Are Household Services Overvalued?

A bstract . It has been argued that estimates of the magnitude of household services relative to the Gross National Product (GNP) are generally overstated. Although under certain conditions this conclusion is justified, the explanations given are sometimes questionable. It is shown here that when overstatements do occur it is due to the need for valuation adjustments rather than quantity adjustments to the estimates. Moreover, depending on the points to be demonstrated it is equally correct to express such estimates as a percentage of the GNP or as a percentage of GNP plus household services. Some have argued to the contrary. It is further shown here that when valuations are adjusted to reflect labor market conditions and other factors, estimates of household services are reduced considerably.     

Economic freedom at metropolitan statistical area borders

This paper applies a variation on differences-in-differences to the effects of economic freedom in matched bordering metropolitan statistical areas using the Metropolitan Economic Freedom Index. While a great deal of research has explored the relationship between economic freedom and economic performance, less has been done at the local level. We find that economic freedom has a positive effect on several measures of economic performance, but no effect on population.     

Connected and autonomous vehicle injury loss events: Potential risk and actuarial considerations for primary insurers

The introduction of connected and autonomous vehicles (CAVs) to the road transport ecosystem will change the manner of collisions. CAVs are expected to optimize the safety of road users and the wider environment, while alleviating traffic congestion and maximizing occupant comfort. The net result is a reduction in the frequency of motor vehicle collisions, and a reduction in the number of injuries currently seen as “preventable.” A changing risk ecosystem will introduce new challenges and opportunities for primary insurers. Prior studies have highlighted the economic benefit provided by reductions in the frequency of hazardous events. This economic benefit, however, will be offset by the economic detriment incurred by emerging risks and the increased scrutiny placed on existing risks. We posit four plausible scenarios detailing how an introduction of these technologies could result in a larger relative rate of injury claims currently characterized as tail‐risk events. In such a scenario, the culmination of these losses will present as a second “hump” in actuarial loss models. We discuss how CAV risk factors and traffic dynamics may combine to make a second “hump” a plausible reality, and discuss a number of opportunities that may arise for primary insurers from a changing road environment.     

Entrepreneurial Opportunities of Refugees in Germany,France, and Ireland: Multiple Embeddedness Framework

International Entrepreneurship and Management Journal - Recently, the entrepreneurial potential of refugees has received growing attention from scholars and policymakers. However, the literature on...     

A vector-autoregression analysis of credit and liquidity factor dynamics in US LIBOR and Euribor swap markets

We use a vector autoregressive approach to investigate the determinants of US Dollar LIBOR and Euribor swap spread variation during the 2007–2009 crisis in global credit and money markets. Using market-quoted yield and spread data from the highly liquid credit default swap (CDS) and overnight index swap (OIS) markets, we provide compelling empirical evidence that liquidity risk factor shocks have been the dominant drivers of the variation in swap spreads over this period. Our findings provide an explanation for the temporal differences that liquidity shocks have on swap spreads and provide a contemporary perspective on the dynamical interplay between credit-default and liquidity risk-factors in these markets. As all our risk-factor proxies are traded in liquid derivatives markets, our findings have implications for proprietary hedge fund traders hedging an exposure to swap-spread risk, for bank treasurers managing their liquidity requirements and for central bankers seeking to better understand the response of markets to their macroeconomic policy implementation and liquidity management actions. Indeed our markets-based analysis suggests that the European Central Bank (ECB) has underperformed relative to the Federal Reserve in terms of the differing levels of market confidence placed in its macroeconomic policy actions and remedial liquidity interventions during the period.     

US Immigration Levels,Urban Housing Values,and their Implications for Capital Share

This article applies previously estimated effects of immigration on housing values to urban counties in the United States. Our findings here also help estimate how much of the increase in the net capital share of income since 1970 as observed by Piketty ( 2014 ) is caused by immigration. We find that in most urban counties in the United States, increased levels of immigration have had a modest but non‐negligible effect on the level of real estate prices and, per Rognlie ( 2015 ), likely capital share. These estimates provide hard numbers for the public debate over immigration policy in the United States, with implications elsewhere as well.     

Withholding investments in energy only markets: can contracts make a difference?

Although there are mechanisms to control market power in the spot market, withholding investments can still increase profits and hamper adequate capacity expansion. We examine the effect on investment of one suggested approach to reducing market power, contracting longer term. We construct a stylized model of an energy-only market where two firms, each specializing in one technology, invest in a first stage, contract part of their production in the second stage and sell the rest in the spot market in the third stage. We compare this model to one of an energy-only market having two stages, investment and a spot market. We find cases where the contracts change neither capacity nor peak prices, where the foreclosing effect of one player blocking the other from contracts markets increases investments and reduces prices, and where the opportunity to foreclose the market can incentivize one firm to lower its investment and increase its pricing power to the detriment of consumers. The model relies on the simplest possible assumptions of imperfect competition (subgame perfect equilibria with Cournot agents). We illustrate the different outcomes in a numerical example with two load steps (peak and off-peak) where we change one parameter, the height of the off-peak time segment. We find cases with increased and decreased capacity as well as no change in capacity. Since there is no general characterization of the consequences of contracts in this simple example, there can be no characterization in more complicated models that contain the market structures included here, and regulators or competition authorities cannot rely on contracts to induce sufficient capacity expansion by reducing market power. One other market mechanism that has been proposed to induce investment, a capacity auction with predetermined capacity requirements, is a potential alternative to limit market power that deserves further exploration to determine the extent to which it can provide an adequate incentive to invest in the presence of market power.     

Trade Union Responses to zero hours work in Ireland

This paper examines the strategies adopted by Irish unions in responding to zero hours work in four sectors. It concludes that rather than adopting either a passive or a uniform approach, unions have pragmatically varied their strategies to curtail zero‐hours work through actively combining both bargaining and regulatory approaches.     

Populism and British Stories of Decline

The British Empire reached its territorial peak less than a century ago in 1920 when one could walk from South Africa to Kuwait and not set foot in a country in which English was not the language of government. By 1959, India, Australia, New Zealand, South Africa, Egypt, Sudan, and other countries were no longer within Britain's imperial fold. In the space of little more than 30 years, the British Empire suffered a precipitous decline and collapse that left the United Kingdom of Great Britain and Northern Ireland little more than the rump successor state of a once great empire. Yet, imperial attitudes lingered and have an undue influence on British life, culture, and politics up to the present day. Through the lens of pivotal moments in the world since World War II, this article examines the breakup of the British Empire and how the vision of empire lives on in the context of global populism.     

A possible adverse effect of needing to issue new equity in the future

This research develops a model of how a need to issue new equity in the future can have an adverse affect on a stock's current price, value, and beta. In particular, if the market error in pricing a stock is positively correlated with the return on the market portfolio of all assets, losses from having to issue equity in the future at a distressed price will result in the stock having a higher beta and a lower current market value. To avoid this situation, corporations are motivated to hold greater financial slack.