Reform of the UK Financial Policy Committee

We argue that: The FPC should have a wider remit; a much broader membership (covering many specialisms); should be wholly independent of Government and outside the Bank of England; its aim should be to comment publicly and authoritatively on any possible areas of risk to financial stability while itself controlling few, if any, levers of policy. The rationale for these conclusions is that: Macroprudential/financial risks come from many sources; many of these sources are structural and outside of the Bank’s regulatory purview/competence; in a sense, the Bank gets to mark its own homework as regards issues such as the SMR, resolution, appropriateness of capital, effectiveness of ring-fencing etc.; many aspects of macroprudential actions have distributional implications, and hence, politicians, not the Bank or any other body, should take and justify, or not, these decisions.     

Humor in advertising: A behavioral perspective

Humorous appeals are used extensively in television, radio, and print advertising. This article examines the effectiveness of humor in accomplishing specific communications and sales objectives. A brief review of the literature on humorous advertising research is presented. The author argues that previous unsuccessful applications of light-hearted messages are attributable, in part, to our incomplete knowledge of how consumers process humorously conveyed information. The discussion focuses on the importance of recognizing and managing variables which mediate the impact of humor on audience response and on the need for further development and testing of behavioral theory as keys to the effective utilization of humor in advertising. The author wishes to thank Dr. Phillip D. White for his helpful comments and critical review of an earlier draft of this paper.     

The Federal Housing Administration (FHA), tenure choice,and residential land use

This paper extends the standard, urban, residential land-use model to analyze the effects of Federal Housing Administration (FHA) mortgage insurance. On the demand side, households are differentiated by income and tenure; on the supply side, the cost of housing is related to the asset prices of land and structure and the cost of capital. Hypothesizing that capital cost is a function of household tenure and income, tenure is chosen to minimize this cost. The effect of FHA, then, is to expand the housing consumption of moderate-middle income households, by reducing their capital cost, while displacing those whose cost is not reduced.