does it matter how monetary policy is implemented abstract in the u s existing monetary base measures add an adjustment factor for changes in reserve requirement ratios to high powered money implicitly the monetary base assumes that the economic effects of changes in reserve requirements are identical to those due to changes in high powered money theory however does not generally support the prediction that the two policy tools will have the same economic effects structural vars are estimated to compare the short run paths of inflation and output growth under two different types of policy shocks in doing so this analysis gives one a measure of the costs associated with this implicit equivalence assumption the evidence is consistent with the hypothesis that the federal reserve at least partially offsets reserve requirement changes with open market operations and the hypothesis that dynamic explanations of macroeconomic variables are improved by separating reserve requirement changes from other monetary policy moves

the information value of the fomc policy directive under the new operating procedures the federal reserve s federal open market committee fomc meets every one to two months to determine its monetary policy objectives over the near term at the conclusion of each meeting the fomc issues a policy directive to the system s account manager at the new york federal reserve bank specifying short run money growth targets and a federal funds interest rate tolerance range the policy directive is not disclosed to the public until after the next meeting when a new directive becomes effective in an earlier paper o brien 1981 evidence was presented suggesting that immediate disclosure of the fomc policy directives over the period january 1976 june 1979 would have improved the accuracy of market expectations of near term interest rate levels by no more than minor amounts in this paper we examine the information value of the fomc policy directives in predicting near term levels of interest rates urder the federal reserve s revised operating procedures adopted in late october 1979 but modified in late 1982 in the next section the interest rate information value of the fomc policy directive is discussed in terms of a simple money demand and supply model

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

a note on discount rate policy and the variability of discount window borrowing abstract the purpose of this note is to evaluate the appropriate discount rate policy rules consistent with minimization of the variability of borrowing at the federal reserve discount window in the context of goodfriend s 1983 model of the bank borrowing decision it is demonstrated that either a penalty rate or a subsidy rate policy will produce minimized variability of borrowing so long as the subsidy rate adjusts point for point to changes in the value of the federal funds rate these policy rules are compatible with a policy procedure designed to target borrowed or non borrowed reserves if the fed does not adhere to one of these specific rules minimization of borrowing variability requires an open market procedure in which the fed pegs the federal funds rate

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

monetary innovations and interest rates this paper examines the effect of unexpected weekly changes in the money supply on financial markets l examination of financial market reaction to weekly monetary surprises provides information on how the economy reacts to monetary changes also the reaction to weekly monetary surprises may put real or imagined constraints on federal reserve behavior as noted by tobin a decade ago certainly the rate of growth of the money stock has become the customary capsule form for describing monetary policy and gauging how easy or tight it is for a time it seemed that public preoccupation with this number might itself be a market constraint on the federal reserve believers in monetarism would regard accelerated growth of m1 as the harbinger of more inflation and higher interest rates if such people were to dominate financial markets they would make it difficult for the fed to carry out a rate reducing expansionary policy tobin 1974 p 70 throughout the paper unexpected weekly changes in the money supply monetary innovations are measured by reported changes in the supply of money minus expected changes where expected changes in money are obtained from market survey data changes in current interest rates of various terms to maturity are used to measure the effects of innovations on financial markets

instability of the u s money demand function this paper surveys the two major episodes of instability of the u s money demand function known respectively as the mystery of missing money and the great velocity decline it also assesses the recent literature on open economy money demand models and their usefulness in explaining the puzzling behavior of money demand manifested shortly after the transition to floating exchange rates copyright 1991 by blackwell publishers ltd

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

the federal reserve s new operating procedures a post mortem abstract although money stock targeting has been the strategic focus of federal reserve policy since the mid 1970 s operating policy the tactics whereby the longer run strategy is implemented over short term intervals has been changed by the federal reserve at least twice over this period a particularly dramatic change in operating policy was announced by the federal reserve in october 1979 this paper provides empirical evidence that settles questions about the nature of this change and suggests that the new operating procedures may have contributed to the heightened interest rate volatility experienced over the 1979 to 1982 period

the identification of monetary policy disturbances explaining the liquidity puzzle abstract this paper examines recent work on the identification of monetary policy disturbances its main finding is that the empirical anomalies found in the literature reflect a failure to properly address the federal reserve s policy of accommodating reserve demand shocks a new method of identifying monetary policy using nonborrowed reserves is proposed using this specification policy has a strong persistent liquidity effect regardless of subsample policy granger causes output even in the presence of interest rates explaining approximately 49 of the variance in output at a two year horizon and the residual explanatory power of interest rates for output is negligible

u s treasury bill forward and futures prices for the period 1976 87 forward rates on u s t bills averaged more than 30 basis points above the comparable futures market rates since risk is common to both rates i argue that this difference can be explained by the substitutability of different maturity t bills for money consistent with this hypothesis i find that this difference depends positively on interest rates and the spread between the federal funds and 3 month t bill rates and negatively on the ratio of short term governments to broadly defined money also significant shifts occurred in the relationship in october 1979 and august 1982 coinciding with changes in federal reserve operating procedures copyright 1994 by ohio state university press

does the federal reserve affect asset prices abstract the federal reserve is probably one of the institutions most closely monitored by investors this indicates that investors believe the actions of the fed have implications for asset prices to this date the trading activities of the fed in the financial markets have not been examined to see how the fed influences asset prices using daily data on open market operations omos and asset prices this study fills this void one finding of the paper is that omos granger cause both short and long term interest rates furthermore the sign of the relationship confirms the existence of the liquidity effect given that its trades represent a small portion of the market volume how the fed influences bond prices is a puzzle the only reasonable explanation is that the fed s trades have high information content judging by the impulse response paths the reaction of interest rates to open market operations is fast additionally it appears that monetary policy has a lasting impact on interest rates

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

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

federal reserve operating procedures a survey and evaluation of the historical record since october 1979 comment william poole has produced another thoughtful and thought provoking paper two major conclusions emerge from his work first the instability of growth in m1b since october 1979 can be attributed largely to a reluctance by the federal reserve to permit wide enough swings in the federal funds rate second to correct this problem and to promote greater stability in financial markets and the economy the fed ought to replace lagged with contemporaneous reserve accounting and reform the discount window they should then begin to hit a nonborrowed base or reserves target that grows at a steady rate i will organize my comments around these two conclusions i will not comment directly on the other excellent paper in this session by ralph c bryant i will refer to some of bryant s empirical work though in my discussion of the poole paper poole attributes the continued extensive volatility of m1b growth since october 1979 to efforts by the federal reserve to smooth interest rates he concedes that the fed really has let go the federal funds rate to a very considerable extent but he believes that variability in m1b growth over tonger periods is due primarily to the important role accorded interest rates in federal reserve policy making italics mine he cites four reasons for believing that the post october 1979 targeting procedures qualitatively are not very different from the federal funds targeting procedure followed earlier of the four the most interesting and empirically verifiable is that in nearly one third of the weeks since october 1979 the federal funds rate has averaged within 100 basis points of either the bottom or the top of the widened target range during these weeks the constraint on the funds rate might have prevented the fed from hitting its nonborrowed reserves target poole in fact accepts this view uncritically

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

the political economy of targeting one of the most widely used method of targeting is to reduce welfare benefits as income rises although the need for such targeting is clear enough it also entails two important difficulties firstly the prospect for the recipients of losing part of their benefits if they were to earn more can be a deterrent to work harder secondly by reducing the number of recipients targeting reduces the political support for taxation and redistribution the purpose of this paper is to study the voting equilibrium of the degree of targeting and the level of taxation in an economy where labour supply is variable the analysis reveals that targeting may be fatal for redistribution even though it rejects strictly less than the richest half of the population and that it is not possible for a coalition of the extremes to form and reject the middle income group from the welfare system moreover because targeting affects labour supply we find that pareto improvements are possible when targeting is either too low or too high we also find that voting simultaneously over taxation and targeting is favourable to the poor in the sense that they can converge to their most preferred policy by successively forming a majority coalition with the rich to increase targeting and with the middle to increase taxation

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

federal reserve interest rate targeting rational expectations and the term structure abstract the amount of information in the yield curve for forecasting future changes in short rates varies with the maturity of the rates involved indeed spreads between certain long and short rates appear unrelated to future changes in the short rate contrary to the rational expectations hypothesis of the term structure this paper estimates a daily model of federal reserve interest rate targeting behavior which accompanied by the maintained hypothesis of rational expectations explains the varying predictive ability of the yield curve and elucidates the link between fed policy and the term structure

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

federal reserve control of the money stock comment it is widely believed that the money stock of the united states somehow defined should play a central role in the conduct of federal reserve monetary policy in particular it is believed that the federal reserve should publicly announce a target time path for the money stock and then try to make the actual stock follow that path closely the analytical basis for this approach to federal reserve policy however is seriously deficient unfortunately moreover debate about this approach seldom focuses on the important controversial issues about which views can justifiably differ instead the debate often becomes mired in confusion and false issues one important source of confusion is an inadequate analysis of the operating procedures through which the federal reserve implements its policy from one short run period to the next a second source is a widespread misperception of the economic processes determining the money stock most noneconomists and even many economists seem to believe that the federal reserve can straightforwardly cause the money stock to follow a target path closely month by month provided only that the federal reserve conscientiously tries to do so a third source of confusion is a poor understanding of the two stage decision process implicit in the

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

benefits and the labour supply of women married to unemployed men this paper seeks to explain the low labor force participation rates of women married to unemployed men in the reducing the net increment to household income that would result from the wife s employment simple probit models of the participation and part time full time decisions are estimated using a large cross sectional data set the results confirm the importance of severe disincentive effects controlling for labor market conditions income related benefits are found to create worse problems than national insurance benefits both types impede part time work in particular copyright 1990 by royal economic society

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

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

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

social security policy in a changing labour market conditions in the uk labour market of the 1990s are markedly different from those which prevailed in the post war period when the modern welfare state was created the main differences include a growth in long term unemployment in female part time employment and in low paid employment and self employment in some respects social security policy has adapted to reflect these new patterns the clearest example of this is the introduction and enhancement of in work benefits such as family credit however two of the main strands of benefit policy in recent decades greater reliance on family based means testing and an increased role for private insurance do not fit so well with labour market trends in the case of the privatization of mortgage insurance the result is likely to be further redistribution away from those in insecure or low paid employment copyright 1995 by oxford university press

the micromechanics of the federal funds market implications for day of the week effects in funds rate variability the federal funds rate arguably is the most important interest rate in the u s capital market because it plays a central role in monetary policy and the term structure this paper examines the micromechanics of the funds market we show that in a continuous market with asynchronous trading regulatory constraints and accounting conventions that focus agents attention on discrete time instants have important implications for the dynamics of trading activity and realized market prices we also exhibit a model of the market that explains observed regularities in the intertemporal behavior of the funds rate

rational expectations econometric analysis of changes in regime an investigation of the term structure of interest rates abstract this paper is of interest both for its methodological contribution of new tools for analyzing rational expectations models and for its substantive conclusions concerning the term structure of interest rates during the monetary experiment of october 1979 the paper studies systems subject to changes in regime interpreted here as occasional discrete shifts in the parameters governing the time series behavior of exogenous economic variables the specification is shown to be quite tractable both theoretically and empirically the technique is used to analyze yields on three month treasury bills and ten year treasury bonds during 1962 to 1987 a constant parameter linear model for short term rates is shown to be inconsistent both with the univariate time series properties of short rates and with the observed bivariate relation between long and short rates under the expectations hypothesis of the term structure an alternative nonlinear model that admits the possibility of changes in regime affords a much better description of the univariate process for short rates moreover the cross equation restrictions implied by the expectations hypothesis of the term structure are consistent with the nonlinear specification indeed the residuals of the restricted relation have a standard error of only 0 8 basis points this is a third less than that of a completely unrestricted linear regression of long rates on short rates and compares with an unconditional standard deviation of long rates of 142 basis points i conclude that once the recognition by bond traders of changes in regime is taken into account the expectations hypothesis of the term structure of interest rates holds up fairly well for these data

revisiting the us money demand function an application of the lagrange multiplier structural break unit root test and the bounds test for a long run relationship in this article we examine the issue of a levels relationship and stability of the us money demand function over the period 1959 01 to 2004 02 we use the lagrange multiplier structural break unit root test and the bounds testing approach to a long run relationship in levels of the variables namely real money demand nominal interest rate and real income we find greater evidence for a long run relationship in levels and stability of the us money demand function when we use m2 as a proxy for money demand however we find little evidence for a long run relationship between m1 and m2 with their determinants for the recent period spanning the last decade or so

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

intermediate monetary targets and macroeconomic fluctuations it is investigated whether the choice of intermediate target has altered macroeconomic fluctuations and whether the observed changes are consistent with predictions from economic theory since implications from the theoretical literature focus on the effects of structural disturbances an empirical analysis must identify these effects the structural vector autoregressive var technique estimates structural disturbances using restrictions from standard macroeconomic theory based on descriptions of actual targeting procedures by insiders to federal reserve policy decisions the intermediate target for the united states is identified as the interest rate from 1951 to 1969 and money from 1970 to 1986 var models are estimated over each subsample to assess whether the estimated structural disturbances cause endogenous variables to behave as economic theory predicts tests are also performed to assess whether or not the targeting rule affects the variance of endogenous variables attributable to structural sh

the return of the liquidity effect a study of the short run relation between money growth and interest rates in this article i use band pass filters to investigate the short run relationship between money growth and interest rates i find a negative correlation between short run movements in money growth and interest rates which i interpret as evidence that the liquidity effect dominates the anticipated inflation effect

a short history of labour turnover job tenure and job security 1975 93 how extensive is labour turnover and how does it vary by gender skill and over time using survey data from britain between 1975 and 1993 this study documents these features and discovers evidence of widening inequalities in job stability and security for the majority still in full time employment average job durations are little changed from those of twenty years ago for those seeking employment however current patterns of job creation mean that entry jobs are now of shorter duration more unstable and relatively less well paid nor do entry jobs offer sufficient access into stable jobs as a result entry jobs are increasingly taken by those with a partner in work polarising the distribution of employment and thereby disenfranchising around one fifth of working age households from regular access to earned incomes copyright 1995 by oxford university press

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

the labour market and economic risk friend or foe this paper examines the twofold role of the labour market in household economic risk management as a source of household consumption risk and as an instrument for insuring consumption against contingencies it outlines a framework for analysing this twofold role of the labour market and uses data from the british household panel survey 1991 1996 to explore this empirically it identifies the relative importance of the labour market and other factors in producing changes in the financial situation of individuals it also implements full insurance tests of whether unemployment and other external shocks to the household are correlated with consumption growth it concludes that labour market factors are a dominant source of change in individuals financial situation with a predominantly positive effect on the financial situation of the better off and a predominantly negative impact on the financial situation of the less well off it also finds that households are unable to fully insure their consumpti

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

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

a markov model of switching regime arch in this article i present a new approach to model more realistically the variability of financial time series i develop a markov arch model that incorporates the features of both hamilton s switching regime model and engle s autoregressive conditional heteroscedasticity arch model to examine the issue of volatility persistence in the monthly excess returns of the three month treasury bill the issue can be resolved by taking into account occasional shifts in the asymptotic variance of the markov arch process that cause the spurious persistence of the volatility process i identify two periods during which there is a regime shift the 1974 2 1974 8 period associated with the oil shock and the 1979 9 1982 8 period associated with the federal reserve s policy change the variance approached asymptotically in these two episodes is more than 10 times as high as the asymptotic variance for the remainder of the sample i conclude that regime shifts have a greater impact on the properties of the data and i ca

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

trade interdependence and the international business cycle a stochastic general equilibrium model of the world economy is developed to analyze the contribution of trade interdependence to international business cycles we test some of the implications of the model using data from ten major industrial countries and a variety of detrending techniques to calculate the cyclical component of output we find that the significance of trade in the transmission of economic disturbances across countries is not robust to the choice of the detrending method in general the role of trade interdependence is moderate and seem to have been stronger in the period before 1973