Contigent Price Contracts and the Efficiency of Housing Markets

Frequently, the response of housing markets to a large negative demand shock is a period during which the liquidity of housing declines, but the price at which transactions take place changes little. In this paper we show that a decline in liquidity can result from the inabilities of sellers and buyers to insure against post-shock price uncertainty. We conclude, that the introduction of a risk-sharing contingent price contract may increase the post-shock liquidity of housing by providing insurance against post-shock price uncertainty. Finally, we show that a mutually agreeable contingent price contract will always exist, even when sellers are excessively optimistic.     

Still Popular, Warts and All

A recent book, Socialism Explained by Arthur Seldon and Brian Crozier, ¹ contesting the claims of socialism is assessed by two writers of divergent approaches. Alan Day, an active member of the Labour party, is a former Editor of Socialist Affairs; and Alexander Shand, Senior Lecturer in Economics at Manchester Polytechnic, is author of Suhjectivist Economics and The Capitalist Alternative.     

Keynesian Chaos

This paper shows how nonperiodic fluctuations can emerge in the standard fix price macroeconomic model when induced investment is strong enough. Specific functional forms are used to illustrate the phenomenon and to compute numerical evidence that nonperiodic fluctuations need not be rare.     

The perils of high-growth markets

The conventional wisdom that businesses should invest in growth markets is based upon the assumptions that, in the early phase of a growth market, share gains are easier and worth more, the experience curve will lead to advantage, price pressure will be low, needed access to the technology will result and future entries will be deterred. These assumptions are examined and six major types of growth market risks are discussed. Finally, conditions which should be present if an early entry into a growth market is attempted are identified.     

Expected inflation and the real rate of interest : A Note

This paper derives an alternative explanation for the Mundell effect in the context of a state preference framework. In contrast to the real cash balance effect discussed by Mundell, the arrival of new information concerning the future course of economic events is shown to simultaneously affect both the real rate of interest and the expected rate of inflation. A negative relation between changes in expected inflation and the real rate of interest is shown to occur in spite of the fact that investors in this model hold no cash balances.     

Disequilibrium economic dynamics: A post-Schumpeterian contribution

Adaptive economizing in a decentralized economy with alternative technologies and scarce resources leads to various kinds of locally unstable behavior. Economic disequilibrium is the rule in such a world and requires the presence of market mechanisms that make possible continued viability. If in addition to local instability economies are also globally unstable, as considerable evidence suggests, then the discovery and application of new structure is essential. A complete dynamic theory of economic change must therefore be based not only on conventional rationality and routinely adapting behavior but on a superior faculty which may perhaps best be called creative intelligence.