 1xed set of currencies the index of a currency will have the same value regardless of base currency choice this currency index can be used as an indicator to assess movements of an individual currency s value in world currency markets the methodological and mathematical reasoning behind icvi is formulated in terms of a simple exchange model simex to demonstrate one possible application we employ icvi to construct a currency basket of minimum variance utilizing a quadratic optimization framework we compute optimal weights for currencies and construct a stable aggregate currency sac comparative empirical analyses of a 1ve currency sac and the imf s special drawing rights sdr demonstrates that the sac has lower volatility and lower correlations with its components than the sdr in a similar way it is shown that a three currency sac has a smaller variance than the world money basket proposed by r mundell numerous academic and business implications are possible for further study with the use of the indices icvi and sac c

robotization and labour dislocation in the manufacturing sectors of oecd countries a panel var approach robots are the most important innovation which has affected the production process in the last three decades thanks to the latest advances in technology they have been able to perform an ever inc

a laissez faire approach to monetary stability this paper develops some diverse hints for a new monetary system offered separately by fischer black eugene fama and robert e hall for reasons that will become evident though we should perhaps say payments system instead of monetary system none of the economists mentioned has actually proposed the particular system set forth here nor examined all its properties and we call it the bfh system not to implicate them but only to give credit for some component ideas and to have a convenient label l regardless of who if anyone may actually advocate the system contemplating it is instructive it illuminates by contrast some characteristics of our existing and recent systems

hedging performance and basis risk in stock index futures in early 1982 trading began at three different exchanges in futures contracts based on stock indexes stock index futures were an immediate success and quickly led to a proliferation of new futures and options markets tied to various indexes one reason for this success was that index futures greatly extended the range of investment and risk management strategies available to investors by offering them for the first time the possibility of unbundling the market and nonmarket components of risk and return in their portfolios many portfolio management and other hedging applications in investment banking and security trading have been described elsewhere1 ranging from use by a passive fund manager to reduce risk over a long time horizon to use by an underwriter to hedge the market risk exposure in a stock offering for one or two days in considering the potential applications of index futures it is clear that in nearly every case a cross hedge is involved that is the stock position that is being hedged is different from the underlying portfolio for the index contract 2 this means that return and risk for an index futures hedge will depend upon the behavior of the basis i e the difference between the futures price and the cash price hedging a position in stock will necessarily expose it to some measure of basis risk risk that the change in the futures price over time will not track exactly the value of the cash position basis risk can arise from a number of different sources and is a more significant problem for stock index contracts than for other financial futures like treasury bills and bonds 3 the most apparent cause of basis risk is the nonmarket component of return on the cash stock position since the index contract is tied to the behavior of an underlying stock market index nonmarket risk cannot be hedged this is the essential problem of a cross hedge however basis risk can be present even when the hedge involves a position in the index portfolio itself and there is no nonmarket risk for one thing returns to the index portfolio include dividends while the index and the index future only track the capital value of the portfolio any risk associated with dividends on the portfolio will become basis risk in a hedged position still dividends are fairly low and also quite stable so this may not be a terribly important shortcoming

irving fisher and price level targeting in austria was silver the answer the question of price level versus inflation targeting remains controversial disagreement concerns not so much the desirability of price stability but rather the means of achieving it irving fisher argued for a commodity dollar standard where the purchasing power of money was fixed by indexing it to a basket of commodities we show that movements in the price of silver closely track the movements in overall prices during the classical gold standard era the one to one relationship between paper and silver bonds suggests that a simple silver rule could have sufficed to fix the purchasing power of money

housing dynamics an urban approach abstract a dynamic linear rational equilibrium model in the tradition of alonso rosen and roback is consistent with many outstanding stylized facts of housing markets these include a that the markets are local in nature b that construction persistence is fully compatible with mean reversion in prices and c that price changes are predictable calibration exercises to match moments of the real data have notable successes and failures the volatility in local income processes as reflected in hmda mortgage applicant data can account for much of the observed price and construction volatility except for the most inelastically supplied local markets the model s biggest failure lies in its inability to match the strong persistence in high frequency price changes from year to year

is there a paradox of indirect convertibility a paradox allegedly plagues systems in which money is only indirectly not directly convertible or redeemable we use the words interchangeably knut wicksell w william woolsey john whittaker and norbert schnadt tyler cowen and randall kroszner and hans michael trautwein have described scenarios in which indirect convertibility would have catastrophic consequences 21 23 17 18 19 3 20 currency deposits and checks are indirectly convertible when they are not redeemed directly in the medium of account the latter term is niehans s it means the commodity or commodity bundle of which some specified quantity defines the unit of account 16 1 money is redeemable instead in some redemption medium some other commodity or even some security in amounts equal in value to the quantity of medium of account defining the unit recent proposals combine indirect convertibility with free banking promising to stabilize the price level and avoid monetary disequilibrium that would disturb income and employment 13 12 25 26 27 28 4 in this bfh system so named perhaps misleadingly to acknowledge ideas borrowed altered and recombined from writings of fischer black eugene fama and robert hall government money is forbidden only competing private banks issue notes coins and checking accounts earlier proposals assumed government issue of currency simon newcomb and aneurin williams advocated money convertible into whatever variable amount of gold as redemption medium had a fixed general purchasing power 15 22 irving fisher citing their proposals argued that the dollar could be stabilized through convertibility into an amount of gold equal in value to a bundle of goods 10 331 2 indirect convertibility is not the same as fisher s betterknown proposal for a compensated dollar 8 337 47 10 494 502 11 95 7 in place of his earlier brief suggestion for indirect convertibility fisher later envisaged periodic discrete adjustments in the gold content of the dollar that is in the official price of gold prompted by deviations

housing price bubbles new supply and within city dynamics abstract although there is broad recognition that cities differ in their tendency to experience house price bubbles most studies assume away any possibility of within city heterogeneity in response to a bubble we develop a model that suggests that this assumption may be appropriate when markets are rising but can be far from reality on the bust side of a bubble during a housing boom new construction and related supply adjustments by developers ensure stable relative prices between low and high quality segments of the housing market on the bust side of a bubble however reduced housing starts allow demand side forces and mortgage default to create pressure for relative prices to diverge across market segments absent a change in technology as markets recover and new construction rebounds relative prices should revert back to pre crash levels evidence based on 2000 2013 single family home sales in phoenix arizona supports this modeling framework additional evidence also suggests that high rates of mortgage default contributed to divergence in relative prices when markets crashed

hedging effectiveness of stock index futures abstract the paper is concerned with the efficiency of hedging stock portfolios using futures stock indices covering the period january 1995 december 2001 the hedged portfolios consisted of the assets of seventeen investment companies quoted on the london stock exchange and two portfolios which were assumed to match exactly the corresponding cash index two futures indices were used to hedge the funds namely ftse100 and ftse250 futures indices which are quoted on liffe weekly observations were used providing 365 observations for each variable the total sample was split into two sections the first 261 observations were used to estimate the optimal hedge ratio i e the in sample period providing 260 returns for each variable and the remaining 104 i e the post sample period observations utilised to check the efficiency of the estimated hedge ratio in addition a second estimation window was tried using the last 30 observations of the in sample period a variety of methods were tried to estimate the optimal hedge ratio including ordinary least squares ols methods allowing for the existence of autoregressive conditional heteroskedasticity and an exponential weighted moving average ewma the general conclusions reached were that for the portfolios within the data set i that the ewma method of estimation provided the best estimate of the optimal hedge ii the shorter estimation window was no more efficient than the longer window and ii the ftese250 futures index was the best hedging vehicle for these portfolios

monetary policy and bank regulations in an economy with financial innovations this is a study of financial innovations and moves towards the cashless society in a general equilibrium cash in advance model it is assumed that a subset of goods cash goods and check goods

testing for micro efficiency in the housing market using highly granular transaction level data for the norwegian housing market over the period 2002 2014 we investigate whether excessive prices persist or revert in repeat sales excessiveness in prices is detected by comparing selling prices to predicted prices implied by a hedonic model which includes a rich set of attributes persistence is rejected and there is substantial reversion in excessive prices our results also show little scope for profitable arbitrage by investing in apparently underpriced units we suggest that excessive prices are related to the stochastic arrival of interested purchasers at public showings which we show is nonrepeatable

rules commitment and the search for stable money a review essay political economists have always criticized existing monetary institutions and struggled to articulate a vision of an ideal monetary system the volume under review the search for stable money essays on monetary reform edited by james a dorn and anna j schwartz university of chicago press 1987 stands firmly in this tradition it addresses the shortcomings of modern monetary institutions and debates the merits of various alternative arrangements the volume consists of nineteen essays and a number of short comments among the contributors are three nobel prize winners buchanan friedman and hayekthough buchanan simply comments on bernholz generally speaking the essayists disapprove of the virtually unlimited discretion invested in the federal reserve they argue that discretion leads to unnecessarily high and variable rates of inflation the essayists also agree that the solution ought to take the form of a change in the political rules which would have the effect of limiting government control over the monetary system beyond this there is no consensus the contributors consider money growth rules the gold standard a proposal for a compensated dollar and competitive currency systems but often find one another s proposals as objectionable as the status quo the essays in this volume are about five years old with the exception of the introductory piece by james dorn each was originally published elsewhere most originally appeared in the cato journal in 1983 sometimes the age of the essays shows careful analysis of federal reserve policy in 1981 82 was no doubt of topical interest when the essays were written but is less so now

why has house price dispersion gone up we calibrate a dynamic general equilibrium island model to investigate the 30 year increase in the level of house prices and their dispersion across u s metropolitan areas the model is based on two main assumptions households o w in and out metropolitan areas in response to local productivity shocks and the housing supply cannot adjust instantly because of technological and regulatory constraints the calibration reveals that the observed tightening of housing supply regulation cannot quantitatively account for the rise in the level and dispersion of house prices in equilibrium workers o w out of tightly regulated towards less regulated metropolitan areas undoing most of the price impact of local supply restrictions in contrast the observed increase in wage dispersion across metropolitan areas does create the observed increase in the level and dispersion of house prices workers o w towards exceptionally productive metropolitan areas and drive house prices up the calibration also suggests that the welfare eects of housing supply regulation are large when wages become more dispersed

the cyclical behavior of the beveridge curve in the housing market abstract this paper develops a business cycle model of the housing market with search frictions and entry of both buyers and sellers the housing market exhibits a well established cyclical component which features three stylized facts prices move in the same direction as sales and the number of houses for sale but opposite to the time it takes to sell a house these stylized facts imply that in the data housing vacancies and the number of buyers are positively correlated i e that the beveridge curve is upward sloping a baseline search and matching model of the housing market is unable to match these stylized facts because it inherently generates a downward sloping beveridge curve with free entry of both buyers and sellers our model reproduces the positive correlation between prices sales and vacancies and matches the stylized facts qualitatively and quantitatively

trading frictions and house price dynamics we model liquidity in housing markets the model provides a simple characterization for the joint process of prices sales and inventory we compare the implications of the model to certain properties of housing markets the model can generate the large price changes and the positive correlation between prices and sales that we see in the data unlike the data prices are negatively autocorrelated and high inventory predicts price appreciation we investigate several amendments to the model informational frictions show promise

energy consumption co2 emissions and economic growth an ethical dilemma in this study we examine the dynamic interrelationship in the output energy environment nexus by applying panel vector autoregression pvar and impulse response function analyses to data on energy consumption and its subcomponents carbon dioxide emissions and real gdp in 106 countries classified by different income groups over the period 1971 2011 our results reveal that the effects of the various types of energy consumption on economic growth and emissions are heterogeneous on the various groups of countries moreover causality between total economic growth and energy consumption is bidirectional thus making a case for the feedback hypothesis however we cannot report any statistically significant evidence that renewable energy consumption in particular is conducive to economic growth a fact that weakens the argument that renewable energy consumption is able to promote growth in a more efficient and environmentally sustainable way finally in analysing the case for an inverted u shaped ekc we find that the continued process of growth aggravates the greenhouse gas emissions phenomenon in this regard we cannot provide any evidence that developed countries may actually grow out of environmental pollution in the light of these findings the efficacy of recent government policies in various countries to promote renewable energy consumption as a means for sustainable growth is questioned put differently there seems to be an ethical dilemma between high economic growth rates and unsustainable environment and low or zero economic growth and environmental sustainability

competitive payments systems comment view lawrence h white criticizes several recent proposals for monetary reform including what we 1983 call the bfh system under this system the government precluded from issuing money would merely define a new unit of account and encourage the unit s general adoption by using it in all its own pricing contracting and accounting the definition would run in terms of so comprehensive a bundle of precisely gradable items with continuously quoted prices that the new unit would have a stable general purchasing power

search liquidity and the dynamics of house prices and construction corrigendum in the course of our ongoing research we have discovered two substantive errors in this article these mistakes do not affect significantly either the qualitative nature of the results or any of the principal conclusions stated in the paper they do however affect the specific quantitative results one error affects the empirical findings presented primarily in section i and the online appendix the other involves the calculation of sales of existing houses in artificial data generated by the model this affects both the calibration section iv and the equilibrium dynamics in section v principally with regard to the dynamics of sales the article s quantitative results are presented through tables of statistics and figures depicting impulse responses virtually all of the specific numerical values in these tables and figures are affected most only trivially but some significantly in this corrigendum we describe the two errors and present corrected values and new versions for the statistics and figures most affected we number the tables and figures as in the original article and the revised online appendix updated correct programs have replaced those containing the mistakes on the aer s website and the revised online appendix contains a complete set of corrected tables and figures

monetary trends in the united states and the united kingdom a review from the perspective of new developments in monetary economics milton friedman and anna schwartz monetary trends reports a great many findings 53 are enumerated in the introduction but paramount is the stability of the demand for money in the us and britain over the past century the money stock controls money income this proposition more than anything else is the point of their painstaking investigation friedman and schwartz argue against what might neutrally be called the early post war view of the macroeconomic role of money velocity will move easily to reconcile any level of nominal income to any money stock the demand for money in this view is a will o the wisp as the authors put it monetary policy has little influence over real activity stabilization policy necessarily relies on fiscal instruments the volume is completely convincing in disposing of this idea today s reader is likely to be puzzled why so much space is devoted to a view that has no serious adherents among professional economists friedman and schwartz are generals fighting an earlier war a situation accentuated by the long lags in putting this volume into print though the opposing armies fighting for the early postwar view have withdrawn in total rout a new front has opened up and the quantity theory is fighting for its life once again worse yet the new armies are fighting under the banner of free market economics and are led by former colleagues and students of milton friedman the midwest once the stronghold of the quantity theory is now largely occupied by the enemy the new monetary economics views the quantity theory as nothing more than an artifact of government regulation an economy organized along free market principles could function without money at all fischer black 1970 it is true that the kinds of monetary regulations imposed by the american and british governments of the past century create a more or less stable relation between a certain class of assets called money and nominal spending eugene fama 1980 but different regulations would alter that relation even the real bills doctrine anathema to quantity theorists because it invites unlimited expansion of the money supply has advocates in the new school thomas sargent and neil wallace 1981 a monetary system where the government is unconcerned about the money stock has been advocated by a university of chicago economist while visiting the hoover institution john bilson 1981 restoring the intrinsic value of money not limiting its quantity has been found to be the key to successful disinflation by one member of this group sargent 1982 a critical summary titled a laissez faire approach to monetary stability written see p 1528 above for publication information

housing price and fundamentals in a transition economy the case of the beijing market this article develops a dynamic rational expectations general equilibrium framework that links house value to fundamental economic variables such as income growth demographics migration and land supply our framework handles nonstationary dynamics as well as structural changes in fundamentals that are commonplace in transition economies applying the framework to beijing we find that the equilibrium house price and rent under reasonable parameterizations of the model are substantially lower than the data we explore potential explanations for the discrepancies between the model and the data

the forerunners of new monetary economics proposals to stabilize the unit of account note this paper critically evaluates the monetary policy regimes proposed by arthur kitson 1917 and henry meulen 1934 contrary to the assertion of tyler cowen and randall kroszner 1987 the unit of account envisioned by these earlier theorists was not at all like recent proposals by proponents of the new monetary economics it is also demonstrated that the compensated dollar plans of aneurin williams 1892 and irving fisher 1920 are closer forerunners to the recent new monetary economics proposals copyright 1990 by ohio state university press

the effectiveness of index futures hedging in emerging markets during the crisis period of 2008 2010 evidence from south africa abstractthis article provides an assessment of the comparative effectiveness of four econometric methods in estimating the optimal hedge ratio in an emerging equity market particularly the south african equity and futures markets the article bases the effectiveness of hedging on volatility reduction and minimization of the coefficient of variation of hedged returns as well as risk aversion based utility maximization the empirical analysis shows that the vector error correction method and multivariate generalized autoregressive conditional heteroscedasticity methods are most effective over relatively long horizon weekly and monthly hedging periods

scottish banking before 1845 a model for laissez faire during the free banking era in eighteenth and early nineteenth century scotland there were a number of legal restrictions affecting the evolution of the system scottish banking was characterized by restrictions on small denomination and interest bearing notes there were also restrictions inhibiting the development of capital markets and entry into banking furthermore the bank of england operated as a shadow central bank for the scottish system these considerations call into question the use of the scottish banking experience as the appropriate model for laissez faire and as evidence against the legal restrictions theory of money and the new monetary economics copyright 1989 by ohio state university press

a more timely house price index using listings data we construct a new repeat sales house price index that describes house values at the contract date when the price is determined rather than the closing date when the property is transferred we showthat this difference in timing helps explain several puzzles about house prices including their strong short term serial correlation and their weak correlation with stock prices and macroeconomic news shocks in addition we showthat a variant of our index that relies exclusively on listings data for recent transactions accurately reveals trends in house prices several months before existing price indexes like case shiller become available

monetarist rules in the light of recent experience recent experience does not include a monetarist experiment as some have argued but may slightly reinforce preexisting reasons for doubting that the best way of formulating monetarist policy prescriptions is in the form of a constant growth rule for the money stock a more desirable rule would pertain to the monetary base which is much more directly under fed control while a constant base growth rule might provide good macroeconomic performance better results should be obtainable from a rule that at regular intervals adjusts the base growth rate upward or downward depending on whether nominal gnp is below or above a target path that specifies constant non inflationary growth for that variable this type of rule is activist to an extent but is non discretionary the implied absence of policy making flexibility is desirable for reasons explained in the literature on dynamic inconsistency this abstract was borrowed from another version of this item