House Price Appreciation, Transactions and Structural Change in the British Housing Market: A Macroeconomic Perspective

This paper constitutes the first of two interrelated studies and is concerned with the relationship between house prices and transactions. Using aggregate time–series data, we find a strong relationship in Britain between the two variables, but the relationship changed during the 1990s. Transactions became much lower. We suggest that structural changes in macroeconomic relationships are increasingly likely to occur in a world of greater inequality and our results are one symptom. We argue that macroeconomic estimation needs to be complemented by careful microeconomic analysis. The second study, also appearing in this issue, therefore examines the microeconomic aspects of the issue.     

Racial differences in the hurdling of prenatal care barriers

The success of black or white mothers in obtaining adequate prenatal care is examined. Two departures from public health convention are employed. The independent variables' marginal effects are calculated from their logit coefficients. The odds ratio of care adequacy between races is derived from race-specific regressions. It yields a smaller variance and type II decision error likelihood compared to the race dummy method. A working-class life outlook and apathetic fathers are the highest barriers to adequate care. Wantedness, in the form of desired timing, is a very strong motivator. Improving upward socioeconomic mobility and paternal attitudes are important aspects of increasing prenatal care adequacy rates.     

The ins and outs of European Monetary Union: some public policy issues

This paper reviews the problems, other than the foregone benefits of EMU, that would face countries-either EU members or non-members closely associated with the EU-as a consequence of staying outside EMU.
Problems both economic and political are discussed, but the primary focus is on economic issues.
It is concluded that there may be minor adverse consequences; but they are only a possibility.
What is clear is that claims that there will inevitably be major adverse consequences - higher inflation or interest rates, or lower growth, for example - are entirely without foundation.     

WORLD OUTLOOK

At the end of 1982 output in the world economy was still falling, although there were signs that the decline had very nearly run its course. We expect a radual recovery to begin in the first half o f 1983. Unlike the recovery which began in the late summer of 1980, when inflation was still in double figures, any upturn in 1983 would be set against a background of declining inflationary expectations and weak oil prices. IJ. as we expect, a falling inflation rate proves a decisive factor in keeping interest rates on a downward path, we forecast that the output will gather pace in I983 and rise reasonably strongly in 1984. Of the 4 per cent rise in industrial production which we foresee in 1984. a large part is due to the fall in real oil prices.     

A continuous time approach to the pricing of bonds

This paper develops an arbitrage model of the term structure of interest rates based on the assumptions that the whole term structure at any point in time may be expressed as a function of the yields on the longest and shortest maturity default free instruments and that these two yields follow a Gauss-Wiener process. Arbitrage arguments are used to derive a partial differential equation which must be satisfied by the values of all default free bonds. The joint stochastic process for the two yields is estimated using Canadian data and the model is used to price a sample of Government of Canada bonds.     

The London Business School with Gover Publishing

The world economy is in poor shape. OECD industrial production fell 0.5per cent in both 1991 and 1992 arid though it may now have stopped falling it is still, on our estimates, below year-earlier levels. The US recovery continues to disappoint; recession persists in Japan and Europe; inflationary pressures, already weak, are waning. Next month's UK forecast would normally be based on the world forecast published in June's International Economic Outlook, when we were looking for G7 output to rise 1.2 per cent this year, 2.5 per cent next. But this now looks on the high side and although a detailed revision to the world forecast mist wait until the December IEO, as at1 input to the UK forecast we are shading our G7 growth forecasts - to I per cent this year and 2.25 per cent in 1994. Similar downward revisions are also in train at the OECD arid IMF, according to recent press reports. The more sluggish output performance is already having mi impact on the oil price, which has fallen below £16 a barrel. Together, these developments imply lower world inflation and, particularly in post-ERM Europe, a faster easing of monetary policy than we had allowed for in June.