Hedging Housing Risk in London

This paper investigates the benefits of allowing households to compensate the portfolio distortion due to their housing consumption through investments in housing price derivatives. Focusing on the London market, we show that a major loss from over-investment in housing is that households are forced to hold a very risky portfolio. However, the strong performance of the London housing market means that little is lost in terms of expected returns. Even households with limited wealth are better off owning their home rather than renting and investing in financial assets, as long as they are willing to face the financial risk involved. In this context, access to housing price derivatives would benefit most poor homeowners looking to limit their risk exposure. It would also benefit wealthier investors looking for the high returns provided by housing investments without the costs of direct ownership of properties. Comparisons with French, Swedish and U.S. data provide a broader perspective on our findings.     

The Target Zone Model, Non-Linearity and Mean Reversion: is the Honeymoon Really Over?

We estimate a target zone model for three ERM exchange rates for 1983–6 and 1987–91 by the method of simulated moments, taking account of the continuous time specification by using daily data with the interruptions of holidays and weekends. Specification tests are unable to reject the model. The estimates imply, however, an essentially linear relationship between the exchange rate and the fundamentals, with a very limited 'honeymoon effect'. Using Monte Carlo simulations, calibrated on the estimates, we find that standard tests for mean reversion of the exchange rate would largely reject the target zone model when, in fact, it held.     

Identification of monetary policy in SVAR models: a data-oriented perspective

In the literature using short-run timing restrictions to identify monetary policy shocks in vector-auto-regressions (VAR) there is a debate on whether (i) contemporaneous real activity and prices or (ii) only data typically observed with high frequency should be assumed to be in the information set of the central bank when the interest rate decision is taken. This paper applies graphical modeling theory, a data-based tool, in a small-scale VAR of the US economy to shed light on this issue. Results corroborate the second type of assumption.     

Book Review

The diffusion of the Internet is becoming a central policy issue for developing countries, being identified by scholars as a key driver of knowledge, innovation and development. Remarkably, the related literature is scarce and fragmented. In order to contribute to fill this gap, we analyse Internet access and usage patterns in seven Latin American countries. In addition to the traditional socio-economic determinants of Internet access, the results also suggest an important role for network effects, presence of students at households and complementarities in Internet use at different locations. Concerning usage, estimations show that Internet access does not translate automatically into usage. In particular, females are found to be less likely to use the Internet, even once access is provided. Finally, the evidence suggests that while technological skills are necessary to fully exploit Internet potentialities, individuals located in rural areas are more likely to use the Internet for education purposes, confirming the potential connectivity impact on human capital.     

Modelling the impact of alternative pricing policies on an urban multimodal traffic corridor

This paper investigates the effects of alternative or joint schemes of road pricing and parking pricing to verify if private behaviour in operating parking facilities, road tolling and transit systems can lead to profitable results in the private sector and for public welfare. The evaluation is carried out using an idealised urban multimodal traffic corridor with some numerical examples that show the effects of different pricing policies. A Deterministic User Equilibrium assignment procedure is used to calculate certain performance indicators such as user travel costs, social costs and private profit. The results show that the system is highly sensitive to pricing policy and that a proper joint pricing of park-and-ride facilities, city centre parking and road tolls can be developed to simultaneously attain good private and social benefits.     

Gender Differences in Financial Education: Evidence from Primary School

Today, financial and economic education is a primary issue in academia and among policy makers, and there is great interest towards programmes that are able to boost it. In this paper, we test whether a programme (“treatment”) of financial education on savings, targeted to children aged 8 and 9 is effective and to what extent. We measure the interest rate required by the children before and after the treatment to accept postponing a reward, computing its variation and comparing this with that of a control group. We find evidence that the overall initiative is helpful in decreasing the level of impatience of children and the number of inconsistent choices of boys. Our findings invite to reflect on the gender neutrality of programmes of financial education.     

Customer satisfaction and service domains: a further development of PROSERV

Quality & Quantity - This paper aims to represent that levels of customer satisfaction of tourist accommodation are an important prerequisite when the goal is building a loyal relationship with...     

Post-Keynesian endogenous money theory: Horizontalists,structuralists and the paradox of illiquidity

The paper aims to provide a theoretical advancement in the post-Keynesian debate between horizontalists and structuralists by offering an additional theoretical support to the horizontalist view. Through the newly introduced notion of paradox of illiquidity, a critique to the endogenous money–liquidity preference model is developed, by focusing on the relationship between the volume of loans and the mark-up. The paradox of illiquidity aims to deny: (a) the idea of a banking sector achieving illiquid position during its lending activities and, consequently, (b) the view of an upward sloping credit supply curve.