learning to believe in sunspots a number of authors have shown that competitive economies may possess sunspot equilibria that is rational expectations equilibria in which purely extrinsic uncertainty affects equilibrium prices and allocations 2 such results demonstrate that it does not require a lack of faith in the rationality of market participants to believe that competitive markets may be subject to purely speculative fluctuations driven solely by expectations 3 the mere existence of sunspot equilibria as solutions to a system of marketclearing conditions however might not be judged sufficient to indicate that competitive markets with rational participants could ever be subject to speculative instability the sunspot equilibria represent states of affairs in which agents act differently in the case of different realizations of the sunspot variable and it is rational for each agent to do so but it might be thought unlikely that the beliefs of all the participants in the market could ever come to be coordinated so as to bring about an equilibrium of that kind it is rational to believe that sunspots convey information about future states of affairs once the economy is in a sunspot equilibrium but why would rational agents ever begin to believe in such a thing so as to create the conditions under which the belief is rational in order to address such a question one must go beyond the mere statement of the conditions for equilibrium and discussion of what states of affairs satisfy them one must specify an explicit dynamic process according to which the beliefs of agents adjust when out of equilibrium any exercise of this kind is necessarily unsatisfactory as there is no univocal meaning for the postulate of rational behavior outside of an equilibrium it may well be the case that

estimation of the tenants benefits residing in public rental housing with unit size constraint in korea summary hicksian income equivalent variation ev has often been used to measure tenants benefits in evaluating public housing programmes a number of papers have so far attempted to apply hicksian ev under the implicit assumption of no constraint on unit size of public housing as a result overestimation of tenants benefits probably occurs where unit size constraints exist as in korea s public housing programme thus the purpose of the paper is to measure hicksian ev with the constraint in unit size of public housing by formulating a revised hicksian ev equation and comparing the result with constraint free cases it is found that hicksian ev with constraint in unit size decreases relative to that of the constraint free cases the extent of ev decrease depends on the income elasticity of demand for housing and the difference between the optimum consumption of public housing under rent support demand wanted and the actual constraint of unit size demand fulfilled

the environmental economic impact of woodland a two stage hedonic price model of the amenity value of forestry in britain woodland is an important part of the environment providing economic benefits through its use in commercial timber production and through its value as an amenity as well as providing recreation for visitors woodland is also important to local residents for whom it provides leisure opportunities and a source of aesthetic enjoyment it is well known that the price of a house may reflect a household s willingness to pay to live near an environmental amenity such as a forest and to gain access to it the nature of this relationship may be examined by applying the hedonic price technique an econometric method which investigates house prices and the variation in structural and environment characteristics over space this study uses a two stage hedonic price model to explore the impact of forest type on house price and to estimate the demand for broadleaved woodland for a sample of houses adjacent to forestry commission land

noise versus access the impact of an airport in an urban property market the effects of a major airport are unlikely to exhibit a uniform spatial distribution the benefits to industries and individual households may extend well beyond the local economy whereas many of the costs are spatially concentrated in the immediate environment in particular the problems of noise and traffic generation can be expected to fall principally upon adjacent populations this paper addresses the general question of whether the costs to local economies of airport proximity which are in the nature of externalities outweigh the benefits of access employment and improved infrastructure based on data relating to manchester airport and its surrounding areas the specific approach adopted in the paper involves an investigation of the extent to which such proximity effects are capitalised into residential property prices our results provide some evidence to suggest that circumstances may exist where positive attributes such as improved access and employment opportunities may be more highly va

estimating market prices and assessed values for income properties assessors perform property valuations for the purpose of tax assessment buyers and sellers make investment decisions culminating in a market price the valuation by assessors is supposed to be fair and equitable and to amount to a prescribed proportion of market value we investigate the property features considered by assessors in arriving at the assessed value and by buyers and sellers in arriving at the market price we also explore what factors appear to be considered differently by the assessors and the market thus contributing to overassessment or underassessment of property taxes the analysis deals with income properties centrally located in stockholm sweden

identification and stochastic specification in rosen s hedonic price model abstract the use of an explicitly specified utility function to derive the inverse demand functions in s rosen s hedonic price model provides considerable insight into the correct stochastic specification of the model it turns out that except in special cases the inverse demand equations are nonlinear in parameters and cannot be formulated conveniently as regression models moreover the inverse demand functions and the hedonic price function must be estimated simultaneously to obtain consistent estimates of the parameters of these functions a tractable estimation technique is described it is desirable to derive the inverse demand functions from a utility specification that is not a strongly separable function of houses attributes since strong separability implies the existence of deterministic relations among incomes prices and observed housing attributes that may fail to hold in applications finally it is shown that the use of an explicitly specified utility function does not guarantee identification of the parameters of rosen s model

inflation output growth and nominal and real uncertainty empirical evidence for the g7 abstract we use univariate garch models of inflation and output growth and monthly data for the g7 covering the 1957 2000 period to test for the causal effect of real and nominal macroeconomic uncertainty on inflation and output growth and the effect of inflation on inflation uncertainty our evidence supports a number of important conclusions first inflation is a positive determinant of uncertainty about inflation second output growth uncertainty is a positive determinant of the output growth rate third there is mixed evidence regarding the effect of inflation uncertainty on inflation and output growth hence uncertainty about the inflation rate is not necessarily detrimental to economic growth finally there is not much evidence supporting the hypothesis that output uncertainty raises inflation

welfare measurement for environmental improvements using the hedonic model the case of nonparametric marginal prices abstract research in environmental and natural resource economics frequently requires the use of hedonic models because of the differentiated products involved this is true for studies of the relationship between environmental quality and property values or wages or between the characteristics of a recreation site and the demand for its services an obvious use of such studies is in estimating willingness to pay for improvements with differentiated products there are usually nonlinear hedonic price schedules and thus nonlinear budget constraints this makes welfare analysis difficult because standard duality results no longer hold this paper develops a technique for estimating a psuedo demand system that can be used to derive exact measures of consumer welfare change similar techniques are developed for producers with a psuedo profit function that can be converted to an exact measure of the change in quasi rents or rents the paper also shows that the distance function can be used to develop an ex ante measure of welfare change

efficient estimation of structural hedonic systems when a product or job is not homogeneous but instead embodies several different characteristics it is difficult to use price information about the product to learn anything about the structure of the supply and demand for the embodied characteristics s rosen 1974 highlighted this problem and suggested that the estimated slope of the price characteristic relation the marginal price could be used instead of standard prices in otherwise standard estimation of the supply and demand system however recently brown and h rosen 1982 brown 1983 and mendelsohn 1985 have pointed out that this method is applicable only when the marginal price depends on variables not found in the supply and demand equations in this paper we show that since the hedonic system matches consumers with high demand for the characteristic to firms with low costs of producing it exogenous variables from the supply equation are not valid instruments in the demand equation and vice versa therefore even when the brown rosen mendelsohn brm condition holds estimation of the identified system by standard simultaneous equations techniques will produce inconsistent estimates we then show that the system can be identified despite the absence of the standard instruments and develop an efficient estimator for the identified system since cross equation constraints make estimation of hedonic systems particularly vulnerable to specification error we also consider some specification tests in this section we consider a simple model with only one characteristic the extension to several characteristics is straightforward the basic model developed by rosen can be described as follows firms with different technologies produce products which provide consumers with varying levels of some characteristic z each consumer buys one unit of the good the product is such that an amount of z from two units of the good provides less utility than the same amount of z embodied in a single unit e g acceleration in a car safety in a job consumers

are innovations relevant for consumers in the hospitality industry a hedonic approach for cuban hotels abstract this paper evaluates the impact of innovative activity in the hotel industry on the willingness to pay by consumers to this end we estimate a hedonic price function where innovation is identified indirectly through certain attributes that previous literature has linked with hotel innovativeness the test is performed on a representative sample of cuban hotels considering a large number of attributes of hotels and rooms to solve the usual problems of collinearity a million alternative models are estimated by choosing the variables included in a random manner and obtaining the final coefficients by means of an internal meta analysis the results are completed with a variance decomposition analysis the results highlight the importance of the attributes linked to innovation and internationalization on the determination of room prices in cuban hotels membership of international hotel chains high quality offers diversified rooms and adaptability to specific needs of each client

the estimation of demand parameters in hedonic price models this paper shows that the econometric problem of estimating hedonic demand parameters is not a standard identification problem caused by demand supply interaction as has been often assumed estimation procedures based on this assumption lead to biased results the hedonic estimation problem is instead caused by the endogeneity of both prices and quantities when households face a nonlinear budget constraint an instrumental variables solution to this problem is suggested using instruments that exogenously shift the budget constraint

estimating the implicit price of energy efficiency improvements in the residential housing market a hedonic approach abstract in this study a hedonic price model has been used to examine the impact which efficiency improvements have on housing values our study represents an improvement over a previous attempt to examine this issue in that the independent variable used in our analysis is designed to reflect variation in structural efficiency levels among sample homes rather than variation in occupant lifestyles and preferences in addition a flexible functional form is used to prevent bias due to misspecification of the hedonic price equation the study results reveal that efficiency improvements are capitalized into housing prices in des moines iowa at the average efficiency level of homes in the sample an efficiency improvement which results in a 1 decrease in the level of expenditures necessary to maintain the house at 65 f in the average heating season will increase the expected selling price of the house by 11 63 the premium obtained for an equivalent efficiency improvement will be greater than 11 63 in a relatively efficient home and less than 11 63 in a relatively inefficient home without further information concerning the price expectations and discount rates utilized by des moines home buyers and the average remaining life of fuels saving investments in the sample it cannot be determined whether the housing market is pricing fuel savings efficiently regardless of whether or not the implicit price of fuel savings is the outcome of an efficient market information on this implicit price facilitates the estimation of an average resale value of fuel saving investments in addition the results of this study refute the hypothesis that efficiency improving investments are not capitalized into housing prices

modeling nonlinearity of business cycles choosing between the cdr and star models nonlinear modeling has become popular in applied macroeconomics successful attempts include beaudry and koop s cdr current depth of the recession model of real gnp and various star smooth transition autoregression models of industrial production however these models have not been directly compared we compare cdr and star models of u s real gnp and industrial production we find i within sample the cdr model fits slightly better than the star model ii out of sample the cdr model forecasts better than the star model and iii the cdr model generates very different dynamics than the star model

hedonic prices and the benefits of public projects s scotchmer has shown that even if the population is homogeneous hedonic prices do not correctly measure long run benefit s of a large public project this paper examines the direction of err ors and shows that the use of cross sectional land rent differentials leads to overestimation of the benefits the short run benefits with fixed lot size are also considered copyright 1988 by the econometric society

the contribution of environmental amenities to low income housing a comparative study of bangkok and jakarta central and local governments and their creditors are increasingly interested in cost recovery for public services these strategies have two aims increasing revenues and making a better connection between benefits received and consumer bills this paper estimates a hedonic model for household level data in a rare contrast of slums in two asian mega cities to provide comparative information about how the poor value environmental amenities and basic infrastructure access the results suggest that slum housing prices do reflect differentials in public service access and that rough estimates of the value of access can be cheaply and usefully obtained for planning purposes

determinants of international trade flows the case of developing countries abstract the question of magnitude and the time path of the trade flows to changes in the exchange rates and to changes in the price level is of emitent practical importance to assess the above proposition a distributed lag structure is imposed on the relative prices and on the effective exchange rate as the determinants of trade flows then import and export demand functions are estimated for a sample of developing countries using the almon procedure the empirical findings appeared to sustain orcutt s early conjecture that trade flows adjust differently to different price stimuli more precisely it was found that imports and exports reactions were quicker and the total response time was shorter when an exchange rate rather than relative prices caused a change in international prices

airport expansions and property values the case of chicago o hare airport abstract the paper adds to the empirical literature by providing up to date estimates of the effect of airport noise on property values around one of the world s busiest airports chicago o hare the results indicate that home values were about 9 lower within a 65 db noise contour band of o hare in 1997 opponents of airport expansions argue that increased noise will reduce property values and lower tax bases the results of this paper suggest that aircraft are becoming so much quieter that the airport can be expanded without causing a drop in local property values or tax bases estimates suggest that house prices may rise by as much as 284 6 million in the densely populated area around o hare after a new runway is added to the airport

estimating british workers demand for safety this paper estimates workers demand function for job safety using the british general household survey data the estimation employs rosen s two stage procedure the main difference between our study and those done in the past is that we estimate hedonic price equations with data sets from two labour markets our approach overcomes the usual identification problems associated with the application of rosen s method the estimation shows that there is a significant wage compensation for job risk in the uk the willingness to pay for a 1 100 000 decrease of annual job fatal accident rate from our estimated workers demand function is about 6 in 1973 prices the estimation of a demand function for safety also enables the derivation of workers willingness to pay for non marginal change of job risk and this can be used for cost benefit analysis on projects involving such non marginal changes

the fischer black hypothesis some time series evidence we estimate an arch m model to analyze the relationship between the conditional standard deviation of real gross national product gnp and its growth rate for the period 1871 1993 we find that variability significantly increases output growth rates in addition impulse response functions show that the effect of variability on growth rates is dynamic these results provide evidence in favor of black s 1987 business cycle hypothesis

macroeconomic uncertainty and performance in the european union abstract we use a very general bivariate garch m model and monthly data on eu countries covering the 1962 2003 period to test for the impact of real output growth and nominal inflation macroeconomic uncertainty on inflation and output growth our evidence supports a number of important conclusions first in the majority of countries uncertainty regarding the output growth rate is related to the average growth rate and the effect in several countries is negative second in half of the cases there is no significant relationship between inflation uncertainty and output growth performance third inflation and output uncertainty have a mixed effect on inflation nevertheless considerable evidence for the cukierman meltzer hypothesis is obtained our conclusions are based on adopting both a structural and a reduced form bivariate garch model finally we also find statistically significant evidence of regime switching for both inflation and output growth volatility throughout the sample

the great moderation and the relationship between output growth and its volatility this study examines the effect of the great moderation on the relationship between u s output growth and its volatility over the period 1947 to 2006 first we consider the possible effects of structural change in the volatility process in so doing we employ garch m and arch m specifications of the process describing output growth rate and its volatility with and without a one time structural break in volatility second our data analyses and empirical results suggest no significant relationship between the output growth rate and its volatility favoring the traditional wisdom of dichotomy in macroeconomics moreover the evidence shows that the time varying variance falls sharply or even disappears once we incorporate a one time structural break in the unconditional variance of output starting 1982 or 1984 that is the integrated garch effect proves spurious finally a joint test of a trend change and a one time shift in the volatility process finds that the one time shift dominates

how much are people willing to pay for silence a contingent valuation study despite its major importance in the urban environment the problem of noise has received little attention from environmental economists in this paper the economic value of a noise reduction programme is evaluated the chosen technique is contingent valuation using the recently proposed one and one half bound question format this new question format reduces the potential for response bias in multiple bound formats such as the double bound model while maintaining much of its efficiency through the estimations it is found that urban residents generally value noise negatively that is households are willing to pay for a noise reduction in particular it is found that households are willing to pay approximately four euros per decibel per year a further finding is that interviewees show scope sensitivity that is households display a different willingness to pay for different degrees of noise reduction most are willing to pay more for larger decreases in the level of disturbance from noise

is there a j curve abstract if the response of the value of the trade balance to movements in the real exchange rate is described by a j curve then a real depreciation initially worsens a balance of trade deficit only improving it over time this paper investigates whether a j curve can be detected in the last twenty five years of american data no statistically reliable evidence of a stable j curve is detected the model is checked extensively to support this finding

measuring the response of macroeconomic uncertainty to shocks recent research documents the importance of uncertainty in determining macroeconomic outcomes but little is known about the transmission of uncertainty across such outcomes this paper examines the response of uncertainty about inflation and output growth to shocks documenting statistically significant size and sign bias and spillover effects uncertainty about inflation is a determinant of output uncertainty whereas higher growth volatility tends to raise inflation volatility both inflation and growth volatility respond asymmetrically to positive and negative shocks negative growth and inflation shocks lead to higher and more persistent uncertainty than shocks of equal magnitude but opposite sign

hedonic amenity valuation and functional form specification this paper uses gis data to develop variables representing the physical extent and visibility of surrounding land use cover features in a hedonic model of a rural suburban residential housing market three equations are estimated to determine if views

mitigating the price effects of growth control a case study of davis california american cities and suburbs have long used their zoning powers to exclude certain groups usually the poor or racial minorities davidoff and davidoff 1971 bosselman 1973 in the last decade many communities have adopted regulations that directly or indirectly control their socioeconomic composition as well as their rate of growth white 1978 dowall 1984 these communities typically justify growth control by asserting that new development does not pay its way the property tax revenues it generates do not pay for the services it requires that population growth will degrade the character of the community and that development will come at the expense of more desirable uses of the land farming or parkland schwartz et al 1979 regardless of the community s rationale for limiting growth the result may be the exclusion of poor households from the community studies of growth control support the assertion that growth control increases the price of housing in a community estimates of the increase in the market price of housing due to growth control have ranged from 13 to 50 percent katz and rosen 1980 gruen and gruen 1977 schwartz et al 1979 legal attacks on stringent growth control programs have been based largely on the public welfare and equal protection issue arguing that the increase in housing prices excludes lower income households from the community several communities have introduced growth controls with accompanying measures designed to reduce the increase in the price of housing an assessment of the effectiveness of these measures

the impact of site characteristics on housing cost estimates abstract hedonic housing regressions using micro data for owners and renters from the 1972 1973 consumer expenditure survey are presented by including tract characteristics and public goods in these regressions evidence is presented which indicates sensitivity of the physical housing variable coefficients to the choice of included site related characteristics furthermore omission of public good variables can result in misleading and possibly perverse coefficients on access intermetropolitan housing cost estimates however are shown to be relatively insensitive to the choice of site related characteristics

do devaluations improve the trade balance the evidence revisited do devaluations improve the trade balance the evidence revisited this paper reexamines the effectiveness of devaluation in trade balance adjustment the question is addressed in a framework which improves the previous empirical literature in several respects the evidence indicates that devaluations have been a successful tool in inducing trade balance adjustment in particular nominal devaluations are found to result in significant real devaluations that last for at least three years and the real devaluation induces significant trade flows that are distributed over a two to three year period the evidence comes from two different samples 1953 73 and 1975 84 involving twenty seven countries and sixty devaluation episodes 1 introduction do devaluations affect real magnitudes in particular the trade balance a devaluation may effect the trade balance through two channels devaluation of the real exchange rate and a direct effect on domestic absorption the traditional approach stresses the first channel a nominal devaluation is assumed to change the real exchange rate a relative price and thus improve competitiveness in turn if relative prices the terms of trade in a two country two good model affect the trade balance devaluation will be successful in the sense of improving the trade balance ceteris paribus the absorption effect becomes the sole or most important channel in the monetary approach in a world in which all goods and assets are perfect substitutes prices are exogenously given for the small country and wages and prices are flexible in both nominal and real terms a devaluation increases the price level by the same percentage the increase in the price level reduces real balances and thus domestic absorption dornbusch 1973 883 has argued that if such a real balance effect is not present then it might stand to reason that the effects of devaluation are negligible not that there must be other powerful avenues through which it exerts its effects emphasis added the controversy over the effects of devaluation on the trade balance arises because according to frenkel and johnson 1976 42 the monetary approach rejects the emphasis given to the role of relative prices in the analysis of devaluation global monetarists argue that neither of the links in the chain postulated by the traditional approach is likely to hold in practice see laffer 1977 the major disagreement centers on the question of the effectiveness of nominal devaluation to affect the real exchange rate and the importance of the latter in influencing trade flows theoretical arguments have not settled the issue the question is as strongly debated today as it was forty years ago see for example branson 1983 katseli 1983 kaldor 1983 nashashibi 1983 and mckinnon 1981 nor does it seem that the available empirical evidence leads to a consistent answer the best known studies cooper 1971 laffer 1977 salant 1977 miles 1979 gylfason and risager 1984 reach contradictory conclusions 1 cooper and gylfason and risager find that devaluations improve the trade balance or current account while laffer and miles conclude exactly the opposite salant finds that devaluations improve the trade balance but not as often as the overall balance of payments in the face of such diverse findings frenkel 1984 suggests that a reexamination of the issue would be useful indeed himarios 1985 shows that a close examination of miles s widely quoted study reveals serious deficiencies that once addressed lead to opposite results this paper provides new evidence concerning the effectiveness of devaluation in trade balance adjustment the approach differs from past studies in several respects it differs from cooper s laffer s and salant s studies in that it accounts for the effects of other variables that affect the trade balance

new estimates of climate demand evidence from location choice abstract we develop and apply to census data a new method for estimating climate demand the method is useful for ranking quality of life based upon a willingness to pay criterion our two major findings are that the willingness to pay quality of life index is correlated with the hedonic approach s ranking but that the migration approach generates much larger estimates of willingness to pay for a more moderate climate this finding is relevant for evaluating the economic impact of global warming

the specification of hedonic indexes for urban housing most studies evaluating the effect on housing prices of regulatory programs for controlling urban growth use econometric methods hedonic price models without considering the research design aspects of the task this article examines the strengths and

are output fluctuations transitory according to the conventional view of the business cycle fluctuations in output represent temporary deviations from trend the purpose of this paper is to question this conventional view if fluctuations in output are dominated by temporary deviations from the natural rate of output then an unexpected change in output today should not substantially change one s forecast of output in say five or ten years our examination of quarterly postwar united states data leads us to be skeptical about this implication the data suggest that an unexpected change in real gnp of 1 percent should change one s forecast by over 1 percent over a long horizon

the asymmetric effects of uncertainty on inflation and output growth we study the effects of growth volatility and inflation volatility on average rates of output growth and inflation for post war us data our results suggest that increased growth uncertainty is associated with significantly lower average growth while higher inflation uncertainty is significantly negatively correlated with lower output growth and lower average inflation both inflation and growth display evidence of significant asymmetric response to positive and negative shocks of equal magnitude copyright 2004 john wiley sons ltd

sample selection and biases in local house value indices abstract analysis of cross sectional or intertemporal variations in house values among localities requires reliable house value indices however prior studies applying the hedonic method to transaction data have reported price series that may be biased our paper investigates a possible cause of bias and uses a censored regression technique extended to an intertemporal model to derive an unbiased index we apply our method to 1971 1991 data from the miami florida msa and find evidence in time varying amounts of bias our results suggest that prior studies using the hedonic method and samples consisting only of sold houses have understated the intertemporal variability of house prices

discrepancies in international data an application to china hong kong entrepot trade before discussing discrepancies in international data it is essential to talk about the sources of the data the principal source for global trade statistics is the united nations un that agency relies on the trade statistics reported by its member countries the obvious discrepancy in these reports is that what country a says it sends to country b is not the same as what country b says it receives from a such differences in what the exporting and importing countries report is not just a feature of developing countries these discrepancies are pervasive in industrial countries as well for example since 1989 the united states has abandoned its attempt to keep track of exports to canada and now just relies on canadian data on its imports from the united states see robert feenstra 1997 table 2 prior to this action the united states underreported its exports to canada by more than 10 percent as compared to the canadian value this illustrates the general principle that the information collected by the importer which is often collecting tariff revenues and therefore has an incentive to record imports accurately is usually viewed as more accurate than that collected by the exporter there are then two problems with the un data it contains different information from the exporting and importing countries and it is expensive at least by the standards of lowbudget academic work progress on the first of these problems has been made by statistics canada in the world trade database wtdb that agency obtains the un trade data and then attempts to resolve the differences between the exporters and importers providing a single number for the value of each disaggregate good sent from country a to b these data are distributed on cd rom but are still fairly expensive by academic standards to make progress on the second problem the statistics canada data set for an early set of years 1970 1992 is distributed by the national bureau of economic research nber for a nominal fee also in cd rom format see feenstra et al 1997 in view of the widespread use of these data distributed by the un statistics canada or the nber it is worth asking how well the statistics canada database resolves the differing reports by the exporters and importers to take a particularly important example consider u s trade with china in 1996 the united states reported a deficit with china of 39 5 billion while the chinese reported a value of the u s deficit of 10 5 billion these two figures differ by 29 billion or a factor of three times at the heart of these differing values is the treatment of goods shipped through hong kong which remains a separate entity from china for customs purposes to what extent does statistics canada resolve the differences between these reported trade values to arrive at some credible value of bilateral trade unfortunately this issue is not resolved at all the values given in the statistics canada wtdb for chinese exports to the united states are very close to those reported by china and are much less than those reported by the united states this is contrary to the general principle stated above of treating the exporter s record of trade as less accurate than the importer s record on the other hand the u s official figures for imports from china are too high because they include the feenstra department of economnics university of california davis ca 95616 haas school of business university of califomia berkeley and national bureau of economic research hai department of economics fort lewis college and china centre for economic research beijing university woo and yao department of economics university of califomia davis we thank li yan jin hongman and jiang xiaozhu from the customs general administration people s republic of china for assisting with the study from which the results reported here are drawn

price effects of rent control on controlled and uncontrolled rental housing in toronto a hedonic index approach this paper examines the price effects of rent controls with exemptions on rent controlled and non rent controlled housing in toronto a model of rent determination in the controlled and uncontrolled markets is presented the paper then applies a hedonic pricing technique to develop indices of the uncontrolled rent relative to the controlled rent for standardized sets of housing characteristics approximately one half of the difference in observed rents is attributable to quality differences between markets and one half to the effect of rent controls

the us china trade imbalance will revaluing the rmb help much abstract the large us china trade imbalance is regularly blamed on the undervalued rmb using an estimated model of the trade balance we find that improvements in the trade balance are likely to be modest for plausible revaluations

are empirical measures of macroeconomic uncertainty alike there is a plethora of time series measures of uncertainty for inflation and real output growth in empirical studies but little is known whether they are comparable to the uncertainty measure reported by individual forecasters in the survey of professional forecasters are these two measures of uncertainty inherently distinct this paper shows that compared with many uncertainty proxies produced by time series models the use of real time data with fixed sample recursive estimation of an asymmetric bivariate generalized autoregressive conditional heteroskedasticity model yields inflation uncertainty estimates which resemble the survey measure there is however overwhelming evidence that many of the time series measures of growth uncertainty exceed the level of uncertainty obtained from survey measure our results highlight the relative merits of using different methods in modelling macroeconomic uncertainty which are useful for empirical researchers

do recessions permanently change output abstract this paper examines whether negative innovations to gnp are more or less persistent than positive innovations we find that once we allow for the impulse response of gnp to be asymmetric negative innovations to gnp are observed to be much less persistent than positive ones in particular the effect of a recession on the forecast of output is found to be negligible after only eight to twelve quarters while the effect of a positive shock is estimated to be persistent and amplified over time our results may therefore help reconcile two antagonistic views about the nature of business cycle fluctuations

searching for a better proxy for business cycles with supports using us data this study revises the original current depth of recession cdr to prove that the modified cdr mcdr is more suitable as a threshold variable than the cdr we rebuild the cdr indicator and adjust its positive and negative ranges with the estimation results of the threshold autoregressive tar model we construct two tar models utilizing cdr and mcdr as threshold variables respectively estimation and test results of the root mean square error theil s inequality coefficient and the diebold mariano dm 1995 test suggest that mcdr performs better as a threshold variable than cdr

an empirical analysis of the demand for housing attributes in a third world city this paper presents estimates of the demand for a set of housing attributes using data drawn from the renter and owner occupier housing submarkets for ibadan nigeria the empirical analysis based on an adaptation of rosen s two step model reveals that the most important determinants of the demand for housing attributes are income price of the attribute in question household size and the occupational status of the head of household the paper further indicates that the demand for housing attributes is inelastic since all estimated coefficients are below unity

output growth and its volatility the gold standard through the great moderation this study examines the relationship between u s output growth and its volatility over the period 1876 i to 2012 ii we adjust the data for outliers and structural breaks we employ generalized autoregressive conditional heteroskedasticity garch and exponential garch egarch specifications normality and homoskedasticity appear only in the garch or egarch model that corrects for the outliers when including the break in the mean equation high volatility persistence remains after also accommodating the breaks in the variance equation the integrated garch effect proves spurious either for the symmetric or the asymmetric model finally our empirical results suggest that the finding of higher output growth volatility stimulating output growth and higher output growth reducing its volatility obtained from the symmetric garch in mean garch m model also proves spurious as a result of the emergence of an asymmetric effect our more appropriately specified asymmetric egarch m model suggests positive volatility in mean and level effects in the long period real gross national product series

the short run and long run benefits of environmental improvement abstract the social value of a nonmarginal improvement to amentities is not related to hedonic prices in a simple way furthermore hedonic price data do not completely reveal preferences in order to evaluate short run benefits of an improvement the rate of change of the hedonic price function must be normalized by a ratio of population densities to calculate long run benefits of the improvement one must calculate the responsiveness of population densities to the nonmarginal improvement a technique to do so is suggested

buying beauty on prices and returns in the art market this paper investigates the price determinants and investment performance of art we apply a hedonic regression analysis to a new data set of more than one million auction transactions of paintings and works on paper based on the resulting price index we conclude that art has appreciated in value by a moderate 3 97 per year in real u s dollar terms between 1957 and 2007 this is a performance similar to that of corporate bonds at much higher risk a repeat sales regression on a subset of the data demonstrates the robustness of our index next quantile regressions document larger average price appreciations and higher volatilities in more expensive price brackets we also find variation in historical returns across mediums and movements finally we show that measures of high income consumer confidence and art market sentiment predict art price trends this paper was accepted by wei xiong finance

simultaneity in the market for housing characteristics abstract the nature of simultaneity in the markets for housing characteristics is examined simultaneity is found to arise in the implicit markets for individual characteristics because of the presence of nonlinearity in the market hedonic price function for housing however this simultaneity is not the kind discussed by s rosen j political econ 82 34 55 1974 between firm supplies and household demands as a result the rosen suggestion of identifying demand with firm supply shifters is inappropriate among the alternative approaches to identification the most desirable involve use of data over two or more markets in which residence for a given household is exogenous to the choice of housing

a bayesian approach to assessing the robustness of hedonic property value studies hedonic price models are widely employed to estimate implicit prices for bundled attributes residential property value studies dominate these applications using a representative cross sectional property value data set we employ bayesian methods to translate a range of priors in covariate selection typical of hedonic property value studies into a range of posterior estimates we also formulate priors regarding measurement error in individual covariates and compute the ranges of resulting posterior means finally we empirically demonstrate that a greater and more systematic use of prior information drawn from one s own data and from other studies can break the collinearity deadlock in this data

fundamental flaws of social regulation the case of airplane noise abstract this article provides an economic assessment of federal regulatory policy toward airplane noise as encapsulated in the 1990 airport noise and capacity act anca this act mandated the elimination of certain aircraft such as the boeing 727 and dc 9 from all u s airports by the end of 1999 to meet quieter noise requirements we find that the present discounted benefits of the anca reflected in higher property values for homeowners fall 5 billion short of the anca s cost to airlines reflected in the reduced economic life of their capital stock more fundamentally we find that the net benefits that could have been generated by an economically optimal airplane noise tax amount to only 0 2 billion present value it appears that noise regulations have generated substantial costs to society when in fact there was little justification on efficiency grounds for regulatory intervention in the first place

nonlinear budget constraints and consumer demand an application to public programs for residential housing abstract this study presents a methodology for exploiting the nonlinear hedonic nature of housing prices to estimate the compensated demands of households for particular housing attributes the methodology is employed to provide hicksian benefit measures of a particular housing subsidy program typical of those undertaken recently in developing countries

the substitution between moves and quits if a worker s workplace and residence locations do not maximize utility quits and moves are substitutes a quit or a move alone is more likely than both together records of a single company confirm this simultaneous bivariate probit estimates of move and quit behavior demonstrate that uncontrolled shocks to quits and moves are negatively correlated furthermore when the company relocated from the central business district to a suburb of its metropolitan area the occurrence of either a quit or a move virtually precluded the occurrence of the other among employees whose journeys to work were lengthened by the relocation copyright 1991 by royal economic society

housing values census estimates disequilibrium and the environmental cost of airport noise a case study of atlanta abstract two unresolved issues about airport noise property value studies are addressed the first issue concerns the comparability of empirical results from aggregate census data vs individual sales values and the second issue concerns the homogeneity and stability of results from housing price studies over time and across markets hedonic price models from two sets of data for a residential area near the atlanta international airport are estimated at two points in time 1979 1980 and 1970 1972 the available data yield similar estimates of the noise discount over time and from the prices of individual house sales vs owner appraised census block aggregates

attributes determining condominium prices in bangkok in thai the housing market particularly the condominium sector in bangkok has been rapidly expanding in this paper the hedonic price model is used to analyze the housing attributes that determine the price of condominiums in bangkok the box cox technique is used to find an appropriate functional form of the model the data of condominium prices and 20 attributes of 146 condominium units were collected from 42 sales offices during 1 31 january 2011 the results indicate that the attributes determining the price of condominium in bangkok were project location proximity to sky train and subway unit location unit size furniture total number of units in a project land size waiting duration before construction is completed reputation of developers parking space common fee for maintenance and services and number of bedrooms the estimated coefficients indicate relative prices of the attributes which can be used as reference prices for buyers developers and banks

nonlinear business cycle dynamics cross country evidence on the persistence of aggregate shocks i introduction economists have long been interested in the dynamics of business cycles particularly regarding the symmetry of expansions and contractions more recently the specification of stochastic trends in economic growth has generated concerns about the relative persistence of positive and negative shocks to the economy several papers have looked at the persistence of business cycles including nelson and plosser 1982 campbell and mankiw 1987 cochrane 1988 diebold and rudebusch 1989 balke and fomby 1990 zelhorst and de haan 1994 and bradley and jansen 1995 while results vary especially on the issue of a unit root in output the overarching result is that output fluctuations are highly persistent one question not asked by the above authors is whether business cycle dynamics are asymmetric this issue has been investigated by neftci 1984 falk 1986 delong and summers 1986 hamilton 1989 diebold and rudebusch 1990 and terasvirta and anderson 1991 these authors take a variety of approaches but they reach a general conclusion that there is some evidence of asymmetric business cycle dynamics however most of these studies ask if contractions are shorter and steeper than expansions except hamilton 1989 they do not ask if there is a difference in persistence due to the asymmetries in a recent paper beaudry and koop 1993 propose a set of methods for simultaneously examining these two questions specifically beaudry and koop bk recommend the augmentation of the standard arma representation of real output growth through the inclusion of a nonlinear term that captures the relative state of the economy this augmentation provides for nonlinear dynamics and the possibility of asymmetric dynamic responses to positive and negative shocks in addition calculation of the implied impulse responses permits detection of the relative persistence implied by the combination of asymmetric cycle dynamics and stochastic trend based upon their analysis of u s data bk conclude that the response of the economy to positive and negative shocks is indeed asymmetric and the imposition of symmetry on impulse responses has likely led to misleading measures of persistence bk p 162 as a result bk conclude we find that the effects of negative shocks to be mainly temporary and the effects of positive shocks to be very persistent bk p 162 if bk s results are correct they have strong implications for the way macro economists view economic fluctuations and will in their words contribute to a reappraisal of some macroeconomic theories that is bk s results suggest that macroeconomic models must be revised to provide for temporary effects of negative shocks but permanent effects of positive shocks because of the potential importance of bk s results we examine the robustness of those results by modifying and extending bk s proposed methods of testing not only do we extend the analysis to the other six g7 countries besides the united states but also we redefine in a sensible way the nature of the nonlinear dynamics overall our results from other economies provide only mixed support for the asymmetry of cyclical dynamics and the lack of persistence of negative shocks ii the model to be estimated in the bk framework the estimated model includes an asymmetric response term the asymmetry is generated by a variable that measures the strength of a recession the variable is calculated as the distance between current real gdp and the previous peak level of real gdp that is bk define a measure they call current depth of the recession cdr where 1 cdr sub t max y sub t j sub j greater than or equal to 0 y sub t with this definition in place bk recommend augmenting an autoregressive model of real gdp growth as 2 phi l delta y sub t delta omega l 1 cdr sub

hedonic prices and the demand for housing attributes in a third world city the case of ibadan nigeria this paper estimates the demand functions for a set of housing attributes for the city of ibadan nigeria using rosen s two step estimation procedure the empirical results reveal that the most im

the effect of recessions on the relationship between output variability and growth this paper investigates the relationship between output volatility and growth using post war real gdp data for the united states we expand on recent research by beaudry and koop 1993 documenting the asymmetric effect of recessions on output growth the results presented in this paper suggest that output volatility is highest when the economy is contracting while we find that the economy expands most rapidly following a recession this expansion is offset by the negative impact of output uncertainty

cross country evidence on the link between volatility and growth this paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations in a sample of ninety two countries as well as a sample of oecd countries the authors find that countries with higher volatility have lower growth the addition of standard control variables strengthens the negative relationship the authors also find that government spending induced volatility is negatively associated with growth even after controlling for both time and country fixed effects copyright 1995 by american economic association

hazardous waste sites and property values in the state of new jersey the polluter pays principal is justified as a deterrent to future pollution however the us experience suggests that it has considerably reduced the clean up rate of existing hazardous waste sites coaseapos s theorem is used as basis to propose that a partnership between the polluters and property owners near these sites will not only ease financial burden but will also speed up the pace of cleanup a hedonic price model is used to empirically estimate the impact of siting of hazardous waste sites on property values and determine the economic feasibility of the proposed partnership the empirical estimates are based on municipality level data from the state of new jersey the benefis from speedy clean up of hazardous waste sites to new jersey property owners are observed to exceed the cleanup cost of these sites

the effect of rent control on the price of rental housing an hedonic approach it is widely believed that rent control leads to a decline in the quality of rental housing this study examines the effect of rent control on the quality of rental housing in new york city quality change is linked to the suppression of rent below