On the Relation between Local Amenities and House Price Dynamics

This study explores the extent to which local amenities are related to house price volatility, returns and risk‐adjusted returns across 238 MSAs. We find strong evidence that high amenity areas experience greater price volatility. In regards to returns, high amenity areas experience greater (lower) real returns in appreciating (depreciating) markets. However, high amenity areas experience little to no abnormal risk‐adjusted returns. Results from the study are robust to an endogenous treatment of amenities and land supply elasticity. Overall, we conclude that the desirability of a metropolitan area is a significant channel through which land values drive house price dynamics.     

Property–Liability Insurer Reserve Error: Motive,Manipulation, or Mistake

We use two reserve error definitions found in the literature to investigate the joint impact of previously studied incentives on the magnitude of reserve error. We find many prior conclusions are dependent upon the restricted setting in which the hypotheses are tested and on the definition of the reserve error. We find strong evidence that financially weak insurers underreserve to a greater extent than other insurers. However, our evidence casts doubt on the conclusion that insurers manipulate reserves to avoid solvency monitoring. We also find insurers increase reserves for tax purposes and to reduce the impact of regulatory rate suppression.     

The Delisting Bias in CRSP's Nasdaq Data and Its Implications for the Size Effect

We investigate the bias in CRSP's Nasdaq data due to missing returns for delisted stocks. We find that the missing returns are large and negative on average, and that delisted stocks experience a substantial decrease in liquidity. We estimate that using a corrected return of −55 percent for missing performance-related delisting returns corrects the bias. We revisit previous work which finds a size effect among Nasdaq stocks. After correcting for the delisting bias, there is no evidence that there ever was a size effect on Nasdaq. Our results are inconsistent with most risk-based explanations of the size effect.     

Valuing Fixed-Income Options and Mortgage-Backed Securities with Alternative Term Structure Models

To value mortgage-backed securities and options on fixed-income securities, it is necessary to make assumptions regarding the term structure of interest rates. We assume that the multi-factor fixed parameter term structure model accurately represents the actual term structure of interest rates, and that the values of mortgage-backed securities and discount bond options derived from such a term structure model are correct. Differences in the prices of interest rate derivative securities based on single-factor term structure models are therefore due to pricing bias resulting from the term structure model. The price biases that result from the use of single-factor models are compared and attributed to differences in the underlying models and implications for the selection of alternative term structure models are considered.     

An Economic Theory of Avant-Garde and Popular Art,or High and Low Culture

Artists face choices between the pecuniary benefits of selling to the market and the nonpecuniary benefits of creating to please their own tastes. We examine how changes in wages, lump-sum income, and capital-labor ratios affect the artist's pursuit of self-satisfaction versus market sales. Using our model of labor supply, we consider the economic forces behind the high/low culture split, why some artistic media offer greater scope for the avant-garde than others, why so many artists dislike the market, and how economic growth and taxation affect the quantity and form of different kinds of art.     

The nature of local area social exclusion in England and the role of the labour market

The creation of the Social Exclusion Unit by the present governmentin 1997 is just one example of the increased desire by bothacademics and policy-makers to understand more about the factorsthat lead to individuals and communities becoming excluded frommainstream society. Of the many aspects of social exclusionwhich have featured in recent debate, this article focuses ontwo. The first is to describe the nature and the extent of socialexclusion in the areas in which it is concentrated in the UnitedKingdom. The second is to examine the role that labour-marketfactors play in creating, reducing, or sustaining geographicalconcentrations of social exclusion. The article draws upon theresults of social surveys conducted in deprived areas and discussesthe arguments for tackling local concentrations of social exclusionthrough area-based initiatives.     

INTERPERSONAL VARIATION IN FARM WORKERS‘ EARNINGS: ANALYSIS OF WAGES AND EMPLOYMENT ENQUIRY DATA

Most econometric analyses of the agricultural labour market in Britain have been concerned with explaining the general level of agricultural earnings and changes over time. This study complements such analyses by attempting to explain the variation in earnings between workers at any one time. The study uses multiple-regression analysis of cross-sectional data taken from the Wages and Employment Enquiry. Significant explanatory variables are age, grade and occupation of the worker, farm size, overtime hours and region. There is evidence of (a) an age-earnings profile with peak earnings at 45–54 years, (b) grade differentials which do not follow those expected from the official Agricultural Wages Board wages structure, (c) occupational differentials, (d) earnings rising with farm size, (e) the importance of overtime hours. Unexpected results occur with some of the regional coefficients.     

Consumer Behavior, Public Policy, and Country-of-Origin Labeling

Recent work by agricultural economists has failed to adequately identify why consumers desire country-of-origin labeling, a key piece of information needed to determine whether a market-failure exists. This paper brings to the attention of agricultural economists a sizable body of literature on country-of-origin effects from the marketing and business disciplines. Based on this literature, we draw a distinction between several consumer motivations for origin labels and we identify which of these is cause for public policy. We propose several research questions that require answers if the consequences of country-of-origin labeling policy are to be fully understood.