The impact of a U.S.–U.K. free trade agreement on workers: a CGE model with worker displacement

Business Economics - On May 5, 2020, the U.S. Trade Representative announced plans to negotiate a free trade agreement with the United Kingdom (USUKFTA). We use GTAP to model the economic...     

Comparing guests’ key attributes of peer-to-peer accommodations and hotels: mixed-methods approach

As peer-to-peer (P2P) accommodations have grown exponentially, it is critical to understand motivations for guests to choose a P2P accommodation instead of a hotel. The current study seeks to understand these motivations by using mixed-methods approach to compare online reviews for P2P accommodations and hotels. Through quantitative analysis, thematic analysis, and text mining, this study provides analysis of 800 reviews from New York, Chicago, Los Angeles, and Houston. The results consistently show that guests in P2P emphasize relationships with hosts, whilst hotel guests place more values on room attributes.     

Macroeconomic News and Mortgage Rates

The study analyzes the influence of macroeconomic news announcements on (a) interest rates for commercial mortgages, residential mortgages, 10-year Treasury notes, and Baa-rated corporate bonds; and (b) corresponding mortgage spreads. It is both interesting and highly relevant from a policy and portfolio management standpoint to examine the implications of the influence of macroeconomic news announcements on mortgage markets. Some important results are reported. First, consistent with the notion of market integration, mortgage rates are found to be co-integrated with other capital market instruments. Second, of the 22 types of periodic macroeconomic news releases considered, 13 of them have a significant influence on at least one of the interest rates, and notably changes in hourly earnings and housing starts significantly influence all debt-security yields. More generally, macroeconomic news that conveys higher inflation and/or economic growth has a positive influence on mortgage and other interest rates. Finally, this study finds several announcements including durable goods orders, new home sales, personal consumption, non-farm payroll, trade balance and Treasury budget to have a significant influence on mortgage spreads.     

Transactions-Driven Commercial Real Estate Returns: The Panacea to Asset Allocation Models?

A transactions-driven commercial real estate return series is generated in this study to determine whether the reliance on appraised values in the estimation of real estate returns is the source of the reported underpricing of real estate relative to stocks, bonds, and bills when analyzed in a traditional mean-variance setting. The reported underpricing of commercial real estate would be rational if transactions-driven returns exhibit more variance than appraisal-driven returns. While we find that transactions-driven real estate returns have greater variance than appraisal-driven returns for individual properties, most of the individual property risk is idiosyncratic and diversified away at the portfolio level. Real estate continues to be a dominate asset class in mean-variance allocation models even when represented with transactions-driven indices.¹     

Political Influence on the Central Bank: International Evidence

Political influence on the central bank is measured here bylooking at the probability that a central bank governor willbe replaced shortly after a political change of government.The governor changes about half the time within six months ofa nonconstitutional or other radical change of government—amilitary coup or a restoration of democracy. The governor ismuch less likely to change within six months following a routinechange in the head of government—about one-fourth of thetime in developing countries and one-tenth in industrial countries.These indicators vary across countries and correlate statisticallywith inflation and its variability and with real growth andreal interest rates. Differences in the vulnerability of thecentral bank to political instability, in political instabilityitself, and in central bank turnover in nonpolitical periodsseem to be a major part of the explanation for why developingcountries have, on average, higher and more variable inflationthan industrial countries do.     

The Effect of Alternative Return Measures on Restricted Mixed-Asset Portfolios

A restricted portfolio is constructed which includes NYSE common stocks, corporate bonds, government bonds, small capitalization common stocks, residential real estate and farmland and returns for each of four different tax brackets (0%, 15%, 30%, 45%). Next, three alternative measures of rates of return for residential real estate and farmland are used. Finally, since some researchers believe that standard risk measures (variance and standard deviation) do not capture the total risk in real estate, the risk for the real estate returns is increased five times while the returns are held constant. The twenty–four optimal portfolios (four tax brackets with two measures of risk and three measure of return for residential real estate and farmland) are then derived. These results are then compared and contrasted to each other to ascertain the change in sensitivity of the optimal portfolios due to different tax rates, different rates–of–return estimates and different risk estimates.     

Weekly Fluctuations in College Student Leisure Activities and Well-Being

College students’ well-being is declining. Differences in students’ leisure activity participation have been linked to their psychological well-being. This study examined how weekly fluctuations in leisure allocation (i.e., frequency of volunteer, cognitive, social, club, religious, and physical activities) related to well-being in college students. Students completed weekly leisure time allocation assessments. Generalized linear multilevel analyses showed that time allocation and well-being varied within-people. Fluctuations in leisure time allocation were related to fluctuations in well-being. Findings extend understanding of leisure and well-being by highlighting the unique contributions of within-person fluctuations beyond between-person differences.     

The Evolution of “Competition”: Lessons for 21st Century Telecommunications Policy

For over a century, assessments of competition or the lack thereof have been central to how public policy treats the telecommunications industry. This centrality continues today. Yet, numerous foundational questions about this concept persist. In this paper, we chronicle how the definition of “competition” has evolved in economics and has been applied in the communications arena. The academic literature on competition hits an important inflection point in the mid-20th century with the development of “workable competition”: a term that is equated to “effective competition.” We find that while the concept of “effective competition” is central to policy formation at the FCC, the Commission’s own applications of “effective competition” are inconsistent. Given the centrality of this concept, and its inconsistent applications to date, we draw upon the seminal contributions to the development of the notion of “effective competition” to offer a modern definition suitable for application in 21st century communications markets.