detecting periodically collapsing bubbles a markov switching unit root test this paper addresses the problem of testing for the presence of a stochastic bubble in a time series in the case that the bubble is periodically collapsing so that the asset price keeps returning to the level implied by the market fundamentals as this is essentially a problem of identifying the collapsing periods from the expanding ones we propose using a generalization of the dickey fuller test procedure which makes use of the class of markov regime switching models the potential of the new methodology is illustrated via simulation and an empirical example is given copyright 1999 john wiley sons ltd

monetary accommodation exchange rate regimes and inflation persistence stable url http links jstor org sici sici 0013 0133 28199205 29102 3a412 3c461 3amaerra 3e2 0 co 3b2 lthe economic journal is currently published by royal economic society your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals res html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgwed feb 13 07 34 49 2008

the operations of the bank of england 1890 1908 a dynamic probit approach this paper analyzes the workings of the pre world war i gold standard using weekly data and a dynamic probit econometric technique the authors evidence sheds light on three potentially conflicting motivations underlying bank rate changes profitability convertibility and concern for home trade the conflict among these goals manifests itself in the bank s asymmetric responses to inflows and outflows of gold and in the bank s asymmetric responses to changes in market interest rates the authors results are consistent with the view that central bank cooperation played an important role in the workings of the gold standard copyright 1995 by ohio state university press

the effect of land use regulation on housing and land prices abstract this paper investigates the effects of land use regulation restrictiveness on house and vacant land prices in contrast to prior studies the index of restrictiveness is treated as an endogenous variable and estimated effects are allowed to vary by market setting using data on more than 100 florida cities greater regulation restrictiveness is found to increase house price and decrease land price evidence is also provided showing that more restrictiveness increases the size of newly constructed homes

a rudimentary random matching model with divisible money and prices abstract we consider a version of kiyotaki and wright s monetary search model in which agents can hold arbitrary amounts of divisible money a continuum of stationary equilibria indexed by the aggregate real money stock exists with all trading occurring at a single price there is always a maximum level of the real money stock consistent with existence of such an equilibrium in the limit as trading becomes faster relative to discounting any real money stock becomes feasible in such an equilibrium in contrast to the original kiyotaki wright model higher equilibrium real money stocks unambiguously correspond to higher welfare in this costless production environment journal of economic literature classification numbers d51 e40

the international monetary system an analysis of alternative regimes abstract this is an exercise in the positive economics of alternative monetary regimes the behavior of output and prices is compared using a stochastic specification which allows asymptotic variances to be obtained without difficulty free floating of exchange rates together with national money supply targets is analyzed first with and without the presence of fads in the exchange rate two alternatives for monetary coordination are then considered first is mckinnon s proposal to fix nominal exchange rates and stabilize aggregate monetary growth or average inflation second is williamson s system of target zones for stable real exchange rates complemented by nominal income targets for fiscal policy

one or two monies abstract the set of incentive feasible allocations is examined in a dynamic quasi linear environment where agents lack commitment and have private information over their idiosyncratic characteristics when record keeping is available the first best allocation is implementable in a set of sufficiently patient economies when record keeping is limited to one money this set is strictly smaller except when private information is absent when record keeping is expanded but limited to two monies the set of economies for which the first best is implementable corresponds to that of record keeping even when private information is present we further demonstrate that two monies are a perfect substitute for record keeping

comparative studies of national incomes and prices income comparisons between persons or groups of persons in different countries are a special field of inquiry mainly because there are different currency units for the most part the other theoretical and empirical problems encountered in international income comparisons are similar to those of within nation comparisons between different persons at the same time or different groups of persons either interspatially or what is more common intertemporally e g constant price series of national income the qualifications mainly and for the most part are included because some writers hold that international comparisons are complicated or even invalidated by differences in consumption patterns sometimes differences in tastes are held to underlie these variations in consumption patterns variations that are often much larger between countries than those found between regions within a country or between different periods in the same country this essay focuses in its methodological aspects on these special problems the basic problems that are common to international and within nation comparisons are left to the standard literature on national accounts 2 we turn now to the currency unit problems and reserve the question of tastes for a later section

filtering city change and the supply of low priced housing in canada this paper examines the filtering process and shows the extent of the forces that are gentrifying canadian cities the 1996 census micro data are used to develop rent and price age profiles of dwe

a comparative study of inequality and corruption this article argues that income inequality increases the level of corruption through material and normative mechanisms the wealthy have both greater motivation and more opportunity to engage in corruption whereas the poor are more vulnerable to extortion and less able to monitor and hold the rich and powerful accountable as inequality increases inequality also adversely affects social norms about corruption and people s beliefs about the legitimacy of rules and institutions thereby making it easier for them to tolerate corruption as acceptable behavior this comparative analysis of 129 countries using two stage least squares methods with a variety of instrumental variables supports the authors hypotheses using different measures of corruption the world bank s control of corruption index and the transparency international s corruption perceptions index the explanatory power of inequality is at least as important as conventionally accepted causes of corruption such as economic development the autho

the debate about the revived bretton woods regime a survey and extension of the literature this paper surveys the literature dealing with the thesis put forward by dooley folkerts landau and garber dfg that the present constellation of global exchange rate arrangements constitutes a revived bretton woods regime dfg also argue that the revived regime will be sustainable despite its large global imbalances while much of the literature generated by dfg s thesis points to specific differences between the earlier regime and revived regime that render the latter unstable we argue that an underlying similarity between the two regimes renders the revived regime unstable specifically to the extent that the present system constitutes a revived bretton woods system it is vulnerable to the same set of destabilizing forces including asset price bubbles and global financial crises that marked the latter years of the earlier regime leading to its breakdown we extend the markov switching model to examine the relation between global liquidity and commodity prices we find evidence of commodity price bubbles in both the latter stages of the earlier bretton woods regime and the revived regime

coexistence of money and interest bearing securities abstract a random matching model with money is used to study the nominal yield on small denomination bearer safe discount securities issued by the government there is always one steady state with matured securities circulating at par and for some parameters another with them circulating at a discount in the former a necessary and sufficient condition for a positive nominal yield on not yet matured securities is exogenous discriminatory treatment of them by the government in the latter the post maturity discount on securities induces a deeper pre maturity discount even without such discriminatory treatment

endogenous multiple currencies in this paper i study a model in which households can decide which currency or currencies they will accept i provide a simple set of assumptions that are sufficient to prevent the indeterminacy of the exchange rate in the sense of kareken and wallace 1981 in a two country model stable equilibria have either a single currency or national currencies i also show currency substitution occurs as an endogenous response to high growth in the stock of a currency

a model of the federal reserve act under the international gold standard system abstract freeman am econom rev 86 1996a 1126 shows that an elastic money supply enhances the efficiency of monetary equilibrium by clearing default free debts at par value in the domestic credit market this research adds a foreign exchange market to freeman s model and extends his analysis into a two country model in which the arrival rates of agents are not equal between the two countries in this model an elastic money supply in the foreign exchange market to clear the exchange of fiat monies at gold standard parity accompanied by an elastic money supply in the domestic credit market could improve the efficiency of monetary equilibrium

separation of unit of account from medium of exchange the separation of a unit of account uoa from a medium of exchange moe in the commodity money system is investigated by considering explicitly a seller s choice of uoa in terms of either an moe or a unit of metal weight if the likelihood of debasement of an moe and its rate are high enough the price is posted in terms of a unit of metal weight rather than an moe interestingly this moe uoa separated equilibrium yields the flexible nominal price whereas an moe uoa integrated equilibrium yields the sticky one this implies the nominal price rigidity in the fiat money system where moe and uoa are integrated

an information based theory of international currency abstract this paper develops an information based theory of international currency based on search frictions private trading histories and imperfect recognizability of assets using an open economy search model with multiple competing currencies the value of each currency is determined without requiring agents to use a particular currency to purchase a country s goods strategic complementarities in portfolio choices and information acquisition decisions generate multiple equilibria with different types of payment arrangements while some inflation can benefit the country issuing an international currency the threat of losing international status puts an inflation discipline on the issuing country when monetary authorities interact in a simple policy game the temptation to inflate can lead optimal policy to deviate from the friedman rule the calibrated model can produce a welfare cost of losing international status for the issuing country larger than previous findings though estimates depend critically on inflation rates and information costs

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

the tale of two great crises abstract the great depression of 1929 and the great financial crisis of 2008 have been the two big events of the last 75 years not only have they produced serious economic consequences but they also changed our view of economics and policymaking the aim of this work is to compare these two great crises and highlight similarities as well as differences monetary policy the exchange rate system and the role of banks are our fields of investigation we find interesting parallels between the two big events but also differences in their specific developments

money in search equilibrium in competitive equilibrium and in competitive search equilibrium we compare three market structures for monetary economies bargaining search equilibrium price taking competitive equilibrium and price posting competitive search equilibrium we also extend work on the microfoundations of money by allowing a general matching technology and entry we study how equilibrium and the effects of policy depend on market structure under bargaining trade and entry are both inefficient and inflation implies first order welfare losses under price taking the friedman rule solves the first inefficiency but not the second and inflation may actually improve welfare under posting the friedman rule yields the first best and inflation implies second order welfare losses

toward a theory of international currency we use the framework of random matching games and develop a two country model of the world economy in which two national currencies compete and may be circulated as media of exchange there are multiple equilibria which differ in the areas of circulation of the two currencies in one equilibrium the two national currencies are circulated only locally in another one currency is circulated as an international currency there is also an equilibrium in which both currencies are accepted internationally we also find an equilibrium in which the two currencies are directly exchanged we first characterize the existence conditions of these equilibria in terms of the relative country size and the degree of economic integration and then use an evolutionary approach to equilibrium selection to explain the evolution of the international currency as the two economies become more integrated some welfare implications are also discussed for example a country can improve its national welfare by letting its own currency circulate internationally provided the domestic circulation is controlled for when the total supply is fixed however a resulting currency shortage may reduce the national welfare

money and price dispersion we relax restrictions on the storage technology in a prototypical monetary search model to study price dispersion in this case buyers and sellers enter matches with potentially different willingness to trade across the distribution of possible bilateral matches prices generally will differ even though agents have identical preferences and technologies we provide existence conditions for a particularly simple equilibrium pattern of exchange we prove that in the limiting case where search frictions are eliminated equilibrium prices are uniform we also show that a higher initial money stock can raise the average price level and increase price dispersion

the burden of intervention externalities in multilateral exchange rates arrangements abstract in this paper we consider a multilateral target zone model that generalizes krugman s model of a bilateral target zone parities are defended by manipulating money supplies in participating countries this means that interventions aimed at one given exchange rate influence other exchange rates as well as a result of these externalities shocks on each fundamental affect the whole range of exchange rates involved moreover intra marginal interventions arise endogenously and the exchange rate distribution does not exhibit the u shaped pattern which is typical of traditional target zones instead our model gives rise to intra marginal targets to which exchange rates tend to return the location of these targets is shown to depend on the intervention sterilization mix adopted by monetary authorities

interest rate interactions in the classical gold standard 1880 1914 was there any monetary independence this paper examines an hypothesis of svensson 1994 journal of monetary economics 33 157 199 that a credible target zone can confer on a country a degree of independence in the operation of its monetary policy even when exchange rates are fixed we test this hypothesis for the classical gold standard using a newly created monthly data base for the period 1880 1913 building on the recently noted finding that the classical gold standard represented a credible well behaved target zone system we propose a number of ways of testing the svensson model our main finding is that the classical gold standard did indeed confer some independence in the operation of monetary policy for participating countries this would seem to have an important bearing on the kind of institutional framework required for a modern day target zone to function effectively and in particular to weather speculative attacks

investigating inflation persistence across monetary regimes under inflation targeting estimates of the indexation parameter in hybrid new keynesian phillips curves are either equal to zero or very low in the united kingdom canada sweden and new zealand analogous results hold for the euro area under the european monetary union and for switzerland under the new monetary regime under stable regimes with clearly defined nominal anchors inflation appears to be purely forward looking these results question the notion that the intrinsic inflation persistence found in post wwii u s data is structural in the sense of lucas carnegie rochester conference series on public policy 1 1976 19 46 and suggest that hardwiring inflation persistence in macroeconomic models is potentially misleading

rules of the game during the international gold standard england and germany abstract the paper suggests an alternative framework to test hypotheses about central bank policy rules during the international gold standard this framework is inspired by work of mundell 1968 on optimal central bank policies and more recent literature on the theory of economic policy which stems from luca s 1976 critique empirical tests obtained from this approach are quite different from those appearing in the empirical literature on the gold standard the results of the tests indicate that the bank of england was not optimally targeting international gold flows inthe case of the rechsbank the hyphothesis that international gold flows were optimally targeted is not rejected at the 5 per level thus the data suggest that the reichsbank was following the rules of the game whereas the bank of england was not

the challenge of monetary theory departing from custom i want to address a problem that needs to be solved rather than one that has been solved i do not have much to contribute to its solution but i believe that the problem is important and want to focus attention on it in general terms the problem is to find appropriate conceptual foundations for monetary economics i believe that we do not as yet have a suitable theoretical framework for studying the functioning of a monetary system the main obstacle to the development of such a framework is our habit of thinking in terms of frictionless organized i e walrasian markets the problem is partly a problem of language the central concepts of economics demand supply and price are concepts that presuppose a system of centralized walrasian markets we are used to thinking in terms of these concepts and we tend to apply them rather automatically to the market for money frequently without realizing that the market for money must be a rather non walrasian market if indeed it can be called a market at all more or less all the models of monetary economics that are being used in practice proceed in this way using artifical adaptations of the walrasian centralized markets model to accommodate money without actually giving an account of what the role of money in the economy is the problem is one of pure economic theory however it bears on many important questions of applied economics and economic policy to study the relation between money income and prices we need a framework which gives a satisfactory account of the relation between the monetary system and the price mechanism to study the effects of central bank open market

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

international monetary trade and the law of one price abstract we endogenize circulation of currencies and price formation in a decentralized trading environment with two countries and two currencies in equilibrium sellers of homogeneous goods may post prices in the national or also in the foreign currency given unobservable buyers valuations we prove that under different monetary regimes the absence of well integrated international goods markets doesn t necessarily imply a violation of the law of one price we also illustrate the behavior of prices across regimes characterized by different degrees of monetary integration

the impact of income inequality on rental affordability an empirical study in large american metropolitan areas american metropolitan areas have experienced rising income inequality and worsening rental affordability in the past few decades has the rise of inequality caused worsening rental affordability t

the rules of the game international money in historical perspective no world central bank issues a separate currency for commerce across national boundaries instead a system of national monies works more or less well in providing a medium of exchange and unit of account for current international transactions as well as a store of value and standard of deferred payment for longer term borrowing and lending how do national governments and banking institutions interact to provide international money for merchants and investors by necessity this monetary interaction changes with time place political circumstances and financial technology to better understand its historical evolution let us follow robert mundell and distinguish between a monetary system and a monetary order

currency substitution and instability in the world dollar standard comment myron ross correctly points out in his comment that u s price inflation is better predicted by the american money supply mlus than by the broader ten country world money supply mlw over the whole statistical time series from 1960 to 1980 provided in mckinnon s 1982 article specifically he showed that american price inflation is more highly correlated with mlus lagged one or two years than with mlw similarly lagged however mckinnon s present tense assertion that in general growth in the world money supply is a better predictor of american price inflation than is american money growth applies only to the weak dollar standard of the 1970 s and early 1980 s as his preceding discussion intended but failed to indicate clearly only in this later period of volatile exchange rates and price level instability in the united states do alternative hard currencies such as the yen and deutsche mark become competitive as international stores of value and units of account hence international currency substitution associated with the ebb and flow of speculation against or for the dollar significantly destabilized the demand for mlus in the 1970 s and 1980 s and only in this later period might one expect the sum of these internationally substitutable monies ml to predict world and perhaps even american price inflation better than does mlus in contrast during the strong dollar standard of the 1950 s and 1960 s the dollar was unchallenged as international money exchange rates were by and large convincingly fixed speculation for or against the dollar was incapable of substantially altering u s interest rates or of directly affecting the demand for mlus because cyclical international influences did not then destabilize the demand for dollars mlus was by itself a fairly efficient predictor of american prices thus ross s statistical results for the period 1960 to 1980 show somewhat greater predictive strength in mlus compared to ml because the 1960 s data outweigh the dissimilar data of the 1970 s let us instead partition the sample of imf data around the year 1970 whence began the transition from fixed to fluctuating exchange rates and the maturation of alternative monetary systems in europe and japan after applying similar statistical correlation procedures to those used by ross we show a striking structural shift in the world s monetary system the explanatory power of mlw increases sharply as that of mlus declines moderately tan 1982 for the early period of 1960 to 1970 table 1 shows simple correlation coefficients between annual percentage changes in money supplies and changes in american and world wholesale price indices the mlus provides a good explanation of u s prices and of world prices one to two years hence whereas the broader definition of mlw in which mlus enters with a 50 percent weight does surprisingly poorly being insignificantly correlated with american or world prices apparently money growth in industrial countries other than the united states was not then an independent source of worldwide inflationary pressure during the strong dollar standard table 2 shows the same simple correlations between percentage changes in prices and money for the weak dollar standard of stanford university please note that a typographical error giving the last word in the original title as market appeared on the cover of the june 1982 issue of this review the title was correct in the table of contents and on the article

monetary policy targets and the stabilization objective a source of tension in the ems abstract this paper evaluates two different monetary regimes in the ems an asymmetric regime with ems monetary policy oriented towards german targets and a symmetric regime with ems wide targets deterministic and stochastic simulations of a macroeconometric model are used to study spillovers adjustment and stabilization in ems economies they show that there exists a significant trade off between the two regimes in terms of output and price deviations from target while germany enjoys more stability under the asymmetric regime the other ems economies are stabilized more effectively by a symmetric target the resulting tension must have been at least partly responsible for the recent ems crises

under what circumstances past and present have international rescues of countries in financial distress been successful recent events in asia and other parts of the globe have prompted calls from many quarters for international rescue of the monetary or fiscal authorities in distressed countries we contrast the experience of rescues of monetary authorities before 1973 of advanced countries temporarily short of liquidity with recent experience of bailouts international rescues in the past have involved relatively small amounts of money sufficient to stave off devaluation or abandonment of a fixed exchange rate while remedial policies were put in place recent bailouts have involved handing over relatively large amounts to both foreign lenders and domestic investors after devaluation of a pegged exchange rate to avoid their incurring wealth losses we document past rescues whether successful or unsuccessful by monetary regimes and show what is different today from past experience

consumer search price dispersion and international relative price fluctuations this article develops a model of consumer search consistent with the evidence of substantial price dispersion and time spent shopping within countries to study international deviations from the law of one price lop and relative price fluctuations search frictions lead firms to price discriminate across markets based on the opportunity cost of search which depends on the local wage with productivity and taste shocks estimated from the data deviations from the lop are as volatile and persistent as in the data fluctuations in relative wages real exchange rates and the terms of trade are also consistent with the data

profitability in the international gold market in the early history of the gold standard by looking at the available evidence on the london gold market in the late eighteenth century and early nineteenth century this p aper presents a new formulation of the gold points and models the mar ket behavior behind gold movements while there is evidence that the merchants behavior sustained the purchasing power parity of gold in terms of currency there is none to support the view that gold flows realized the purchasing power parity of gold in terms of traded commo dities therefore the equilibrium condition imposed by both the mone tary approach and the price specie flow mechanism seems unnecessarily restrictive copyright 1987 by the review of economic studies limited

forecasting pre world war i inflation the fisher effect and the gold standard we examine interest and inflation rates from 1879 to 1913 deflation prior to 1896 was followed by inflation average u s inflation was 3 1 percentage points higher in the years after 1896 yet nominal interest rates were no higher after 1896 this nonadjustment of nominal rates would be consistent with rational expectations if inflation was not forecastable and indeed univariate tests show little sign of serial correlation but gold production does forecast inflation the relationship between mining and inflation was such that expected inflation should have risen 300 basis points between 1890 and 1910 we consider explanations of this failure to foresee the shift in inflation after 1896 and conclude that it is not persuasive evidence that investors ignored relevant information but does suggest great uncertainty about the appropriate model for analyzing the economy

a retrospective on the bretton woods system lessons for international monetary reform at the close of the second world war when industrialized nations faced serious trade and financial imbalances delegates from forty four countries met in bretton woods new hampshire in order to reconstruct the international monetary system over the next 25 years with currencies fixed to the american dollar world trade expanded vigorously inflation remained moderate and national income in industrialized countries rose faster than during any other period in this volume three generations of scholars and policy makers some of whom participated in the 1944 conference consider how the bretton woods system contributed to economic stability and rapid growth between 1945 and 1971 and discuss the future of the international monetary system in light of the bretton woods experience since president richard m nixon ended the bretton woods system in 1971 exchange rates have exhibited increasing flexibility after twenty years of floating rates however there is considerable interest in once again limiting exchange rate flexibility the apparent success of the european monetary system a fixed rate arrangement loosely based on the postwar system and the prospect of european monetary unification increase interest in a new internationally stable exchange rate moreover some academics and government officials see fixed rates as a way to help eastern europe and the former soviet union cope with pressing economic and political problems the economists historians political scientists and policy makers who contribute to this volume relate the bretton woods system to earlier fixed rate schemes and consider the political background of the original new hampshire meeting using recenteconomic theory for example work on time consistency and credibility they explore adjustment liquidity and transmission under the system the way it affected developing countries and the role of the international monetary fund in maintaining a stable rate the authors examine th

the social and private micro level consequences of homeownership abstract this paper reviews the literature that describes the micro level economic and social consequences of homeownership we adopt an interdisciplinary approach and include studies from economics sociology geography political science psychology and other disciplines our focus is on the set of consequences of homeownership in developed countries our list of potential outcomes of homeownership includes the impact on household wealth and portfolio choice mobility labor force participation urban structure and segregation home maintenance political and social activities health demographics self esteem and child outcomes there is substantial evidence that homeownership has important effects on some household behaviors and outcomes however we find that much of the past 30 year s literature on consequences of homeowning is deficient from a theoretical or econometric perspective we suggest solutions and identify research gaps present in the literature

exchange rate regimes for emerging markets moral hazard and international overborrowing this paper investigates the role of the exchange rate regime in a simple fisherian model of the overborrowing syndrome where domestic banks are subject to moral hazard the choice of exchange rate regime may have important implications for the macroeconomic stability of the economy banks that enjoy government guarantees have an incentive to increase foreign borrowing and incur foreign exchange risks that are underwritten by the deposit insurance system in the absence of capital controls this increases the magnitude of overborrowing and leaves the economy both more vulnerable to speculative attack and more exposed to the real economic consequences of such an attack while bad exchange rate pegs will tend to exacerbate the problem of overborrowing in emerging markets it is unclear that flexible exchange rate always dominate fixed exchange rates a good fix one that is credible and close to purchasing power parity may reduce the super risk premium in domestic interest rates and thereby narrow the margin of temptation for banks to overborrow internationally contrary to the current consensus regarding the lessons that should be drawn from the asian crisis a good fix may better stabilise the domestic economy while limiting moral hazard in the banking system

on the effects of sterilized intervention an analysis of weekly data abstract as the recent empirical studies surveyed here illustrate it is very difficult to demonstrate that the exchange rate risk premium depends through a portfolio balance channel on the currency composition of outside assets the existence of a portfolio balance effect is a necessary condition for sterilized intervention to be a genuinely independent tool of monetary policy this paper studies u s canadian data and attempts to improve on earlier studies by using higher frequency weekly data and by implementing an appropriate instrumental variables technique 2s2sls however we still fail to detect evidence of a portfolio balance effect

new evidence on the effectiveness of foreign exchange market intervention this paper compares foreign exchange market intervention in case there is no uncertainty about the extent of an imperfectly sustainable target zone and where there is uncertainty a well known example of the first case was the european monetary system between 1979 and 1992 an example of the latter is the dirty floating of the dollar against the dmark and yen after the so called louvre accord in 1987 the analysis shows that the instantaneous effectiveness of intervention tends to be larger the more implicit the band policy is our empirical results which use belgian and us intervention data support this claim

arbitrage during the dollar sterling gold standard 1899 1908 an econometric approach the gold standard as instituted in the late nineteenth and early twentieth centuries has recently become the center of public policy and academic scrutiny recently a controversy over the efficiency of the gold standard has developed see clark 1984 officer 1986 in short clark following morgenstern 1959 finds that the gold standard was inefficient because it exhibited many violations of the gold points officer however attempts to show that the gold standard was efficient in that few gold point violations are observed when proper methods are used to calculate the relevant gold points 2

what has happened to the bottom of the us housing market housing quality has improved dramatically for most low income households but they are paying much larger shares of their income for it many discussions of the bottom of the market focus on either the rising costs the bad news or the rising quality the good news both points of view have some merit this paper takes a positivist approach to the question what s happening to the bottom of the housing market we use a variety of indicators to look at whether the supply of low cost units has fallen we then focus on whether this dwindling supply reflects a market failure if the market for low income housing is indeed failing we would observe relatively high prices per unit of housing services provided by low quality housing obstructions to the supply of low cost housing which arises largely from filtering and high vacancy rates we find evidence of market failure in some markets but not in others finally we focus on one possible source of market failure excessive regulation to see whether it

violations of the gold points 1890 1908 evidence is presented that the gold standard system was inefficient in two ways 1 gold point violations sometimes persisted for long periods indicating that profit opportunities were not always eliminated quickly 2 following gold point violations gold occasionally flowed in unprofitable directions it is argued that government interference in the workings of the system was a source of these inefficiencies this suggests that the gold standard did not completely restrict the discretionary power of monetary authorities if present day gold standard advocates seek to eliminate discretionary monetary policy revival of the traditional gold standard is probably insufficient to attain their goal

supply constraints and housing market dynamics abstract although the volatility of house prices is often ascribed to demand side factors constraints on housing supply have important and little studied implications for housing dynamics i illustrate the strong relationship between the volatility of house prices and the regulation of new housing supply i then employ a dynamic structural model of housing investment to investigate the mechanisms underlying this relationship i find that supply constraints increase volatility through two channels first regulation lowers the elasticity of new housing supply by increasing lags in the permit process and adding to the cost of supplying new houses on the margin second geographic limitations on the area available for building houses such as steep slopes and water bodies lead to less investment on average relative to the size of the existing housing stock leaving less scope for the supply response to attenuate the effects of a demand shock my estimates and simulations confirm that regulation and geographic constraints play critical and complementary roles in decreasing the responsiveness of investment to demand shocks which in turn amplifies house price volatility

the phillips curve the persistence of inflation and the lucas critique evidence from exchange rate regimes comment we present evidence from the united states and the united kingdom that the persistence of price inflation is significantly higher under managed exchange rate regimes than under gold based fixed exchange rate regimes these differences are also reflected in expectations augmented phillips curves we use a two country macro model with forward looking price setters to demonstrate that higher monetary accommodation of inflation and exchange rate accommodation of inflation differentials increase inflation persistence the evidence does not contradict this hypothesis it supports the hypothesis of forward looking price setters and highlights the empirical significance of the lucas critique jel e31 e42 f33

the modern history of exchange rate arrangements a reinterpretation we develop a novel system of reclassifying historical exchange rate regimes one key difference between our study and previous classifications is that we employ monthly data on market determined parallel exchange rates going back to 1946 for 153 countries our approach differs from the imf official classification which we show to be only a little better than random it also differs radically from all previous attempts at historical reclassification our classification points to a rethinking of economic performance under alternative exchange rate regimes indeed the breakup of bretton woods had less impact on exchange rate regimes than is popularly believed