median voters or budget maximizers evidence from school expenditure referenda some readers may have found these results of greater interest were we able to confirm the directional hypotheses of the certainty setter model in addition to finding that spending is related to the reversion the much weaker prediction of the uncertainty model yet the failure of the certainty when base elections were optional their infrequent occurrence might be expected under either a median voter or a setter model for those districts that did hold base elections the observations appear consistent with a setter model but are either inexplicable by or inconsistent with a median voter model finally both a the relationship between the number of budget elections and the presence of base elections and b the outcome of mandatory base elections in 1978 provide a set of observations that are challenging to either model a similar challenge was posed by our investigation of budget elections when we called attention to the inadequacy of static full information models rather than resolving the question of the simple setter model against the simple median voter model our results indicate that both may be inappropriate and that endeavors dealing with complexities omitted here are warranted

the resilience of employment in wales through recession and into recovery sensier m and artis m the resilience of employment in wales through recession and into recovery regional studies the dimensions of resilience of the welsh employment cycle are assessed the welsh economy has undergone reorientation and renewal since the deep crisis of the 1980s and it was more resistant than the uk for the 1990s crisis and has recovered its pre recession peak for the most recent crisis to visualize the regional spread of the most recent recession in wales turning points in unitary authority unemployment claims are dated and a series of maps show when welsh authorities entered recession it is found that the housing sector and manufacturing survey data are the best predictors of the welsh employment cycle

impact of deposit rate ceiling changes on bank stock returns this paper reexamines the impact of four major changes in deposit rate ceilings that occurred during the 1970 80 decade on bank systematic and unsystematic risk the reexamination clarifies why it is dangerous to conduct event studies naively stephen m goldfeld and richard e quandt s switching regressions method is proposed as a procedure that forces the researcher to take a more disciplined approach to determining event dates contrary to previous studies switch dates identified by goldfeld and quandt s switching regressions method cannot be associated with ceiling change announcements because of other information flows so that inferences cannot be drawn about the specific effects of the regulatory adjustments copyright 1989 by ohio state university press

user cost changes unemployment and home ownership evidence from spain this paper develops a macroeconomic model that permits analysis of the relationship between unemployment and home ownership rates using aggregate data at the provincial level within spain besides other influential variables such as the changes of the relative user costs of owning and renting or household life cycle attributes the model constructed permits the authors to question the evidence of oswald nickell and layard and partially of green and hendershott that home ownership leads to higher unemployment the results point out that taking into account the simultaneity determination issue and reducing the omitted variable bias a higher unemployment discourages home ownership

hedging and coordinated risk management evidence from thrift conversions we provide an explanation for hedging as a means of allocating rather than reducing risk we argue that when increases in total risk are costly firms optimally allocate risk by reducing increasing exposure to risks that provide zero positive economic rents our evidence shows that mutual thrifts that convert to stock institutions increase total risk following conversion consistent with their increased abilities and incentives for risk taking they achieve this increase by hedging interest rate risk and increasing credit risk we provide some evidence that risk management activities are related to growth capacity and management compensation structure attained at conversion

further implications of the reversion level in agenda setter models abstract the reversion level affects price and income elasticities of demand when expenditure levels are chosen by agenda setters this paper develops this relationship and shows how agenda setter produced elasticities differ from median voter elasticities

property taxation and the economy after the barker review this paper analyses the roles of property and land values in the uk economy and considers property tax reform with the objectives of improving macro economic stability resource allocation economic inequality and the environment with uk house prices at all time peaks relative to incomes concerns about affordability and the distributional consequences have increased the barker review for the uk treasury of new housing supply reported in 2004 and recommended extensive reforms of the land use planning system as well as various other reforms including new development taxes this paper argues that these taxes are unwise compared to the property tax reforms proposed here

private demands for public capital evidence from school bond referenda abstract this paper develops a framework for estimating demand for school infrastructure investment that is financed through local bond referenda our framework takes explicit account of the irregular and discrete nature of local capital investment and the objective functions of local school boards our empirical model consists of a three equation system composed of a proposed spending equation a vote equation and a selection equation estimated income and price elasticities of demand for school infrastructure are similar to those found in studies of current school spending we also find that school boards act like risk averse budget maximizing agenda setters

reconciling the wage curve and the phillips curve the wage curve is the negative relationship that links wage levels to the unemployment rate it fits accurately with modern non competitive labour market models but goes against a phillips curve modelling because the latter ties wage growth to the unemployment rate in this article we present a comprehensive review of these non competitive models highlighting recent contributions that try to eliminate the possible gap that exists between the concepts of the wage curve on the one hand and the phillips curve on the other copyright blackwell publishers ltd 2005

booms and busts in the uk housing market the often volatile behaviour of uk house prices between 1957 and 1994 is analysed in an annual econometric model theory suggests that financial liberalisation of mortgage markets in the 1980s should have led to notable shifts in house price behaviour the evidence supports the predictions of theory suggesting shifts took place in wealth effects as in the consumption function and that real interest rates and income expectations became more important the presence of transactions costs suggests important nonlinearities in house price dynamics the paper also contains an explicit econometric treatment of expectations demography supply spillovers from the rented sector and of composition biases in the official house price index

the power of the last word in legislative policy making we examine legislative policy making in institutions with two empirically relevant features agenda setting occurs in real time and the default policy evolves we demonstrate that these institutions select condorcet winners when they exist provided a sufficient number of individuals have opportunities to make proposals in policy spaces with either pork barrel or pure redistributional politics where a condorcet winner does not exist the last proposer is effectively a dictator or near dictator under relatively weak conditions

size and performance of banking firms testing the predictions of theory abstract in recent years two important literatures on the theory of banking firms have developed one examines the economic functions of banks in environments in which agents are asymmetrically informed another considers the incentive effects moral hazard resulting from deposit insurance both theories make predictions about the relation between banking firm size and performance an empirical analysis of large bank holding companies investigates measures of market valuation and risk of failure limited support is provided for either set of theoretical predictions

circumventing formal structure through commitment presidential influence and agenda control although the formal institutional structure that defines the temporal order of play in a policy game between the congress and president ought to provide congress with agenda power the president is traditionally treated as the dominant player in this relationship we show that if the president can make clear cut commitments presidential commitment can counter the dominance hierarchy and the complexion of equilibrium outcomes thus the details of political interactions in particular the possibilities for commitment may be as important as the formal specification of institutional structure

an introduction to the wage curve en conomists and policymakers are interested in understanding the forces that determine the level of unemployment and the level of wages this paper describes an empirical discovery made with the help of international microeconometric evidence covering more than a dozen nations about a link between these two variables the connection can be portrayed on a graph with the level of unemployment on the horizontal axis and the level of wages on the vertical axis then the wage curve as shown in figure 1 is a downwardsloping locus this relationship tells us that holding others things constant if a region has a rise in unemployment in a particular year those who live there will have a fall in their wages in that year what does this curve mean how in a field where fully controlled experiments are almost impossible could there be any convincing scientific basis for this wage curve what is the relationship between the wage curve and a phillips curve other than that the curve of figure 1 looks like a phillips curve with the vertical axis mislabeled how does the wage curve fit into existing economic knowledge and is the empirical finding consistent with competitive theory this paper sketches answers to these kinds of questions the discussion draws on our book the wage curve blanchflower and oswald 1994 where the points raised here are investigated more fully it also rests upon work done by other economists whose work is listed in the paper and the bibliography

comparing the new earnings survey nes and the labour force survey lfs an analysis of the differences between the data sets and their implications for the pattern of geographical pay in the uk ma a roberts e elliott r f bell d and scott a 2006 comparing the new earnings survey nes and the labour force survey lfs an analysis of the differences between the data sets and their implications for the pattern of geographical pay in the uk regional studies 40 645 665 the labour force survey lfs and the new earnings survey nes are the most widely used data sets for analysing pay in britain the paper details the key differences between the two and assesses the impact of their use for studying geographical wage differences the pattern observed is sensitive to the differences in data sets to differences in the sample populations the questions asked about pay and working hours and how hourly pay is measured recommendations are made on which data set should be used for what purposes as well as comments on the expected improvements that will result from the introduction of the annual survey of hours and earnings ashe ma a roberts e elliott r f bell d et scott a 2006

a constitution for solving asymmetric externality games externalities such as pollution represent an important class of social problems that can be resolved by political institutions this work investigated two key questions raised by these situations what is the effect of using a given political institution such as simple majority rule to resolve externalities more important are there constitutionally prescribed institutions that will generate appropriate outcomes we developed a model in which citizens benefit asymmetrically from producing an externality any one citizen s production however imposes an equal cost on all citizens in this technology a pollution charge chosen by majority rule generally leads to suboptimal outcomes we show that an alternative institution is optimal a citizen whom we call the setter volunteers to select the charge if his choice is approved unanimously the charge is enacted otherwise everyone produces the constitutional mechanism is such that the correct setter is induced to volunteer the resulting allocation maximizes net social benefits as a result of the uniform and linear nature of the externality cost this optimal allocation is obtained without making strong assumptions about the information held by citizens specifically attaining the optimal allocation is not dependent on citizens knowing the production benefits or actions of others

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

evidence of bank market discipline in subordinated debenture yields 1983 1991 we examine debenture yields over the period 1983 1991 to evaluate the market s sensitivity to bank specific risks and conclude that investors have rationally reflected changes in the government s policy toward absorbing private losses in the event of a bank failure although this evidence does not establish that market discipline can effectively control banking firms it soundly rejects the hypothesis that investors cannot rationally differentiate among the risks undertaken by the major u s banking firms an increasingly important issue in the regulation of financial institutions concerns the extent to which market investors can will recognize and control the risks of banking firms although the banking act of 1933 replaced some private risk bearing with federal deposit insurance legislators were reluctant to displace market discipline very extensively flood 1992 by the early 1980s however u s regulators had come to protect virtually all bank liability holders from credit losses most visibly at large banks which were deemed too big to fail sprague 1986 o hara and shaw 1990 this extension of the government safety net largely reflects a skepticism on the part of regulators that normal market forces could adequately identify and control bank risks while u s regulators have recently shown an increased willingness to let some bank investors bear default losses an official suspicion of the efficacy of market discipline remains widespread by contrast some prominent academic economists argue that market investors in bank debentures could provide timely and effective control over banking firms risk exposures and that the social cost of supervising banks would be lower if regulators ceded greater

bureaucrats voters and public investment abstract this paper explores the provision of a durable public good in romer and rosenthal s agenda setter model it identifies a type of equilibrium called a romer rosenthal equilibrium in which in every period the bureaucrat proposes the maximum level of public investment the voter will support the paper establishes that such an equilibrium exists for a variety of public good benefit functions equilibrium public good levels converge or almost converge to a steady state these steady states can involve a unique public good level being provided each period or may exhibit a two period cycle steady state public good levels exceed the voter s optimal level more surprisingly steady state equilibrium reversion levels can exceed the voter s optimal steady state level meaning that reversion levels cannot be used to bound the optimal level reflecting the inability of the agents to commit to their future proposing and voting behavior equilibrium paths are pareto inefficient

majority rule and election models abstract this paper surveys the theoretical work that has been done on majority rule and economic models of elections section i provides an overview of the topic section 2 reviews the most important results that have been obtained about majority rule as an abstract collective choice rule section 3 identifies some alternative inferences that can be made from those results section 4 covers some models that include additional features that are present in political institutions where majority rule is used section 5 concentrates on some alternative election models and equilibrium concepts section 6 focuses on election models with abstentions and or candidate uncertainty about voter behaviour section 7 compares and contrasts models where candidates are certain about what the voters choices will be contingent upon about the choices made by the candidates and models where they are uncertain about those choices section 8 closes the survey by identifying some emerging areas of research

running against the status quo institutions for direct democracy referenda and allocations over time stylized institutions for direct democracy referenda are examined in a dynamic full information environment with myopic voters competitive agenda median voter processes are contrasted with monopolistic controlled agenda processes by extending existing static analyses to a class of dynamic institutions not previously characterized the status quo reversion rule this highlights the dependence of the progression of real equilibrium allocations over time on institutional structure by delineating the restrictions implied by each institutional form the model explains some persistent empirical regularities in particular a strict ceteris paribus ordering of the magnitudes of budgets by institutional form is derived for a wide portion of the parameter space

is infrastructure capital productive a dynamic heterogeneous approach this paper offers an empirical evaluation of the output contribution of infrastructure drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960 2000 and using a panel time series approach the paper estimates a long run aggregate production function relating gdp to human capital physical capital and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport power and telecommunications tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector which is taken to represent the long run production function estimation of its parameters is performed using the pooled mean group estimator which allows for unrestricted short run parameter heterogeneity across countries while imposing the testable restriction of long run parameter homogeneity the long run elasticity of output with respect to the synthetic infrastructure index ranges between 0 07 and 0 10 the estimates are highly significant both statistically and economically and robust to alternative dynamic specifications and infrastructure measures there is little evidence of long run parameter heterogeneity across countries whether heterogeneity is unconditional or conditional on their level of development population size or infrastructure endowments

bureaucrats legislators and the size of government some recent theories have blamed the growth of government on budget maximizing bureaucrats who are assumedly capable of imposing their most preferred budget output combination on legislatures subject to cost and demand constraints however theoretical examination of the range of bargaining outcomes that might occur between bureau and legislature shows that budget maximizing behavior does not necessarily lead to super optimal levels of production nor do the suggested reforms of competition and privatization necessarily improve the situation in this bargaining model the central determinants of governmental growth are not budget maximizing bureaucrats but the legislature s decisions regarding mode of oversight and form of internal organization

the econometrics of macroeconomic forecasting when an econometric model coincides with the mechanism generating the data in an unchanging world the theory of economic forecasting is reasonably well developed however less is known about forecasting when model and mechanism differ in a non stationary and changing world the paper addresses the basic concepts the invariance of forecast accuracy measures to isomorphic model representations the roles of causal information parsimony and collinearity a reformulated taxonomy of forecast errors differencing and intercept corrections to robustify forecasts against biases due to shifts in deterministic factors the removal of structural breaks by co breaking and forecasting using leading indicators

the wage curve a review in the wage qurve david g blancflower and andrew j oswald argue that there is a fundamental negative relation between wages and the unemployment rate in a worker s local labor market blancflower and oswald use large scale micro data sets to estimate this relation for the united states britain and 10 other countries i review their empirical methods and findings and provide some further evidence on the nature of the wage curve relationship in the united states i conclude that there is a strong statistical correlation between rates of pay and local unemployment although the interpretation of this correlation remains unresolved this abstract was borrowed from another version of this item

federal deposit insurance regulatory policy and optimal bank capital this paper seeks to explain the combination of explicit and implicit pricing for deposit insurance employed by the fdic essentially the fdic sells two products insurance and regulation to span the product space it must and does set two prices we argue that the need to establish regulatory disincentives to bank risk taking is the heart of the controversy over the adequacy of bank capital and that the ability to close risky banks before exhausting their charter value i e the value of their right to continue in business stands at the center of these disincentives and in front of the fdic s insurance reserves just as a book shouldn t be judged by its cover a government agency shouldn t be judged by the words behind its initials with the fdic federal deposit insurance corporation the agency s name describes only part of its formal operations the fdic is quasi governmental has a regional structure and sells deposit insurance however the initials fail to convey the fdic s critical place in the governmental regulatory structure as the sole federal overseer of the approximately 8900 state chartered commercial banks that have chosen not to belong the federal reserve system reflecting the federal reserve s membership problem the number of these banks is growing year by year besides selling deposit insurance at bargain explicit rates the fdic performs four regulatory functions 1 entry regulation it passes on new banks applications for deposit insurance and on branch and merger proposals as well thereby protecting the value of existing bank charters 2 examination two thirds of fdic employees are concerned with inspecting bank records and supervising managerial activity 3 regulation of deposit rates and conditions for withdrawal by tradition fdic policies on these matters conform entirely with regulations applicable to federal reserve member banks and 4 disposition of failed banks when an insured bank fails the fdic usually chooses not to liquidate it 2

an analysis of the impact of deposit rate ceilings on the market values of thrift institutions this paper examines the impact of changes in deposit interest rate regulations on the common stock values of savings and loan institutions the analysis indicates that stockholder owned savings and loans s l s have experienced statistically significant declines in equity market values at the announcement of the removal of ceilings on certain consumer small saver certificate accounts and the introduction of short term variable rate money market certificates we find the evidence to be consistent with the hypothesis that s l s have earned economic rents from restrictions on interest rates paid to small saver accounts and that relaxation of interest rate ceilings has reduced these rents a central issue in the economics of regulation is whether regulators behave in a way that primarily benefits the economic agents whose actions they are supposed to regulate the proposition that regulation is demanded and acquired by the regulated and that regulations are designed and administered primarily for their benefit was originally put forth by stigler 19 and has come to be known as the capture theory of regulation an alternative view is that regulators adopt policies which serve some other perhaps public or possibly the regulators own interest and that administration of these policies does not benefit the regulated entities this paper examines the regulation of savings and loan associations deposit interest rates and reports evidence pertaining to the impact of the administration of regulation regulation of interest rates paid to depositors in federally insured savings and loan associations began in 1966 since that time several changes in the maximum allowed interest rates deposit rate ceilings have been made these changes present an opportunity to observe the impact of one form of regulatory action on savings and loan institutions deposit rate regulation has been the subject of extensive previous research the empirical investigations have focused primarily on two issues 1 the allocational efficiency and wealth redistribution effects of rate ceilings and 2 the impact of deposit rate ceilings on the flow of funds into the residential

implicit bank debt guarantees costs benefits and risks the expectation by market participants that public authorities might bailout the creditors of banks that are considered too important for financial system stability or another reason to be allowed to fail is commonly referred to as an implicit guarantee public authorities do not have any explicit commitment to intervene they may even honestly state that they not want to do so ex ante but may feel compelled to do so ex post a declared policy aim is to limit the value of implicit guarantees by making banks stronger more easily resolvable in case of distress as well as by imposing extra charges that rise as banks become more systemically important as part of the latter approach globally systemically important banks are identified and subjected to more costly and intrusive regulation there is little evidence that specific approach has been successful so far there is some evidence that the introduction of new resolution frameworks has been helpful while the use of newly available resolution tools and the involvement of bank creditors in the burden sharing associated with bank failure resolution has significantly reduced the value of implicit bank debt guarantees where it occurred in that sense actions speak louder than words

empirical research on accounting choice abstract we review research from the 1990s that examines the determinants and consequences of accounting choice structuring our analysis around the three types of market imperfections that influence managers choices agency costs information asymmetries and externalities affecting non contracting parties we conclude that research in the 1990s made limited progress in expanding our understanding of accounting choice because of limitations in research design and a focus on replication rather than extension of current knowledge we discuss opportunities for future research recommending the exploration of the economic implications of accounting choice by addressing the three different reasons why accounting matters

a study in structural change relative earnings in wales since the 1970s the welsh economy has undergone rapid structural change in recent years this paper uses data from the new earnings survey to examine how earnings in wales changed relative to those of great britain between 1975 and 1994 there are five main findings first earnings of workers in wales have declined relative to those in great britain second the shift away from full time men has been an important factor in the fall in average relative earnings third the decline in the relative earnings of full time men is mostly explained by falling relative earnings in construction distribution and transport as well as the failure of workers in banking and financial services in wales to keep up with their counterparts in great britain fourth the shift in full time employment to health education and other services has tended to support relative earnings fifth the decline in full time men s earnings relative to great britain seems to have been caused by long run factors that are unlikely to naturally reverse the

cooperation and punishment under repeated majority voting in light of the extensive theoretical evidence suggesting absence of equilibrium in voting models tullock 1981 asks why so much stability our results suggest the following answer political agents engaged in long term relationships can sustain highly stable allocations if there are strongly held norms for punishment of defectors 1

earnings unemployment and the regional employment structure in britain blackaby d h and manning d n 1990 earnings unemployment and the regional employment structure in britain reg studies 24 529 535 this paper investigates the effect of regional unemployment on regional earnings in britain data are obtained from the new earnings survey reports from 1970 to 1986 and the influence of the regional industrial and occupational structure is taken into account in general the results support the hypothesis that increases in regional unemployment relative to the national average are associated with decreases in regional earnings below that expected blackaby d h et manning d n 1990 revenus chomage et distribution regionale de l emploi en grande bretagne reg studies 24 529 535 cet article examine l effet du chomage regional sur les revenus en grande bretagne les donnees proviennent des rapports disponibles sur la periode de 1970 a 1986 concernant les revenus new earnings survey en outre on met en consideration l influence des structures industrialo regi

efficiency and bargaining power in the interbank loan market using detailed transactions level data on interbank loans we examine the efficiency of an overnight interbank lending market and the bargaining power of its participants our analysis relies on the equilibrium concept of the core which imposes a set of no arbitrage conditions on trades in the market for canada s large value transfer system we show that although the market is fairly efficient systemic inefficiency persists throughout our sample the level of inefficiency matches distinct phases of both the bank of canada s operations as well as phases of the 2007 8 financial crisis we find that bargaining power tilted sharply toward borrowers as the financial crisis progressed and surprisingly toward riskier borrowers

learning the preferences of governments and voters from proposed spending and aggregated votes abstract remarkably little is known about how to analyze the proposals and voting results from spending referenda when the votes are aggregated by jurisdiction and the proposals are different across jurisdictions this paper presents a framework in which we can derive the voting equation comparative statics and links between reduced form and structural parameters that are implied by different models of the proposal maker it is then possible to use interjurisdictional proposal and voting information to test hypotheses about the proposal maker and the voters our empirical work finds support for a modified budget maximization model over simpler maximization models and various non maximization models

data feature earnings biases in the united kingdom regional accounts some economic policy and research implications between the late 1970s and late 1980s the uk regional accounts data suggest a much smaller rise in the south east earnings premium and consequently a much smaller increase in the regional dispersion of earnings than do the other sources of data we discuss several possible explanations for this discrepancy and conclude it was probably due to problems at the inland revenue in allocating tax records across the regions the historical unreliability of the regional accounts has implications for economic research on regional consumption and convergence and may have caused the poorest regions to miss out on eu structural funds this paper argues that united kingdom regional accounts data on income from employment and hence personal income and gross domestic product per head for the last 20 years give a misleading picture of the development of regional differentials these data are published in economic trends and regional trends and are widely used they have informed public debates about such topics as scottish and welsh devolution they are an important input for policy towards the english regions and for wales scotland and northern ireland and are used to define the income criteria by which a

does the debt market assess large banks risk time series evidence from money center cds abstract uninsured bank liabilities should offer a promised yield that compensates depositors for their expected default losses however the conjectural guarantees available to large u s banking firms makes it questionable whether large depositors should or do feel themselves exposed to credit risk prior papers have evaluated the determinants of bank risk premia using cross sectional data with relatively inconclusive results this paper investigates the same issue in a methodologically independent fashion using time series data on specific banks daily offering rates during the period may 1982 through july 1988 we find that cd rates paid by large money center banks include significant default risk premia

an empirical analysis of the economic implications of fair value accounting for investment securities abstract this paper analyzes security returns of bank holding companies and insurance companies during periods surrounding the adoption of sfas 115 we find bank share prices were negatively affected by the examined events but find little share price reaction for insurance companies our evidence suggests banks were adversely affected by the standard because of problems with the standard s market value accounting approach cross sectional analysis of event period returns shows that banks that more frequently traded their investments with longer maturing investments and that are more fully hedged against interest rate changes were the most negatively impacted by the standard

compensation of regional unemployment in housing markets why are regional unemployment differentials in europe so persistent if as the wage curve literature demonstrates there is no compensation in labour markets we hypothesize that workers in high unemployment regions are compensated in housing markets modelling regional unemployment differentials as a consequence of centralized wage bargaining we show that clearing of land markets may undo the incentive for workers to migrate to low unemployment regions in general equilibrium the compensating differentials hypothesis is tested on city level data for several countries controlling for variation in income and amenities housing is found to be about 3 percent less expensive on average in cities where unemployment is 10 percent up an analysis of housing demand survey data which takes account of housing heterogeneity yields a similar negative relationship the magnitude of the income effect generated by this compensating differential is consistent with a 0 10 wage curve elasticity these findings weaken the case for regional support programs

earnings unemployment and housing in britain this paper models regional earnings and unemployment in the ten regions of great britain between 1972 and 1995 paying particular attention to their interaction and to the important influence of the housing market in contrast to blanchard and katz 1992 1997 for the united states we find less persistence in british regional earnings differentials but greater persistence in regional unemployment rates we find no evidence of a negative effect of the overall unemployment rate on the earnings of men in non manual or women in full time employment however for manual men we find a significant elasticity of around 0 07 comparable with blanchflower and oswald 1994 copyright 2001 john wiley sons ltd

spatial housing economics a survey this introduction to the virtual special issue surveys the development of spatial housing economics from its roots in neoclassical theory through more recent developments in social interactions modelling and touching on the role of institutions path dependence and economic history the survey also points to some of the more promising future directions for the subject that are beginning to appear in the literature the survey covers elements of hedonic models spatial econometrics neighbourhood models housing market areas housing supply models of segregation migration housing tenure subnational house price modelling including the so called ripple effect and agent based models possible future directions are set in the context of a selection of recent papers that have appeared in urban studies nevertheless there are still important gaps in the literature that merit further attention arising at least partly from emerging policy problems these include more research on housing and biodiversity

an analysis of intra industry differences in the effect of regulation the case of deposit rate ceilings abstract this study examines the impact of deposit rate ceiling changes on the market value of commercial banks and stock savings and loan associations statistically significant increases in market value are found on announcement of the removal of ceilings on large denomination certificates of deposit in contrast retail commercial banks and savings and loans experienced declines in value on announcement of the elimination or relaxation of deposit rate ceilings on small denomination consumer accounts in addition for all events analyzed significant differences were found in the effect of ceiling changes on the market value of wholesale and retail commercial banks

agenda control by budget maximizers in a multi bureau setting while the present extension of the single issue model of agenda control has permitted the examination of a wide array of questions within a consistent overall framework and has generated new insights some qualifications are in order first the analysis like niskanen s and romer and rosenthal s is strictly limited to one form of agenda control take it or leave it offers made relative to some reversion level second each of the bureaus in this extension are single activity bureaus as a result certain types of agenda control that might exist when there are several dimensions to each bureau s activity such as the mix chosen for various sub activities or the spatial distribution of the bureau s output are ignored see denzau and mackay 1980 and mackay and weaver 1979a b for analyses of these types of agenda control for the case of a single bureau third as a point of reference and for expositional simplicity the analysis for the most part was executed with a single decisive voter on all issues as a result certain complexities and perhaps additional ambiguities were avoided finally in an effort to isolate and study the effects of the supply side phenomenon of agenda control a simple traditional model of the demand side of the collective choice process was employed for the simplest demand side passive supply side models this has typically proved quite adequate as models of the collective choice process have become more complex however taking on more strategic features the weaknesses of certain of the standard assumptions implicit in this demand side model become more apparent in particular the assumption that voters vote sincerely and non strategically is likely to be strained by most specifications of the dynamics of the voting process since learning on the part of voters would condition expectations and perhaps alter choice the inclusion of expectations formation into the model of voter behavior would certainly seem at least at the intuitive level to introduce an interesting additional set of constraints on agenda setters that may limit to some extent the expansionary tendencies described in this paper in short each of these qualifications should provide fertile ground for future research

deposit insurance and wealth effects the value of being too big to fail this paper investigates the effect on bank equity values of the comptroller of the currency s announcement that some banks were too big to fail and that for those banks total deposit insurance would be provided using an event study methodology we find positive wealth effects accruing to tbtf banks with corresponding negative effects accruing to non included banks we demonstrate that the magnitude of these effects differed with bank solvency and size we also show that the policy to which the market reacted was that suggested by the wall street journal and not that actually intended by the comptroller the role of deposit insurance has become a topic of increasing debate advocates argue that by removing the incentive to run deposit insurance protects individual financial institutions from instability in the intermediation process thereby providing stability to the financial system as a whole 1 the recent rise in bank failures and the concomitant crises in the s l industry however demonstrate that this stability is not guaranteed moreover critics note that deposit insurance may introduce incentive problems and wealth effects into the financial system both of which can impede the effective functioning of any deposit insurance system these problems have prompted concern about the structure of the current deposit insurance system and have led to numerous proposals regarding its restructuring 2 this paper investigates one aspect of this debate by analyzing the effect on bank equity values of the policy decision to insure completely some banks but not others specifically in september 1984 the comptroller of the currency testified before congress that some banks were simply too big to fail tbtf and that for those banks total deposit insurance would be provided while not explicitly naming the banks the comptroller admitted that this policy would apply to the eleven largest banks using an event study methodology we analyze