Does Homeownership Lead to Longer Unemployment Spells? The Role of Mortgage Payments

This paper examines the impact of housing tenure choice on unemployment duration in Belgium using EU-SILC micro data. We contribute to the literature in distinguishing homeowners with mortgage payments and outright homeowners. Accounting for tenure endogeneity and unobserved heterogeneity, we find that homeowners with a mortgage exit unemployment first, while outright owners stay unemployed the longest. Tenants take an intermediate position. Our results emphasize the key role of housing costs in the link between housing tenure and labour market outcomes. Considered together with the results of recent macroeconomic research on housing and employment in Belgium, this paper provides indirect evidence for significant negative effects of homeownership on the labour market and the economy beyond the owners themselves.     

A von Neumann–Morgenstern representation result without weak continuity assumption

In the paradigm of von Neumann and Morgenstern (1947), a representation of affine preferences in terms of an expected utility can be obtained under the assumption of weak continuity. Since the weak topology is coarse, this requirement is a priori far from being negligible. In this work, we replace the assumption of weak continuity by monotonicity. More precisely, on the space of lotteries on an interval of the real line, it is shown that any affine preference order which is monotone with respect to the first stochastic order admits a representation in terms of an expected utility for some nondecreasing utility function. As a consequence, any affine preference order on the subset of lotteries with compact support, which is monotone with respect to the second stochastic order, can be represented in terms of an expected utility for some nondecreasing concave utility function. We also provide such representations for affine preference orders on the subset of those lotteries which fulfill some integrability conditions. The subtleties of the weak topology are illustrated by some examples.     

Sustainable finance: The role of savings and credit cooperatives in Ecuador

The current world situation leads us to consider that sustainable development needs to be a global priority to ensure the future of the planet and improve the quality of life. There is a need for sustainable finance to support this. Savings and credit cooperatives could help to achieve this impact as they serve the microfinance and microlending market. They facilitate the financial inclusion of the most vulnerable people, most of whom live in rural areas and are members of organizations, such as agricultural cooperatives and associations. Previous studies have focused exclusively on overall profitability, so this paper contributes to extending the literature by analyzing the whole population of savings and credit cooperatives in Ecuador (510 institutions), focusing on their profitability in two ways: the overall profitability necessary for the viability of the business and, in addition, the microcredit portfolio profitability, as a specific measure of its contribution to sustainability and social value creation. Another novelty is that the analysis has been carried out using several machine learning techniques for the wider generalization of the results. These show that size is the most relevant variable for predicting the ROE and that the microcredit portfolio profitability is conditioned by the credit variables.     

Central bank independence: Only part of the inflation story

Summary Central bank independence: Only part of the inflation story The idea that countries with an independent central bank perform better on price stability is very popular and confirmed by studies investigating the issue empirically. Yet, using the Barro-Gordon model we show that the gains from a more independent central bank are not fixed. They are larger in countries with unstable governments, not committed to fixed exchange rates, and in countries were left-wing parties hold a strong position. The effect of increasing central bank independence is also shown to depend on the level of the natural unemployment rate and the slope of the short-term Phillips curve.We are grateful to Eric Pentecost and two referees of this journal for valuable comments on an earlier version of the paper. Any remaining errors are ours.     

Consols In the Cir Model

A consol is a default-free financial instrument paying a constant stream of one unit of money. A synonym is a perpetuity. the valuation of a consol presents a particular difficulty: the time horizon of this instrument is infinity, and hence the usual technique of replacing the physical probability measure by a new probability measure represents serious problems with regard to absolute continuity of the two measures. We will work out explicit formulas when the instantaneous riskless interest rate follows a square-root process under the risk-free measure. Several mathematical properties will be investigated. Yor and Geman and Yor have considered the problem of pricing consols and carry out a more fundamental analysis (see References). This paper is self-contained and emphasizes properties or techniques not covered by those authors.     

AUCTIONS,EX POST COMPETITION AND PRICES: THE EFFICIENCY OF PUBLIC‐PRIVATE PARTNERSHIPS*

ABSTRACT ** : Using an original database concerning 1102 French local public authorities in 2001, we explore the relationships between prices charged by private operators in water contracts and ex post competition. We show that prices charged in contracts in which operators are in a monopoly situation throughout the duration of the contract, are not affected by a ‘competition effect’ between private operators. However, a competition effect between private operators and public management appears to be crucial in explaining prices combined with a ‘termination effect’, reflecting the fact that the contract is close to being renewed, and hence re‐auctioned.     

Will the role of the dollar as the international reserve currency be challenged?

The actual role of the US Dollar as the international reserve currency is an essential part of a financial architecture, which was conceived after World War II. Since then the world-wide economic, financial and political landscape has fundamentally changed. The article describes through which mechanisms the actual financial architecture will be challenged and what will be the consequences and occasional outcome.