analysis of the changing influences on traditional households ownership patterns abstract sociological and economic forces have begun to alter ownership patterns in ways not yet captured by movements in the aggregate ownership rate while demographic factors such as marital status and family structure remain influential in determining tenure choice their impact has waned particularly among the best educated households and those with rising real incomes labor market conditions as evidenced by increasing returns to skill are more strongly felt than ever before in the housing market the impact on owning of being highly educated now rivals the influence of being married with minor children increasingly delayed ownership is a reality even for traditional family units with 36 to 45 year old heads that have not prospered in the labor market the rising real cost of even relatively inexpensive suburban housing is also beginning to be reflected in a heightened impact for real family income on tenure choice finally race currently is more adversely influential in determining suburban ownership for young middle aged minority families than it was in 1960 particularly if the household head is not well educated we suspect this is due to racially disparate impacts of increasingly rigorous zoning regulations and higher impact fees in the suburbs

similarities and convergence in g 7 cycles this paper examines the properties of g 7 cycles using a multicountry bayesian panel var model with time variations unit specific dynamics and cross country interdependences we demonstrate the presence of a significant world cycle and show that country specific indicators play a much smaller role we detect di erences across business cycle phases but apart from an increase in synchronicity in the late 1990s find little evidence of major structural changes we also find no evidence of the existence of an euro area specific cycle or of its emergence in the 1990s

environmental management in development the evolution of paradigms in the past quarter century environmental management has increasingly become a concern of governments more recently the traditional split between developers and conservationists has begun to break down conceptions of what is economically and technologically practical ecologically necessary and politically feasible are rapidly changing this report discusses the implications of five paradigms of environmental management in development the author notes that the remedial legalistic approach of environmental management is breaking down instead interest in the more economically integrated approach of resource management has recently taken hold several interdependent forces indicate that improving the economic management of pollution and resources may be a necessary but insufficient measure to create the conditions for sustainable development the perception of tradeoffs between development and environmental quality persists in the present debate but its necessity is greatly exaggerated according to this paper finally it is noted that paradigms may be impervious to evidence and institutions and societies too difficult to change whether when and how these issues are resolved may be modern civilization s most significant test

housing wealth and consumption growth evidence from a large panel of households this article uses a large panel dataset that tracks the housing wealth and credit card spending of 12 793 individuals in hong kong to study the relationship between housing wealth and household consumption i identify a significant effect of housing wealth on consumption a pure wealth effect can explain part of the sensitivity households with multiple houses have much stronger consumption responses consistent with a relaxation of the credit constraints mortgage refinancing significantly increases households consumption sensitivities however for the majority of the households that do not refinance consumption sensitivity appears to be due to a reduction in precautionary saving jel e21 g21

regional uk house price co movement cyclical synchronization of home prices has important implications for monetary and other policies regional house price divergence even over a business cycle can inhibit labour mobility and pr

tax base variability and procyclical fiscal policy in developing countries abstract based on a sample of 56 countries we show that fiscal policy in the g7 countries appears to be acyclical while fiscal policy in developing countries is procyclical i e fiscal policy is expansionary in good times and contractionary in bad times to explain this puzzle we develop an optimal fiscal policy model in which running budget surpluses is costly because they create pressures to increase public spending given this distortion a government that faces large fluctuations in the tax base as is the case for developing countries will find it optimal to run a procyclical fiscal policy

the impact of transaction costs and the expected length of stay on homeownership abstract economic theory suggests that an increase in the expected length of stay in a dwelling increases the probability of a household choosing to own a house rather than rent this hypothesis is derived from recognition that there are substantial transaction costs associated with homeownership and increased expected time in the home reduces the annualized transaction cost using a military data set we confirm that expected length of stay in a dwelling and the transaction costs of selling are very important to the ownership decision our best estimate of the transaction costs of selling a home are the sum of 3 of house value and 4 of household earnings

fiscal policy and financial market movements abstract this paper estimates fiscal policy reaction function in order to investigate the links between financial market movements and fiscal policy outcomes an increase in asset prices affects in a positive and significant manner primary balances with the response reflecting both an increase in government revenues and a fall in government spending the most important impact on fiscal balances is due to changes in residential property prices changes in equity and commercial property prices are also important determinants of fiscal balances our findings suggest that the steepening of the slope of the yield curve contributes to expenditure based fiscal discipline

bank regulation property prices and early warning systems for banking crises in oecd countries abstract early warning systems ews for banking crises generally omit bank capital bank liquidity and property prices most work on ews has been for global samples dominated by emerging market crises where time series data on bank capital adequacy and property prices are typically absent we estimate logit crisis models for oecd countries finding strong effects from capital adequacy and liquidity ratios as well as property prices and can exclude traditional variables higher capital adequacy and liquidity ratios have a marked effect on the crisis probabilities implying long run benefits to offset some of the costs that such regulations may impose

commensuration and theories of value in ecological economics abstract without a theory of value price in ecological economics the valuation of ecosystem and economic resources cannot be rigorously defended at the crux of the matter is the valuation or mixed units problem of commensurating biophysical inputs outputs which are different this paper critically reviews candidate theories of value which have emerged in the ecological economics literature for dealing with this problem first of all the neo ricardian approach using sraffa type systems is discussed in particular judson s assertion that the sraffa system is suitable for ecological economics is questioned as it is based on circular flow generation of a surplus and exchange values none of these ideas are consistent with a biophysical characterisation of an economic system which is paramount in ecological economics a more fruitful avenue for establishing a biophysical theory of value based on ecological and thermodynamic principles is to extend patterson s quality equivalent methodology qem to explicitly include mass flows in addition to energy at this point a model close to costanza and hannon s biosphere model of price determination emerges the extended qem model however has a number of important advantages over the costanza hannon model because it has a more generalised formulation and is not reliant on necessarily using solar energy as the numeraire the paper concludes with a discussion of some outstanding issues that need to be resolved before a biophysical theory of value can be properly established in ecological economics

nonparametric nonlinear cotrending analysis with an application to interest and inflation in the united states given the assumption that the components of a vector time series are stationary around nonlinear deterministic time trends nonlinear cotrending is the phenomenon that one or more linear combinations of the time series are stationary around a linear trend or a constant hence the series have common nonlinear deterministic time trends in this article i develop nonparametric tests for nonlinear cotrending and i derive nonparametric estimators of the cotrending vectors i apply this approach to the federal funds rate and the consumer price index inflation rate in the united states using monthly data to analyze the price puzzle

the margin of safety and turning points in house prices observations from three developed markets using quarterly data from 1960 united kingdom 1963 united states and 1977 japan through the second quarter q2 of 2010 all three markets the authors examined long run mean reverting relationships between house prices and inflation disposable income gdp and rents at the end of q2 2010 u s prices were below their mean reverting levels and at the lower end of their historical range equivalent u k and japanese prices were at or slightly above their mean reverting levels

niche diversification in environmental ecological economics abstract this paper is devoted to the identification and comparison of the niches of neoclassical environmental economics nee and ecological economics eco it is presented in four sections section 1 argues that the existing literature does not make the differences and relations between the sister disciplines neatly transparent section 2 critically examines the antecedents of the subjects with reference to three structural dimensions such as scarcity perception problem solving orientation and range of integration section 3 collates the elements and reformulates the definitions section 4 is coda on the essay the divide between the paradigms which came to the surface during the 1960s became prominent through the growth controversy of the subsequent decade the controversy over the need for change of economic theory to cope with the growing intensity of environmental uncertainty makes the disciplines sore about each other the neoclassical paradigm comprising of elements like relative scarcity allocative approach market correction and technological optimism characterises nee the distinguishing characteristics of eco include thermodynamic irreversibility absolute scarcity economy ecosystem symbiosis biophysical approach ecological stewardship and prudent pessimism the niches are competitive and complementary in some respects and thus provide a unique example of fruitful niche diversification within environmental ecological economics we have a feeling that the economics profession can trace out the interface of the disciplines in some policy areas and raise the effectiveness of prescriptions so that this academic species diversity can serve humankind to its full potential

tax subsidies to owner occupied housing an asset market approach inflation reduces the effective cost of homeownership and raises the tax subsidy to owner occupation this paper presents an asset market model of the housing market and estimates how changes in the expected inflation rate affect the real price of houses and the equilibrium size of the housing capital stock simulation results suggest that the accelerating inflation of the 1970s which substantially reduced homeowners user costs could have accounted for as much as a 30 percent increase in real house prices persistent high inflation rates could lead ultimately to a sizable increase in the stock of owner occupied housing

bank integration and co movements across housing markets this paper investigates whether bank integration measured by cross border bank flows can capture the co movements across housing markets in developed countries by using a spatial dynamic panel model the transmission can occur through a global banking channel in which global banks intermediate wholesale funding to local banks changes in financial conditions are passed across borders through the banks balance sheet exposure to credit currency maturity and funding risks resulting in house price spillovers while controlling for country level and global factors we find significant co movement across housing markets of countries with proportionally high bank integration bank integration can better capture house price co movements than other measures of economic integration once we account for bank exposure other spatial linkages traditionally used to account for return co movements across region such as trade foreign direct investment portfolio investment geographic proximity etc become insignificant moreover we find that the co movement across housing markets decreases for countries with less developed mortgage markets characterized by fixed mortgage rate contracts low limits of loan to value ratios and no mortgage equity withdrawal

residential mobility and job changes under uncertainty abstract this paper empirically investigates households residential mobility and job change decisions under uncertainty we allow households degree of risk aversion to be a confounding factor in the joint decision of residential mobility and job changes using panel data to estimate a random effects multinomial probit model of households joint decision of residential and job mobility our empirical results show that risk aversion discourages a household from making any changes moreover when compared to single changes in either job or residential locations risk aversion is more discouraging for joint changes to more central residential locations and less discouraging for joint changes to more distant residential locations these effects are statistically significant albeit small in magnitude our empirical results demonstrate the uncertainty does play a role in households job and residential mobility decisions

estimating the consumption and investment demands for housing and their effect on housing tenure status theoretical work suggests that families live in owner occupied housing if their investment demand for housing exceeds their consumption demand for housing using household data from the 1983 survey of consumer finances the authors test this theory by estimating an ordered probit model of whether families rent without owning property rent while owning property other than their home own their home without owning other properties or own their home in addition to other properties for owner occupiers who own additional property both the investment and consumption demands are directly observed enabling the authors to separately identify these functions copyright 1994 by mit press

indicators of sustainable development some lessons from capital theory abstract interest in sustainable development has prompted a search for suitable indicators that might complement or supplant the traditional measures of economic success although there is no agreement about the precise meaning of sustainable development one idea which is increasingly in good currency is that sustainable development requires that the stock of capital that one generation passes on to the next be maintained or enhanced further this stock of capital is seen by some to comprise two elements manufactured capital and natural capital the extent to which these are believed to be substitutes or complements is one factor which separates the neoclassical school from some of its critics a premise of this paper is that if capital theory is relevant to sustainable development then it should also be helpful in developing indicators however even within the normal confines of economics capital theory is not a homogeneous body of analysis therefore an exploration of capital theory and its relevance to sustainable development can be expected to generate various perspectives on those measures most useful for gauging the sustainability of economic activity it is these linkages between capital theory in various schools of thought and possible indicators of sustainable development that are the subject of this paper

interaction between housing prices and household borrowing the finnish case abstract employing time series econometrics this study shows that there has been a significant two way interaction between housing prices and housing loan stock in finland since the financial liberalization in the late 1980s before the financial deregulation the interaction was substantially weaker furthermore housing appreciation has a notable positive impact on the outstanding consumption loan stock it appears that there is no similar relationship between stock prices and credit understanding the two way interaction between housing prices and credit is of importance since the interdependence is likely to augment boom bust cycles in the economy and increase the fragility of the financial sector

testing for rational bubbles in the presence of structural breaks evidence from nonstationary panels this paper presents new results on the rational bubbles hypothesis for a panel of 18 oecd countries using the model developed by campbell 2000 we provide an analysis of international data that exploits increased power deriving from the panel unit root and cointegration methodology together with the flexibility of allowing explicitly for multiple endogenous structural breaks in the individual series differently from the time series methodology the panel data approach allows for a global analysis of the financial crashes that are related to rational bubbles we find strong evidence in favor of bubbles phenomena

fiscal policy expenditure composition and growth in low income countries abstract this paper assesses the effects of fiscal consolidation and expenditure composition on economic growth in a sample of 39 low income countries during the 1990s the paper finds that strong budgetary positions are generally associated with higher economic growth in both the short and long terms the composition of public outlays also matters countries where spending is concentrated on wages tend to have lower growth while those that allocate higher shares to capital and nonwage goods and services enjoy faster output expansion finally initial fiscal conditions also have a bearing on the nexus between fiscal deficits and growth

inflation risk taxes and the demand for owner occupied housing a bstract a portfolio choice model is formulated which focuses on the possibility of inflation hedging motives in housing demand in the 1970s an asset demand equation is used to estimate the capitalization of inflation expectations into house prices through tax mortgage and hedging effects the empirical results indicate that even after accounting for tax and mortgage effects the hedging motive was significant in bidding up house prices one implication is that the tax effects of inflation may have been overstated in previous research that ignored inflation risk

concepts of efficiency in ecological economics sisyphus and the decision maker abstract efficiency forms the bedrock of policy planning and business approaches to sustainable development but what do ecological economists mean by efficiency in the resource use context efficiency has a wide range of potential interpretations from the ratio of work output energy inputs to pareto efficiency despite the potential richness of the efficiency concept in practice efficiency is often narrowly conceived within disciplinary boundaries this appears to be the case even in ecological economics which purports to be transdisciplinary and pluralistic such narrow disciplinary perspectives essentially waste the richness of the efficiency concept this wasting could mean ecological economists and decision makers are destined to sisyphean toil in the pursuit of sustainable development this paper explores the efficiency concept and its interpretation it then reviews ecological economic literature to find that there is much room for improvement in the way ecological economists apply efficiency finally the paper presents a framework within which a truly ecological economic approach to efficiency can emerge armed with this framework policy makers and planners should be better prepared to make decisions leading to sustainable development

fiscal spending and economic growth some stylized facts using an event analysis this paper complements the cross country approach to the study of fiscal correlates of growth data on fiscal expenditures and growth for a database of 140 countries 118 developing countries over 1972 2005 are reorganized around turning points providing a summary but encompassing description of what is in the data for this sample the probability of occurrence of a fiscal event is about 10 and the probability of a growth event once a fiscal event had occurred is around 26 for developing countries fiscal events followed by growth events occur under situations of i significantly lesser deficit ii fewer resources devoted to non interest general public services and iii shift in primary expenditures toward transport communication after controlling for the growth inducing effects of positive terms of trade shocks and of trade liberalization reform probit estimates indicate that a growth event is more likely to occur in a developing country when surrounded by a fiscal event moreover the probability of occurrence of a growth event in the years following a fiscal event is greater the lower is the associated fiscal deficit confirming that success of a growth oriented fiscal expenditure reform is associate with a stabilized macroeconomic environment through limited primary fiscal deficit

a model of housing in the presence of adjustment costs a structural interpretation of habit persistence building on the model of sanford j grossman and guy laroque 1990 this paper provides a model of household consumption and portfolio allocation which incorporates the role of housing as both a consumption good and as a component of wealth the model captures the following features of the household s problem a utility depends probably nonseparably on two distinct goods nondurable consumption and housing b nondurable consumption can be adjusted cost lessly but housing is subject to an adjustment cost c households face housing price risk in the sense that the relative price of housing varies over time and d in addition to the house the household can invest in a wide variety of financial assets this single reasonably tractable model generates testable implications for portfolio allocation risk aversion asset pricing and the dynamics of nondurable consumption because the original grossman and laroque model considers a utility function in which the durable good is the sole argument and thus abstracts completely from nondurable consump tion their analysis cannot address either the potential spillover effects of the adjustment costs of the durable good on the dynamics of nondurable consumption or the implications for portfolio allocation of housing risk arising from variation in the relative price of housing in addition to generating implications for issues on which the original grossman and laroque model was silent the housing model delivers a strikingly different message concerning asset pricing that is in contrast to the grossman and laroque result that the consumption based capital asset pricing model consumption capm fails the housing model implies that the consumptioncapm holds we assume that the household incurs an adjustment cost when altering the holding of the dura ble good or house although financial assets can be bought and sold costlessly consumption of the nondurable good can also be adjusted costlessly when choosing a new house the consumer takes into account the fact that the consumption of housing services will be constant at the new level until the subsequent stopping time when it is again worthwhile to incur the adjustment cost thus the home purchase decision is endogenous and fully rational but because of the adjustment cost infrequent in this continuous time setting the household s decision process has a recursive structure at each instant the household first decides whether it is optimal to sell the house immediately on those rare occasions that it is optimal to incur the adjustment cost the household sells the old house and buys a new one instantaneously if the household decides that it is not optimal to sell the house immediately it then determines its optimal holdings of financial assets and optimal level of nondurable consumption conditional on the current housing stock in essence because of the adjustment costs associated with the durable good the current

economy and environment a theoretical essay on the interdependence of economic and environmental systems preface notation guide 1 introduction part i the physical economy environment system 2 closed physical systems a model 3 structure and time in the physical system 4 technological change and the environmental constraints to physical growth part ii the economic system 5 the price system 6 prices property and the environment 7 economic conflict and environmental change part iii environmental strategies in an evolutionary economy environment system 8 time uncertainty and external effects 9 the market solution 10 the stationary state 11 conclusions references index

the voracity effect abstract we analyze an economy that lacks a strong legal political institutional infrastructure and is populated by multiple powerful groups powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock in equilibrium this leads to slow economic growth and a voracity effect by which a shock such as a terms of trade windfall perversely generates a more than proportionate increase in fiscal redistribution and reduces growth we also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks jel f43 o10 o23 o40

why is fiscal policy often procyclical many countries especially developing ones follow procyclical fiscal policies namely spending goes up taxes go down in booms and spending goes down taxes go up in recessions we provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for less than benevolent government to appropriate rents voters have incentives similar to the starving the leviathan classic argument and demand more public goods or fewer taxes to prevent governments from appropriating rents when the economy is doing well we test this argument against more traditional explanations based purely on borrowing constraints with a reasonable amount of success

sustainable development looking for new strategies abstract many strategies have been proposed to reach sustainable development a great many of these strategies aim at one type of problem preventing environmental deterioration while ignoring the importance of economic or social goals in addition while political decisions are at the heart of the choices to be made most researchers seem to consider sustainable development as a mere technical problem in this paper we describe a more complete strategy for sustainable development we use the outlines of this strategy to find out what knowledge and skills are still needed the strategy is based on the idea that it is necessary to find consensus on the development of a socio environmental system as a whole and between all people involved it leaves us with at least two main areas that need further study the supply of information and the management of consensus building a formal procedure for consensus building might be developed based on the literature and on experiences with environmental impact assessments special attention is paid to the information needed it can be summarized as information about 1 delimiting a socio environmental system 2 the needs and wants to be satisfied via that system and 3 the physical ecological economic social and cultural constraints of satisfying those needs and wants

when will housing recover an interesting perspective on recent trends in the u s housing market is gained by noting how housing prices correspond to per capita income a traditional measure of affordability the ratio of housing prices to per capita income is high but close to historical norms in many regional markets however notable exceptions do exist in california housing prices recently reached levels relative to per capita income far above historical norms a significant pricing correction has begun in that market similarly housing prices are correcting sharply in arizona florida and nevada investors need to be mindful of the potential for housing market related losses and the potential for contagion among asset classes see comments and response on this article

fiscal deficits and growth in developing countries this paper examines the relation between fiscal deficits and growth for a panel of 45 developing countries based on a consistent treatment of the government budget constraint it finds evidence of a threshold effect at a level of the deficit around 1 5 of gdp while there appears to be a growth payoff to reducing deficits to this level this effect disappears or reverses itself for further fiscal contraction the magnitude of this payoff but not its general character necessarily depends on how changes in the deficit are financed through changes in borrowing or seigniorage and on how the change in the deficit is accommodated elsewhere in the budget we also find evidence of interaction effects between deficits and debt stocks with high debt stocks exacerbating the adverse consequences of high deficits

how much is a tulip worth the kind of passion to possess tulip bulbs that gripped holland some 350 years ago may be alive and well today among certain u s equity investors

housing cycles and macroeconomic fluctuations a global perspective abstract this paper investigates the international spillovers of housing demand shocks on real economic activity the global economy is modeled using a global var with a novel house price data set for both advanced and emerging economies the impulse responses to an identified u s housing demand shock confirm the existence of strong international spillovers to advanced economies in contrast the response of some major emerging economies is not significantly different from zero moreover the analysis of synchronized housing demand shocks speaks in favor of the recent evidence of increased resilience of emerging economies to shocks originating in advanced economies and it also suggests that a close monitoring of housing cycles in advanced economies as well as in emerging economies should be of interest for policy makers

labor income housing prices and homeownership abstract this paper tests the intuition that households whose incomes covary relatively strongly with housing prices should own relatively little housing among us households a one standard deviation in covariance between income and home prices is associated with a decrease of approximately 7500 in the value of owner occupied housing this result arises in the presence of controls for the level and distribution of home prices the generally positive correlations between income and home prices suggests that households enter financial markets with a greater exposure to risk than is typically modeled

development of ecological economics in australia and new zealand abstract this paper reviews the development of ecological economics in australia and new zealand since its beginnings in the late 1970s a historical account is presented that focuses particularly on the activities of the australia new zealand society for ecological economics and key ecological economics research activities achievements of ecological economics in australia and new zealand are assessed using a range of quantitative and qualitative data the main areas of expertise developed by australian and new zealand ecological economists were found to be theoretical foundations and visions for ecological economics biodiversity and resilience input output analysis heterodox valuation approaches analysis of economy environment interactions sustainability indicators sustainable agriculture fisheries and oceans and energy thermodynamics both countries are ranked at the top or near the top of the world rankings in terms of per capita isee membership and publication rates in ecological economics a defining feature of ecological economics in australia and new zealand has also been its practical and problem solving focus and the level of end user engagement the paper concludes by discussing the challenges that face the future development of ecological economics in australia and new zealand

asymmetric effects of the business cycle on bank credit risk abstract prior empirical research on the relation between credit risk and the business cycle has failed to properly investigate the presence of asymmetric effects to fill this gap we examine this relation both at the aggregate and the bank level exploiting a unique dataset on italian banks borrowers default rates we employ threshold regression models that allow to endogenously establish different regimes identified by the thresholds over below which credit risk is more less cyclical we find that not only are the effects of the business cycle on credit risk more pronounced during downturns but cyclicality is also higher for those banks with riskier portfolios

a general equilibrium model of housing taxes and portfolio choice we describe a model in which rental and owner housing are risky assets tenure choice is endogenous and each household is constrained to consume the same amount of owner housing that it has in its investment portfolio at each iteration in the search for an equilibrium we determine the new taxable income for each of 3 578 households from the survey of consumer finances and we use statutory schedules to find the marginal rate and tax paid equilibrium net rates of return are major determinants of the amount of owner housing but a logit model indicates that demographic factors are the main determinants of ownership rates in our simulation taxes on owner housing would raise welfare not only by reallocating capital but also by the government s taking part of the risk from individual properties and diversifying it away measures to disallow property tax or mortgage interest deductions do not help share this risk simulations of the 1986 tax reform indicate a small shift from rental to owner housing and

overcoming scarcities through innovation what do technologists do when faced with constraints abstract the question that still divides many debates about sustainability is the possibility of technological substitution of scarce natural resources while there is considerable debate among economists whether technology can mitigate scarcities through development of substitutes there is little actual research on the mechanisms and limitations of this substitution process in this study i seek to build a bridge between scarcity and innovation literatures to study when technologists decide to develop technological substitutes my starting point is the theory of technology as a recombination of existing mental and physical components combining this theory with modern scarcity literature that differentiates between absolute relative and quasi scarcities yields a more nuanced framework for understanding both different types of scarcities and how technologists decide whether or not to develop or adopt technological substitutes this improves our understanding of the possibilities and limitations of scarcity induced innovation i then illustrate the use of this framework with two brief historical case studies about constraint induced innovation i conclude that the mainstream economic practice of assuming that substitution will occur automatically even in cases of absolute scarcity may hide extremely important phenomena from discussion and debate behind a veil of circular reasoning

a flexible assurance bonding system for improved environmental management abstract current methods of regulating activities that are known or suspected to be environmentally danaging are not working well they induce legal confrontation obfuscation and government intrusion into the inner workings of firms they tend to suppress technical and social innovation aimed at long term solutions they do not mesh well with the market signals that firms use to make decisions this paper discusses some of the underlying reasons for this problem and outlines a flexible environmental assurance bonding system designed to incorporate environmental criteria and uncertainty into the market system and to induce positive environmental technological innovation in addition to direct charges for known environmental damages an assurance bond equal to the current best estimate of the largest potential future environmental damages would be levied and kept in an interest bearing escrow account the bond plus a portion of the interest would be returned if and only if the firm could prove that the suspected damages had not occured or would not occur if damages did occur the bond would be used to rehabilitate or repair the environment and to compensate injured parties by requiring the users of environmental resources to post a bond adequate to cover potential future environmental damages with the possibility for refunds the burden of proof is shifted from the public to the resource user and a strong economic incentive is provided to research the true costs of environmentally innovative activities and to develop innovative cost effective pollution control technologies

regional spillover and rising connectedness in china s urban housing prices regional housing prices may be dynamically linked and converge to a long run equilibrium the level of connectedness can be used to describe systemic risk in the housing market this paper uses a r

credit channel trade credit channel and inventory investment evidence from a panel of uk firms abstract in this paper we use a panel of 609 uk firms over the period 1980 2000 to test for the existence of a trade credit channel of transmission of monetary policy and for whether this channel plays an offsetting effect on the traditional credit channel we estimate error correction inventory investment equations augmented with the coverage ratio and the trade credit to assets ratio differentiating the effects of the latter variables across firms more or less likely to face financing constraints and firms making a high or low use of trade credit our results suggest that both the credit and the trade credit channels operate in the uk and that the latter channel tends to weaken the former

estimating the linear quadratic inventory model maximum likelihood versus generalized method of moments abstract we compare generalized method of moments gmm and maximum likelihood ml estimators of the parameters of a linear quadratic inventory model using nondurable manufacturing data and monte carlo simulations data based gmm estimates for five normalizations vary widely generally rejecting the model the ml estimate generally supports the model monte carlo experiments reveal that the gmm estimates are often biased apparently due to poor instruments statistically insignificant economically implausible and dynamically unstable the ml estimates are generally unbiased even in misspecified models statistically significant economically plausible and dynamically stable asymptotic standard errors for ml are 3 to 15 times smaller than for gmm

competition and credit procyclicality in european banking abstract this paper empirically assesses how competition in the banking sector affects credit procyclicality by estimating both an interacted panel var model using macroeconomic data and a single equation model with bank level data these two empirical approaches show that a deviation of actual gdp from potential gdp leads to greater credit fluctuations in economies where bank competition is weak this suggests that increased market power for banks increases the financial accelerator mechanism which is consistent with recent macroeconomic models showing that monopolistic banking tends to increase macroeconomic volatility by making credit cheaper during booms and more expensive during recessions

monetary policy in a data rich environment abstract most empirical analyses of monetary policy have been confined to frameworks in which the federal reserve is implicitly assumed to exploit only a limited amount of information despite the fact that the fed actively monitors literally thousands of economic time series this article explores the feasibility of incorporating richer information sets into the analysis both positive and normative of fed policymaking we employ a factor model approach developed by stock j h watson m w diffusion indices journal of business economic statistics 2002 20 2 147 forecasting inflation 1999 journal of monetary economics 44 2 293 that permits the systematic information in large data sets to be summarized by relatively few estimated factors with this framework we reconfirm stock and watson s result that the use of large data sets can improve forecast accuracy and we show that this result does not seem to depend on the use of finally revised as opposed to real time data we estimate policy reaction functions for the fed that take into account its data rich environment and provide a test of the hypothesis that fed actions are explained solely by its forecasts of inflation and real activity finally we explore the possibility of developing an expert system that could aggregate diverse information and provide benchmark policy settings

endogeneity in semiparametric binary response models this paper develops and implements semiparametric methods for estimating binary response binary choice models with continuous endogenous regressors it extends existing results on semiparametric estimation in single index binary response models to the case of endogenous regressors it develops a control function approach to account for endogeneity in triangular and fully simulataneous binary response models the proposed estimation method is applied to estimate the income effect in a labor market participation problem using a large micro data set from the british fes the semiparametric estimator is found to perform well detecting a significant attenuation bias the proposed estimator is contrasted to the corresponding probit and linear probability specifications jel c14 c25 c35 j22

hedging house price risk in the presence of lumpy transaction costs abstract this paper presents a life cycle model of housing demand with uncertain house prices and lumpy transaction costs the paper extends the s s methodology to a non stationary discrete time framework with multivariate stochastic price processes this allows the characterization of a self hedging mechanism in an incomplete housing market households use earlier accumulated housing wealth to hedge against future housing cost risk as a result the direction of the effect of price uncertainty on housing demand depends critically on households future housing consumption plans when price uncertainty increases households consume and thereby invest in less housing if they plan to realize the housing wealth gain however they will instead take a larger housing position if they plan to move to a bigger home in a correlated housing market in the future

alternative mortgage instruments the tilt problem and consumer welfare mortgage instrument in the united states for the last 50 years and for much of this period it has performed well however during periods of high and volatile rates of inflation the sfpm suffers from severe weaknesses 1 foremost among these problems from the standpoint of the borrower is the tilt in the stream of real mortgage payments toward the initial years of the mortgage for consumers unconstrained by capital market imperfections this tilt is unimportant however a consumer is typically unable to borrow against expected higher future income or against the nominal capital gains that accrue to the owner of a house over the life of the mortgage in addition common practices of mortgage lenders often limit mortgage payments to some fraction of income at the time of purchase together these liquidity constraints create a mismatch between the time se quence of mortgage payments and income a mismatch that reduces the number of borrowers who qualify for financing and that limits the value of the house purchased by those who do obtain financing 2 in an attempt to reduce the problems created by this mismatch a variety of alternative mortgage instruments amis has been suggested three of the most important are the graduated payment mortgage gpm the shared appreciation mortgage sam and the price level adjusted mortgage plam 3 with the gpm mortgage payments rise at some specified rate during a portion of the mortgage life the sam enables the lender to share in the appreciation of the university of colorado boulder and syracuse university respectively this paper was writ ten while the first author was at syracuse university funding for the research was shared by the office of the comptroller of the currency the federal horne loan bank board and the department of housing and urban development mary anne beeman served as research assistant and the manu

credit booms monetary integration and the new neoclassical synthesis abstract credit to the private sector has risen rapidly in many new central and eastern european eu member states nms in recent years the lending boom has recently been particularly strong in the segment of loans to households primarily mortgage based housing loans and in those countries that operate currency boards or other forms of hard pegs the main aim of this paper is to propose a conceptual framework to analyze the observed developments with a view to exploring some policy implications at a stage in which these countries are preparing for their prospective integration with the euro area to achieve this we first use a stylized new neoclassical synthesis nns framework which has recently been advanced by goodfriend goodfriend m 2002 monetary policy in the new neoclassical synthesis a primer federal reserve bank of richmond july and goodfriend and king goodfriend m king r 2001 the case for price stability nber working paper 8423 we then discuss the implications of the nns model for credit dynamics and ensuing monetary policy challenges specifically we emphasize consumption smoothing as an important channel of the observed credit expansion and we show how it is related to and how it affects the monetary policy making in ms in doing so we place our discussion in the context of the monetary integration process in general and the nominal convergence process in particular

house prices non fundamental components and interstate spillovers the australian experience abstract using australian capital city data from 1984q3 2008q2 this paper utilizes a dynamic present value model within a var framework to construct time series of house prices depicting what aggregate house prices should be given expectations of future real disposable income the fundamental price and continues by comparing capital city fundamental prices with actual prices the extent to which revealed capital city non fundamental components spillover from state to state as well as their long term impact is also investigated results provide evidence of periods of sustained deviations of house prices from values warranted by income for all state capitals with the greatest deviations arising in the nsw market and starting around 2000 in general nsw is relatively more susceptible to spillovers transmitted from other states while act and wa are most isolated from the rest of the country

historical roots for ecological economics biophysical versus allocative approaches abstract a number of economists today are aware that the results of their science are more or less at variance with concrete fact and are alive to the necessity of perfecting it they go wrong rather in their choice of means to that end they try obstinately to get from their science alone the materials they know are needed for a closer approximation to fact whereas they should resort to other sciences and go into them thoroughly not just incidentally for their bearing on the given economic problem until economic science is much farther advanced economic principles are less important to the economists than the reciprocal bearings of the results of economics and the results of the other social sciences many economists are paying no attention to such interrelations for mastery of them is a long and fatiguing task requiring an extensive knowledge of facts whereas anyone with a little imagination a pen and a few reams of paper can relieve himself of a chat on principles pareto 1935 para 2022

relative and absolute scarcity of nature assessing the roles of economics and ecology for biodiversity conservation abstract our aim in this essay is to identify and analyze some of the difficulties with interdisciplinary integration of economic and ecological contributions to the study of biodiversity loss we develop our analysis from a widely accepted definition of economics which is based on the concept of scarcity taking a closer look at this notion we find that economics actually limits itself to a very particular aspect of scarcity which we denote as relative scarcity we describe in what respect the economic approach towards biodiversity is based on this notion and also reflect on the specific understanding of the relation of humans and nature behind the economic approach we then turn to absolute scarcity as another notion of scarcity and show that this is not within the scope of economics but has been a theme of ecology and ecological economics we describe in which way ecological and ecological economic approaches towards biodiversity are based on the idea of absolute scarcity and also reflect on the specific understanding of the human nature relationship behind this notion of scarcity against this background we discuss the roles of economics and ecology for nature conservation we conclude that the interdisciplinary integration of ecology and economics requires a philosophical underpinning and suggest a framework for further research

an ecological economic approach to forest and biodiversity conservation the case of vanuatu abstract the paper presents an ecological economic approach to forest and biodiversity conservation constructivist philosophy of social science is critically reviewed and adopted as the methodological basis of the approach the paradigmatic basis of ecological economics is discussed and a model of human behavior suited to ecological economics is presented this model accounts for altruistic normative affective and irrational behavior as well as the role of institutions a discussion of participatory land use planning which also accounts for intergenerational equity issues completes the presentation of the ecological economic approach its application to the conservation of forests and biodiversity in vanuatu demonstrates the operational applicability of the proposed approach

the great recession us dynamics and spillovers to the world economy abstract this paper provides an empirical investigation of both the within us and international channels of transmission of macroeconomic and financial shocks by means of a 50 country macroeconometric model estimated over the 1980 2009 period including measures of excess liquidity and financial fragility specifically designed in order to evaluate the relevance of the boom bust credit cycle view put forward as an interpretation of the recent great recession episode we find that such a view is consistent with the empirical evidence moreover concerning the real effects of financial shocks within the us we detect stronger evidence of an asset prices channel rather than a liquidity channel concerning the spillovers to the world economy we find that while financial disturbances are transmitted to foreign countries through us house and stock price dynamics as well as excess liquidity creation the trade channel is the key trasmission mechanism of real shocks

non temporal components of residential real estate appreciation this paper separates the components of capital appreciation returns in an asset market into fixed and stochastic portions it proposes a control for the problem of fixed components in the capital appreciation return used in transactions based return estimates we find a consistent bias in the index resulting from repeat sales regressions which may be eliminated through simple methods the sign and magnitude of the bias as well as its systematic variation across property suggest that it is caused by incremental home improvements as well as by price risk we propose a maximum likelihood method for estimating the first and second moments of the fixed and temporal components of real estate returns that relies upon relatively small samples copyright 1995 by mit press

the composition of public expenditure and economic growth abstract noting that the literature has focused on the link between the level of public expenditure and growth we derive conditions under which a change in the composition of expenditure leads to a higher steady state growth rate of the economy the conditions depend not just on the physical productivity of the different components of public expenditure but also on the initial shares using data from 43 developing countries over 20 years we show that an increase in the share of current expenditure has positive and statistically significant growth effects by contrast the relationship between the capital component of public expenditure and per capita growth is negative thus seemingly productive expenditures when used in excess could become unproductive these results imply that developing country governments have been misallocating public expenditures in favor of capital expenditures at the expense of current expenditures

international house prices and macroeconomic fluctuations abstract the paper investigates linkages between general macroeconomic conditions and the housing market for the g 7 area among the key results of the paper we find that the us are an important source of global fluctuations not only for real activity nominal variables and stock prices but also for real housing prices secondly albeit distinct driving forces for real activity and financial factors can be pointed out sizeable global interactions are also evident in particular global supply side shocks are an important determinant of g 7 house prices fluctuations the linkage between real housing prices and macroeconomic developments is however bidirectional with investment showing in general a stronger reaction than consumption and output to housing price shocks implications for the real effects of the sub prime crisis are also explored

the effects of price risk on housing demand empirical evidence from u s markets this article examines how price risk affects housing demand it identifies two relevant channels a financial risk effect that reduces demand and a hedging effect that increases demand since current homes may hedge future housing costs the latter dominates when hedging incentives are strong namely when the likelihood of moving up the housing ladder is high and the tendency to move across markets is low for households with weak hedging incentives the article finds negative effects of price risk on the timing and size of home purchases but positive effects for households with strong hedging incentives

environmental economics and ecological economics where they can converge abstract environmental economics and ecological economics share the common objective of understanding the human economy environment interaction in order to redirect the economies towards sustainability in pursuing this objective these two perspectives utilise different types of analytical framework and are opposed to each other on many of the fundamental theoretical and methodological issues while the environmental economics has progressed within a narrowly but sharply focused neoclassical analytical approach the ecological economics has expanded by adopting a diversified approach which led to widen the gap between the two this article makes an attempt to highlight the divergence between these two perspectives on different issues and identifies certain research avenues that would potentially bring convergence between these two perspectives

cross country effects of regulatory capital arbitrage abstract one reason for the recent asset price bubbles in many developed countries could be regulatory capital arbitrage regulatory and legal changes can help traditional banks to move their assets off their balance sheets into the lightly regulated shadows and thus enable regulatory arbitrage through the securitized sector this paper adopts a global vector autoregression gvar methodology to assess the effects of regulatory capital arbitrage on equity prices house prices and economic activity across 11 oecd countries regions a counterfactual experiment disentangles the effects of regulatory arbitrage following a change in the net capital rule for investment banks in april 2004 and the adoption of the basel ii accord in june 2004 the results provide evidence for the existence of an international finance multiplier with about half of the countries overshooting u s impulse responses the counterfactual shows that regulatory arbitrage via the u s securitized sector may enhance the cross country reallocation of capital from housing markets towards equity markets

what is ecological economics ecological economics addresses the relationships between ecosystems and economic systems in the broadest sense these relationships are the locus of many of our most pressing current problems i e sustainability acid rain global warming species extinction wealth distribution but they are not well covered by any existing discipline environmental and resource economics as it is currently practiced covers only the application of neoclassical economics to environmental and resource problems ecology as it is cur rently practiced sometimes deals with human impacts on ecosystems but the more common tendency is to stick to natural systems ecological economics aims to extend these modest areas of overlap it will include neoclassical environmental economics and ecological impact studies as sub sets but will also encourage new ways of thinking about the linkages between ecological and economic systems we have chosen the name ecological economics for this area of study because it implies a broad ecological interdisciplinary and holistic view of the problem of studying and managing our world the earth from space cover of the journal reflects this global holistic perspective we did not intend to imply with the ordering of the two words in the title that the journal is mainly an economics journal it is intended to be a new approach to both ecology and economics that recognizes the need to make economics more cognizant of ecological impacts and dependencies the need to make ecology more sensitive to economic forces incentives and constraints and the need to treat integrated economic ecologic systems with a common but diverse set of conceptual and analytical tools there was much discussion of other possible names such as economic ecology or ecology and economics or some conjoining of the two words that to me end up being confusing tongue twisters like ecolnomics or econology but ecological economics seemed to get closest to the mean ing we desired while still being evocative to the uninitiated