Reviews

LEARNING FROM THE USA.

Hambleton, R. and Taylor, M. (eds.) 1993: People in Cities: A Transatlantic Policy Exchange. Bristol: School for Advanced Urban Studies Publications, £12.95.

PRIVATE INVESTMENT AND URBAN DEPRIVATION.

Deakin, N. and Edwards, J. 1993: The Enterprise Culture and the Inner City. London: Routledge, £13.99, paper.

CULTURAL POLICY AND URBAN REGENERATION.

Bianchini, F. and Parkinson, M. (eds) 1993: Cultural Policy and Urban Regeneration. Manchester: Manchester University Press, £35.00 cloth.

PERSPECTIVES ON URBAN POLICY.

Atkinson, R. and Moon, G. 1994: Urban Policy in Britain: The City, the State and the Market. Hampshire: Macmillan, £11.99, paper.

EVALUATING URBAN POLICY.

Robson, R. et al. 1994: Assessing the Impact of Urban Policy; Inner Cities Research Programme. Department of the Environment, HMSO,

£40.

DEMOCRATIC CIVIC LEADERSHIP IN TACKLING URBAN PROBLEMS.

Stoker, G. and Young, S. 1994: Cities in the 1990s. Longman. £20, paper.     

On the use of semimartingales and stochastic integrals to model continuous trading

The continuous-time contingent claim valuation model is generalized to stopping times (random trading dates), giving substance to the question of what it means to have unlimited opportunities to trade while trading intercessions may occur only finitely, albeit arbitrarily, often. Robustness and stability of the contingent claim valuation formula are demonstrated, validating the use of continuous-time models for approximating discrete-time trading environments. The no-arbitrage value of a redundant contingent claim is shown to be a stochastic integral obtained as the limit of bounded arbitrage opportunities. As a corollary, we find that the hypothesis needed to value an American call option is significantly stronger than that sufficient to value a European call option.     

Incomes,Incentives and the Growth of Means-Testing in Hungary

The purpose of this paper is to examine the reform of family benefits and the growth of means-testing in Hungary. From 1996, many family benefits were means-tested for the first time. A new microsimulation model for Hungary, running on recent survey microdata, is used to simulate the impact of the 1996 reforms on government expenditures, the distribution of incomes, the targeting of benefits and effective marginal tax rates. These reforms are found to be largely benign and even progressive, but they also appear to be paving the way for the further extension of means-testing. The model is used to investigate such an extension by simulating the impact of a UK-style system of means-tested family benefits in Hungary. This system achieves some expenditure savings and better targeting of benefits, but also greatly increases effective marginal tax rates on low-income households with children. The paper argues that resulting poverty traps may increase child poverty in Hungary in the longer term and cautions against the overextension of means-testing.