The Optimal Mortgage Payment Path Under Price Uncertainty

It has been shown that in a world of certainty, individuals with rising income streams will choose a graduated payment mortgage over the standard flat payment mortgage. The present paper extends this analysis by introducing uncertainty about future inflation rates. We show that the risk-averse individual, when faced with uncertainty, will choose a less graduated payment path than in the certainty situation. While not conclusive, the analysis may cast some doubt on the suboptimality of the standard flat payment mortgage.     

On measuring serial correlation: Implications for finance and accounting research studies

Accounting and finance studies that measure serial correlation implicitly make two assumptions. One, the studies assume that the sample estimate of the autocorrelation coefficient is unbiased. The assumption is intuitively appealing, but incorrect. This article provides a measure of the size of the bias. Two, the studies assume that the target of the time series is constant over time. However, over a long period target values may change. This article models the general case in which not only do random shocks affect actual values, but also random changes affect target values.     

The diamond city: The case for rectangular grid models

This paper makes the case for a diamond-shaped city with a rectangular grid street network as an alternative to the circular city with radial roads. It considers the allocation of land to transportation, the expansion of the road network via the development of expressways, the assignment of commuter traffic given alternative configurations, the corresponding rent and density surfaces, and the implications of these road networks for subcentering.     

How to derive keynesian results from first principles: A survey of new-Keynesian economics

Summary In the 1980s theoretical research in macroeconomics was dominated by what has become known as new-Keynesian economics. The principal aim of new-Keynesian economics is to explain how Keynesian results can be reconciled with the neo-classical principles of utility and profit maximization. This paper provides a survey and an assessment of New Keynesian economics. In our view, the theoretical foundation of new-Keynesian economics would be strengthened if more institutional detail is added to the analysis. The real challenge for new-Keynesian economics is to develop macroeconomics (and microeconomics) from a theory that takes the working of markets seriously.We would like to thank David Colander, Paul Davidson. Theo van de Klundert and Simon Kuipers for their comments on this paper and Esther Langeveld for research assistance. Of course, the usual disclaimer applies. An extended version of this paper, which addresses teh empirical evidence in substantially more detail is available as Research Memorandum no. 488 of the University of Groningen. Parts of section 3 are based on Van Ees (1991) and Garretsen (1992).