House prices, non-fundamental components and interstate spillovers: The Australian experience

Using Australian capital city data from 1984Q3--2008Q2, this paper utilizes a dynamic present value model within a VAR framework to construct time series of house prices depicting what aggregate house prices should be given expectations of future real disposable income - the “fundamental price” - and continues by comparing capital city fundamental prices with actual prices. The extent to which revealed capital city “non-fundamental” components spillover from state to state, as well as their long-term impact is also investigated. Results provide evidence of periods of sustained deviations of house prices from values warranted by income for all state capitals with the greatest deviations arising in the NSW market and starting around 2000. In general NSW is relatively more susceptible to spillovers transmitted from other states while ACT and WA are most isolated from the rest of the country.     

Violation of the iid-normal assumption: Effects on tests of asset-pricing models using Australian data

Financial data are typically not identically, independently and normally distributed (iid-normal). Yet, standard tests of asset-pricing models are based on this assumption, and we have little information on how sensitive the tests are to violations of iid-normality. Recent evidence suggests that test outcomes may be sensitive to these violations. In this paper, we use Australian data to compare the standard test results with those that do not require iid-normality: the GMM-J test and bootstrap-based tests. We find that different tests produce differences in prob values at least as large as those in US studies but that test outcomes are generally robust.     

Growth Volatility and Technical Progress: A Simple Rent-seeking Model

Recent empirical evidence demonstrates that a higher level of technical progress is associated with a lower level of growth volatility and higher expected economic growth. This paper builds a simple growth model which combines the insights of Angeletos and Kollintzas (2000) and Tse (2000; 2001; 2002) with endogenous productivity growth and rent-seeking behavior to account for these stylized facts. Our model complements the literature that focuses on the heterogeneity of different agents.     

UNEMPLOYMENT IN AN EQUILIBRIUM MODEL WITH BARGAINING*

This paper develops a model which embeds the Nash-equilibrium version of McDonald and Solow's (1981) wage-bargaining model into an otherwise standard static equilibrium macro model. Equilibrium unemployment is possible. Real shocks to demand result in pro-cyclical employment and anti-cyclical real wage movements while money shocks are neutral. This is in some contrast to the results obtained by McDonald and Solow.     

The Sensitivity of Tests of Asset Pricing Models to the IID-Normal Assumption: Contemporaneous Evidence from the US and UK Stock Markets

Standard tests of asset pricing models are based on the iid -normal assumption. We compare standard test results with those obtained from procedures that do not require iid -normality. Analysing unconditional and conditional asset pricing models, we find that the use of tests that consider departures from the iid -normal assumption affect probability values, sometimes by a considerable amount but that test outcomes are not affected. The results also suggest that issues surrounding the testing of joint hypothesis influence probability values and that the use of appropriate tests may be more important when analysing US data than when analysing UK data.     

The effects of fiscal policy in a two-period model

The paper analyzes fiscal policy in a model which differs from the conventional analyses in the following ways: 1) It is based on the intertemporal maximizing behavior of individual agents. 2) The government is assumed to actively balance its budget the long run. 3) Government expenditure is on useful goods and services. The welfare effects of fiscal policy are also examined. The principal conclusions are that fiscal policy is effective in the short run but the effects on both output and welfare may be perverse; and, that with full employment in the long run, fiscal policy still has allocative effects and so influences welfare.     

An increase in the retirement age in China: the regional economic effects

China’s pension system is in need of comprehensive reform. One measure on which we focus is to increase the retirement age. It is likely that a change in retirement age will have significantly different effects across China’s regions. Interregional disparities are already very substantial in China and it will be important to know how changes in pension arrangements will affect disparities. We consider four policies to increase the retirement age from 60 to 61. They differ according the use made of the extra revenue generated by the policy. All four policies increase welfare and reduce the interregional welfare gap.     

Using Linkography to investigate students’ thinking and information use during a STEM task

One of the characteristics of the twenty-first century is the increase in the information sources available to designers to make their design decisions. However, current verbal protocol analysis methods and theoretical frameworks do not explain how internal and external information sources contribute to novice designers’ moment-to-moment thought processes. The purpose of this paper is to examine the use of Linkography, a protocol analysis method, to investigate the nature of novice designers’ thought processes. We also introduce the use of coloured archiographs, as a complimentary tool, to analyse how novice designers use information sources during the early phases of the design process. In order to discuss and illustrate the use of these analysis methods, we report on a case study in which a group of Grade 8 participants completed a design task requiring them to design a heat retaining food container for street food vendors at a taxi depot. The findings of this study suggests that Linkography, in combination with coloured archiographs, is a novel method in technology education to analyse and visually represent how students think while they are designing.     

Upgrading and low-income housing initiatives: Indicating their value to the people of Freedom Square,Bloemfontein

Since 1990, hundreds of informal settlements have grown rapidly around cities throughout South Africa as a result of the changing political context, poverty and the enormous housing backlog. The impact of this uncontrolled urbanisation became apparent in the fact that hundreds of thousands of poor people had to make a living with limited access to running water, electricity and formal housing. This article explores the development experiences, needs and expectations of the residents of Freedom Square – previously Bloemfontein's largest informal settlement and home to 17 200 people – over a period of 8 years. This is approached by means of a comparative overview of four surveys (1990, 1993, 1995 and 1997), all relating to the social impact of upgrading-orientated and low-income housing initiatives within the study community.