Book Reviews

Books reviewed:
E. Wayne Nafziger and Juha Auvinen, Economic Development, Inequality, and War: Humanitarian Emergencies in Developing Countries.
Steve Striffler and Mark Moberg (eds), Banana Wars. Power, Production and History in the Americas.
Stefano Ponte, Farmers and Markets in Tanzania: How Policy Reforms Affect Rural Livelihoods in Africa.
Catherine Boone, Political Topographies of the African State: Territorial Authority and Institutional Choice.     

韩国的东北亚经济中心建设构想及难题

为了应对东北亚区域内外环境的变化以及韩国经济可持续发展的需要,韩国政府提出了构建东北亚经济中心的构想。这是一个以东北亚地区经济合作为基础,以促进东北亚地区经济资源流动与经济发展为目的,由韩国发挥中心作用的远大战略,其建设方案主要包括东北亚物流中心、金融中心、企业中心等内容。文章提出,实现这一目标,需要巨大的资本和较长的时间,需要对韩国政治、行政、经济、媒体、教育等领域进行改革;必须得到东北亚区域内国家特别是中国和日本的协助,构建东北亚经济合作组织。     

Understanding Housing Market Volatility

The Campbell–Shiller present value formula implies a factor structure for the price–rent ratio of housing market. Using a dynamic factor model, we decompose the price–rent ratios of 23 major housing markets into a national factor and independent local factors, and we link these factors to the economic fundamentals of the housing markets. We find that a large fraction of housing market volatility is local and that the national factor has become more important than local factors in driving housing market volatility since 1999, consistent with the findings in Del Negro and Otrok (2007). The local volatilities mostly are due to time variations of idiosyncratic housing market risk premia, not local growth. At the aggregate level, the growth and interest rate factors jointly account for less than half of the total variation in the price–rent ratio. The rest is due to the aggregate housing market risk premium and a pricing error. We find evidence that the pricing error is related to money illusion, especially at the onset of the recent housing market bubble. The rapid rise in housing prices prior to the 2008 financial crisis was accompanied by both a large increase in the pricing error and a large decrease in the housing market risk premium.     

Long‐Run Risk and Its Implications for the Equity Premium Puzzle: New Evidence from a Multivariate Framework

This paper investigates the empirical evidence of long‐run risk and its implications for the equity premium puzzle. We find that the long‐run risk model is generally weakly identified and that standard inferences tend to underestimate the uncertainty of long‐run risk. We extend the LM‐type test of Ma and Nelson (2010) that remains valid under weak identification to the bivariate VARMA‐GARCH model of consumption and dividend growth. The results cast doubt on the validity of long‐run risk as an explanation for the equity premium puzzle. We also evaluate the approach of Bansal, Kiku, and Yaron (2007a), which extracts long‐run risk by regressing consumption growth and its volatility on predictive variables. The results using the Bonferroni Q‐test of Campbell and Yogo (2006) suggest that consumption and dividend growth are generally unpredictable by the price‐dividend ratio and risk‐free rate. This casts doubt on the validity of the BKY approach.     

Fooling All of the People Some of the Time: A Theory of Endogenous Sequencing in Confidential Negotiations

We analyse a bargaining game in which one party, called the buyer, has the option of choosing the sequence of negotiations with other participants, called sellers. When the sequencing of negotiations is confidential and the sellers' goods are highly complementary, efficient, non-dissipative equilibria exist in which the buyer randomizes over negotiation sequences. In these equilibria, the buyer can obtain higher pay-offs than in pure strategy equilibria or in public negotiations. The degree of sequencing uncertainty that maximizes buyer pay-offs is inversely related to the aggregate bargaining power of the sellers.