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

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

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

tax management loss harvesting and hifo accounting virtually all companies and individuals are faced with the management of taxable assets to manage these assets efficiently investors need to be aware of the impact of taxes on investment returns in the study we report in this article we quantified the benefits of loss harvesting and highest in first out hifo accounting by using monte carlo simulations and investigated the robustness of these strategies in various markets and with various cash flows and tax rates we concluded that a market with high stock specific risk low average return and high dividend yield provides more opportunities to harvest losses in addition a steady stream of contributions refreshes a portfolio and allows the benefits of loss harvesting to remain strong over time conversely withdrawals reduce the advantages of realizing losses our findings show that no matter what market environment occurs in the future managing a portfolio in a tax efficient manner gives substantially better after tax performance than a simple i

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

coalition and party formation in a legislative voting game we examine a legislative voting game where decisions are being made over both ideological and distributive dimensions and legislators preferences are separable over the two dimensions in equilibrium legislators prefer to make proposals for the two dimensions together rather than offering sequential proposals on the two dimensions separately the equilibria exhibit interaction between the ideological and distributive dimensions and in any equilibrium there is a positive probability that a proposal is made and approved which excludes the median legislator as defined over the ideological dimension in contrast with a game where no distributive decision is being made moreover in any stationary equilibrium there is more than one ideological decision that has a positive probability of being proposed and approved we show that legislators can gain from forming political parties and consider examples where predictions can be made about the composition of parties we discuss the impact of political parties on the outcome

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

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

majority rules and incentives a club s majority rule defines the number of members that must approve a policy proposed to replace the status quo since the majority rule thus dictates the extent to which winners must compensate losers it also determines the incentives to invest in order to become a winner of anticipated projects if the required majority is large members invest too little because of a holdup problem if it is small members invest too much in order to become a member of the majority coalition to balance these opposing forces the majority rule should increase in the project s value and the club s enforcement capacity but decrease in the heterogeneity in preferences externalities can be internalized by adjusting the rule with heterogeneity in size or initial conditions votes should be appropriately weighted or double majorities required

optimal taxation and fiscal constitution abstract assuming a world with excessive taxes the focuses of this paper are political mechanisms that ensure efficiency enhancing restraints on taxes in particular it is shown that supermajority requirements to approve tax increases as currently used in some us states is the means of attaining this objective their relationship to another such mechanism prevalent in earlier centuries that of franchise restrictions is discussed

a carrot and stick approach to agenda setting this paper models a legislature in which the same agenda setter serves for two periods showing how he can exploit a legislature completely in the first period by promising future benefits to legislators who support him in equilibrium a large majority of legislators vote for the first period proposal because they thereby maintain the chance of belonging to the minimum winning coalition in the future legislators may therefore approve policies by large majorities or even unanimously that benefit few or even none of them the results are robust but institutional arrangements such as entitlements can reduce the agenda setter s power by reducing his discretion to reward and punish legislators and rules such as sequential voting can increase a legislator s ability to resist exploitation

reducing housing subsidy swedish housing policy in an international context swedish housing policy was dramatically changed during the 1990s a traditional formally tenure neutral and generous subsidy system has been replaced by much lower levels of assistance more direct

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

senate representation and coalition building in distributive politics p7 vhe senate s equal representation of states shapes coalition building in distributive politics the great variation in state population means that some states have far greater need for federal fttnds than others but all senators have equal voting weight as a result even though all senators votes are of equal value to the coalition builder they are not of equal prwice coalition builders can include benefits for small states at considerably less expense to program budgets than comparable benefits for more populous states building on formal models of coalition building two hypotheses are developed and tested first coalition builders will seek out less costly members to build supportive coalitions efficiently second the final outcomes of distributive policy will more closely reflect the preferences of small state senators than large state senators the hypotheses are tested by examining the 1991 and 1997 98 reauthorizations of federal surface transportation programs the findings support both hypotheses

a structural model of government formation in this paper we estimate a bargaining model of government formation in parliamentary democracies we use the estimated structural model to conduct constitutional experiments aimed at evaluating the impact of institutional features of the political environment on the duration of the government formation process the type of coalitions that form and their relative stability

government turnover in parliamentary democracies in this paper we consider a dynamic model of government formation and termination in parliamentary democracies that accounts for the following phenomena 1 cabinet terminations due to replacement or early election 2 cabinet reshuf es 3 minority and surplus governments 4 the relative instability of minority governments

voting blocs party discipline and party formation abstract i study the strategic incentives to coordinate votes in an assembly coalitions form voting blocs acting as single players and affecting the policy outcome in an assembly with two exogenous parties i show how the incentives to accept party discipline depend on the types of the agents the sizes of the parties and the rules the blocs use to aggregate preferences in a game of fully endogenous party formation i find sufficient conditions for the existence of equilibria with one bloc two blocs and multiple blocs

a nonlinear principal component analysis of the relationship between budget rules and fiscal performance in the european union tests of the relationship between budget rules and fiscal performance are metric sensitive and arbitrary in the evaluation of the stringency of the rules in the aggregation of these evaluations in an index and in the imposition of a linearly specified model we propose a nonlinear principal component analysis to solve these problems and evaluate the relative disciplinary power of each rule a battery of panel regressions on 1980 2003 optimally transformed data relative to 12 eu countries confirms that upon controlling for standard economic political and institutional variables more stringent rules reduce fiscal imbalances and budget size

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

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

uniqueness of stationary equilibrium payoffs in coalitional bargaining we study a model of sequential bargaining in which in each period before an agreement is reached the proposer s identity is randomly determined the proposer suggests a division of a pie of size one each other agent either approves or rejects the proposal and the proposal is implemented if the set of approving agents is a winning coalition for the proposer the theory of the fixed point index is used to show that stationary equilibrium expected payoffs of this coalitional bargaining game are unique this generalizes eraslan 34 insofar as a there are no restrictions on the structure of sets of winning coalitions b different proposers may have different sets of winning coalitions c there may be a positive probability that no proposer is selected

finance capital actor network theory and the struggle over calculative agencies in the business property markets of mexico city metropolitan region david l and halbert l finance capital actor network theory and the struggle over calculative agencies in the business property markets of mexico city metropolitan region regional studies the selective spatialities of business property in the mexico city metropolitan region are explained with reference to actor network theory building on a conception of markets as the outcomes of the confrontation between different calculative agencies the paper discusses how investment managers have to negotiate the integration of new buildings and spaces into their portfolios alongside pre existing actor networks whose power and autonomy differ across the metropolitan area in a fragmented city region the longstanding urban coalition in the central part of the area may lock out the business property development market to finance capital while some peripheral areas may be more opened up

territorial competition and property market process an exploratory analysis this paper argues that the emerging research on territorial competition should be supplemented by an explicit consideration of the role of real property and property market process in shaping urb

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

tax managed factor strategies we examine the tax efficiency of an indexing strategy and six factor tilts between june 1995 and march 2018 average value added by tax management exceeded 1 50 per year at a 10 year horizon for

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

the president and the distribution of federal spending scholarship on distributive politics focuses almost exclusively on the internal operations of congress paying particular attention to committees and majority parties this article highlights the president who has extensive opportunities both ex ante and ex post to influence the distribution of federal outlays we analyze two databases that track the geographic spending of nearly every domestic program over a 24 year period the largest and most comprehensive panels of federal spending patterns ever assembled using district and county fixed effects estimation strategies we find no evidence of committee influence and mixed evidence that majority party members receive larger shares of federal outlays we find that districts and counties receive systematically more federal outlays when legislators in the president s party represent them

voting and vetoing the consequences of veto power in committees is analyzed using the appro ach of noncooperative bargaining theory it is first shown that in equilibrium nonveto players do not share in the benefits gained by the decision making of the committee that is in every equilibrium outcome of the bargaining game nonveto players earn zero some measures for reducing the excessive power of veto members in committees are analyzed specifically i study the effects of imposing a deadline on negotiations and of expanding the committee by increasing the number of nonveto players quantitative results are given for the case of the un security council

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

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

what would yale do if it were taxable corrected january 2016 the distinctive financial goals and constraints of ultra high net worth individuals together with their aggregate growth in assets have led to the emergence of new institutional investing which includes the best practices from institutional investors but also incorporates the critical element of tax management the authors design new institutional asset allocations that incorporate traditional investment metrics in a tax aware setting specifically they show how risk and after tax returns need to be combined from inception when seeking an optimal after tax asset allocation diversification is especially important for taxable investors because low asset class correlations can facilitate the inclusion of attractive but tax inefficient asset classes in a tax aware allocation

undermining the financial basis of regions the spatial structure and implications of the uk pension fund system martin r and minns r 1995 undermining the financial basis of regions the spatial structure and implications of the uk pension fund system reg studies 29 125 144 regional growth theory and regional policy traditionally focus on the process of industrial development relatively little is known about the flows of money and financial capital that shape that development this paper examines the spatial organization and implications of the uk pension fund system one of the principal circuits of financial capital in the national economy it is shown how the great bulk of pension fund contributions that originate right across the various regions of the uk are channelled into and controlled by financial institutions in the south east of the country moreover those funds are then invested primarily back into companies and organizations located or headquartered in the south east this spatially centralized system pursues liquidity rather than productive investment and little of the money trickles down to

institutional investment in rental housing in australia a policy framework and two models housing affordability among low to moderate income private tenants has been declining over the past 10 years in australia this trend has intensified in spite of almost a decade of strong economic growth and low inflation in the australian economy an important factor here has been the continuing decline in the stock of rental housing at the low rent end of the market especially in the large cities like sydney and melbourne this in turn has been associated with the peculiar pattern of private investment in australian housing markets large professional and institutional investors have avoided the private rental sector leaving a myriad of small individual investor landlords as primary suppliers government housing taxation and other policies have reinforced this pattern of development this paper provides a conceptual framework for analysing these outcomes and develops an approach that identifies the key elements of public policy necessary to reduce barriers to widespread investment in the provision

extension of the portfolio allocation model to surplus majority governments a fuzzy approach scholars have long studied the conditions under which the cabinet making process will result in minority surplus majority or minimum winning governing coalitions in parliamentary systems since riker a good number of these attempts have been based on rational choice assumptions among formal approaches in this vein laver and shepsle s making and breaking governments cabinets and legislatures in parliamentary governments 1996 portfolio allocation model argues that parties centrally located in policy space have a greater potential for being part of any governing coalition and that parties located at the issue by issue median have a high likelihood of forming a minority government however the model predicts that surplus majority coalitions will only form when the number of salient policy dimensions in the political system is greater than two we incorporate fuzzy set theory in the portfolio allocation model permitting us to model ambiguity in parties policy preferences the reformulated model accounts for the formation of surplus majority coalitions in two dimensional policy space we illustrate the model s conclusions with a case study of the 1996 surplus majority coalition in the lithuanian seimas

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

seventy five years of investing for future generations university endowments invest for future generations so their strategy should reflect their long horizon we researched whether they really do behave like long term investors we examined the behav

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

fiscal discipline and the budget process the critical economic policy issue for many oecd countries developing countries and transition economies currently is fiscal consolidation and the maintenance of long run fiscal balance two related components underlie this general goal first several countries face the issue of deficit reduction particularly those countries with high debt gdp ratios second it is becoming increasingly apparent that major reforms of the welfare system and specifically of social security systems are critical ingredients of a long lasting fiscal consolidation see alesina and perotti 1995a in the case of monetary policy a constructive discussion has generated a widespread consensus about the benefits of different monetary institutions relatively few economists dispute the benefits of a certain amount of central bank independence even though different commentators and policymakers may disagree on the optimal degree of independence also a contracting approach has highlighted the benefit of inflation targeting and of certain institutional relationships contracts between the executive and the central bank a similar theoretical and empirical discussion on the role of budget procedures and budget institutions is just beginning in this paper we ask the following two questions i do budget procedures matter for the determination of the budget balance and its composition ii are there certain institutional reforms that one should feel comfortable in recommending based on the relatively scarce empirical evidence available we tentatively answer yes to the first question budget procedures matter on the second question we suggest that the two critical areas of reform are first more transparency second a strengthening of the roles of the executive branch vis a vis the legislature and of the treasury minister vis a vis the rest of the executive branch in order to achieve a centralized and top bottom approach to the budget process

the secondary circuit of capital reconsidered globalization and the u s real estate sector1 the author examines the u s real estate sector to show how the state shapes global real estate flows and networks of activity through the creation and control of liquid resources the analysis focuses on the role of state laws and regulations in the expansion of the mortgage backed securities markets and the development of real estate investment trusts reits these institutional developments represent a series of ad hoc state efforts to delocalize residential and commercial property and embed real estate financing within global capital markets rather than viewing globalization as weakening the state the author argues that the u s state s capacity to influence the degree and development of liquidity is a powerful mechanism of globalization

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

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

strategic delegation and voting rules abstract the selection of political representatives depends on the political system principals such as voters or districts may benefit by strategically electing representatives different from themselves while a status quo biased delegate may be a better negotiator an enthusiastic representative has a better chance of being included in the majority coalition a larger majority requirement leads to conservative delegation and hence a status quo bias a poor minority protection does the opposite through strategic delegation the political system also determines whether centralization or decentralization is beneficial

a noncooperative theory of legislative coalitions this noncooperative theory is based on a model that incorporates an institutional structure that reflects the sequential process of agenda formation and voting in a legislature that has the task of allocating particularistic benefits among legislative districts the theory is intended to identify the incentives for the formation of proposal coordinating coalitions as a function of characteristics of the political system and the rules that govern agenda formation coalition proposals allocate all the benefits to their districts and whenever the coalition has discipline or controls the chair it will be of minimal winning size when proposals are governed by a closed rule when coalition discipline is absent and the chair is neutral the coalition will be comprised of approximately 70 of the legislature a legislative rule that allows amendments may result in larger coalitions coalition composition is also considered

two key concepts for wealth management and beyond corrected march 2012 asset allocation is profoundly influenced by at least two underappreciated concepts first tax deferred accounts for example 401 k s are like partnerships in which the investor owns 1 tn of the partnership principal and the government owns the remainder where tn is the marginal tax rate when the funds are withdrawn second the government shares in both the return and the risk of assets held in taxable accounts the authors discuss these concepts implications for wealth management

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

amend the old or address the new broad based legislation when proposing policies is costly if each legislator wishes to encourage other legislators to address new problems in future periods then a subgame perfect nash equilibrium can exist with the following properties 1 no legislator finds it worthwhile to make a narrow proposal that appeals to a minimum majority 2 instead legislators propose policies that appeal to all members not for fear of retaliation but rather to encourage other members to work on new problems in succeeding periods 3 in succeeding periods no legislator amends the existing broad policy we find an equilibrium with these properties in finite as well as infinite period games

seniority in legislatures we construct a stochastic game model of a legislature with an endogenously determined seniority system we model the behavior of the legislators as well as their constituents in an infinitely repeated divide the dollar game each legislative session must make a decision on redistributional issues modeled as a divide the dollar game however each session begins with a vote in which the legislators decide by majority rule whether or not to impose on themselves a seniority system legislative decisions on the redistributional issues are made by the baron ferejohn rule an agenda setter is selected by a random recognition rule which in our model is a function of the seniority system selected the agenda setter makes a proposal on redistributional issues and the legislature then votes whether to accept or reject the agenda setters proposal if the legislature rejects the proposal another agenda setter is randomly selected and the process is repeated if the legislature accepts the proposal the legislative session ends and the voters in each legislative district vote whether to retain their legislator or throw it out of office the voters verdict determines the seniority structure of the next period legislature we find a stationary equilibrium to the game having the property that the legislature imposes on itself a non trivial seniority system and that legislators are always reelected