Art as an investment: Short and long-term comovements in major painting markets

This paper examines the short and long-term price linkages among major art and equity markets over the period 1976–2001. The art markets examined are Contemporary Masters, French Impressionists, Modern European, 19^th Century European, Old Masters, Surrealists, 20^th Century English and Modern US paintings. A global equity index (with dividends and capitalisation changes) is also included. Multivariate cointegration procedures, Granger non-causality tests, level VAR and generalised variance decomposition analyses based on error-correction and vector autoregressive models are conducted to analyse short and long-run relationships among these markets. The results indicate that there is a stationary long-run relationship and significant short and long run causal linkages between the various painting markets and between the equity market and painting markets. However, in terms of the percentage of variance explained most painting markets are relatively isolated, and other painting markets are generally more important than the equity market in explaining the variance that is not caused by innovations in the market itself. This suggests that opportunities for portfolio diversification in art works alone and in conjunction with equity markets exist, though in common with the literature in this area the study finds that the returns on paintings are much lower and the risks much higher than in conventional financial markets.The authors would like to thank delegates to the 14th Australasian Finance and Banking Conference, University of New South Wales, seminar participants at the Queensland University of Technology and Massey University, Masaki Katsuura, and two anonymous referees for helpful comments on earlier versions of this paper. The financial assistance of a Queensland University of Technology, Faculty of Business Research Initiative Grant is also gratefully acknowledged.     

A Permanent Change in the Route to Owner Occupation?

This paper attempts to explain why home ownership rates among young adults fell in the early 1990s when various indicators suggested it had become more affordable. As a potential explanation, we focus on the relatively slower growth in their incomes and argue that this could signal a fundamental change in behaviour, a change in route adopted into owner occupation, induced by structural economic change. In examining the implications for housing tenure, we use a conditional fixed effects multinomial logit model to exploit the information on the tenure choice and the timing of transitions in the British Household Panel Survey. Our results reveal that relatively slower income growth contributed significantly to this decline and that ignoring the intertemporal correlation in micro‐panels generates inconsistent results.     

Estimating state-industry employment,with an application to industrial localization

We describe a method to construct an industry-by-state repeated cross-section of employment at the most disaggregated level publicly available, covering 1963–2012. Nondisclosed data are estimated with a procedure using the hierarchical information structure. To illustrate the usefulness of the procedure, the resulting estimated data are tested to determine if industrial localization of the processed food sector has changed over the last 50 years in the United States. Our findings suggest it has not changed systemically despite variation in levels of localization within industries.     

How Monetary Policy Affects Your Gross Domestic Product

During the financial crisis, monetary policy was loosened significantly. Debate continues about the extent to which low interest rates and quantitative easing (QE) may have had adverse distributional impacts, whether by income, wealth, age or region. Using quantified simulations on micro data, I show that looser monetary policy had a significantly positive financial impact on the majority of cohorts of UK society. The impact of monetary policy loosening on income and wealth inequality was small and the overall impact on household welfare significantly positive. These results differ from public perceptions of monetary policy. Personalised information on the impact of monetary policy on household balance sheets could help to correct these misperceptions.     

Do School Principals Respond to Increased Public Scrutiny? New Survey Evidence from Australia

We explore responses of Australian school principals to the introduction of test score reporting via the My School website in 2010. Theory suggests that heightened public scrutiny should motivate principals to adopt best practices for improving their schools' test results. We use responses from both public and private schools to a custom‐built questionnaire administered to principals before (2009) and after (2012) the My School website launch. We find scarce evidence of meaningful adjustments over time, but we do find evidence of significantly different policies and practices across school groups.     

Coordination and learning in games with strategic substitutes and complements

This paper experimentally compares the impact of the presence of strategic substitutes (GSS) and complements (GSC) on players’ ability to successfully play equilibrium strategies. By exploiting a simple property of the ordering on strategy spaces, our design allows us to isolate these effects by avoiding other confounding factors that are present in more complex settings, such as market games. We find that the presence of strategic complementarities significantly improves the rate of Nash play, but that this effect is driven mainly by early rounds of play. This suggests that GSS may be more difficult to learn initially, but that given sufficient time, the theoretically supported globally stable equilibrium offers a good prediction in both settings. We also show that increasing the degree of substitutability or complementarity does not significantly improve the rate of Nash play in either setting, which builds on the findings of previous studies.     

Bias-corrected estimates of reduction of post-surgery length of stay and corresponding cost savings through the widespread national implementation of fast-tracking after liver transplantation: a quasi-experimental study

Background: Fast-tracking is an approach adopted by Mayo Clinic in Florida’s (MCF) liver transplant (LT) program, which consists of early tracheal extubation and transfer of patients to surgical ward, eliminating a stay in the intensive care unit in select patients. Since adopting this approach in 2002, MCF has successfully fast-tracked 54.3% of patients undergoing LT.

Objectives: This study evaluated the reduction in post-operative length of stay (LOS) that resulted from the fast-tracking protocol and assessed the potential cost saving in the case of nationwide implementation.

Methods: A propensity score for fast-tracking was generated based on MCF liver transplant databases during 2011–2013. Various propensity score matching algorithms were used to form control groups from the United Network of Organ Sharing Standard Analysis and Research (STAR) file that had comparable demographic characteristics and health status to the treatment group identified in MCF. Multiple regression and matching estimators were employed for evaluation of the post-surgery LOS. The algorithm generated from the analysis was also applied to the STAR data to determine the proportion of patients in the US who could potentially be candidates for fast-tracking, and the potential savings.

Results: The effect of the fast-tracking on the post-transplant LOS was estimated at approximately from 2.5 (p-value?=?0.001) to 3.2 (p-value?Conclusion: The fast-track program was found to be effective in reducing post-transplant LOS, although the reduction appeared to be less than previously reported. Nationwide implementation of fast-tracking could result in substantial cost savings without compromising the patient outcome.     

Nobelity and novelty: Finn Kydland and Edward Prescott’s contributions viewed from Vienna

The awarding of the Nobel Prize in Economics in 2004 to Finn Kydland and Edward Prescott represents an opportunity to evaluate their contributions in light of Austrian economics. We lay out the basics of their contributions—the general equilibrium approach to economic fluctuations and the game theoretic approach to policy—and argue that they have tenets similar to those of Austrianism. We argue that their methodology parallels Austrian methodology in several significant ways that have gone unnoticed. We conclude that Kydland and Prescott’s Nobel Prize suggests Austrian approaches can have a more prominent impact than they have had in the past.     

Does One Size Fit All? A currency union with asymmetric transmissions and a stability pact

The theory of optimal currency areas stresses that a single currency zone should have symmetry across shocks and structures. What happens if the monetary transmission mechanisms differ so that a common monetary policy has different effects in different places? Using a fully specified econometric model, we find that such asymmetries are likely to destabilise the business cycle and put countries out of phase with each other in a way that cannot be corrected by deficit-constrained national fiscal policies. Market discipline, however, could achieve this. Hence, the question is whether the markets would create sufficient discipline on their own.     

Quality Uncertainty as Resolution of the Bertrand Paradox

It is well‐known that product differentiation eliminates the Bertrand paradox (i.e. marginal cost pricing under duopoly). While differentiation is often justified with reference to the consumer's ‘preference for variety’, the conditions under which such a preference is likely to arise are rarely considered. We investigate this question in a setting in which uncertainty about product quality can endogenously generate either convex or non‐convex preferences. We show that even when two goods are ex ante homogeneous, quality uncertainty can eliminate the Bertrand paradox.