Conditional Dependence in Precious Metal Prices

This study investigates the time-series properties of gold and silver spot prices. Both precious metal price series are found to exhibit time dependence and pronounced generalized autoregressive conditional heteroscedastic (GARCH) effects. Splitting the data into similar economic subperiods provides superior explanation of these effects because of the observed long-run nonconstancy of the unconditional variance. Further, the power exponential distribution, as opposed to the Student-t, is found to portray accurately the thick-tailed conditional variance that remains after the GARCH effects are removed. These findings imply that constant variance pricing models are inappropriate for securities that are based on precious metal prices.     

Space Traders: Reregulation,Property Companies and Auckland's Office Market, 1975–94

The global property boom of the 1980s and its aftermath has prompted considerable debate among academics. For the most part research has been directed toward the global cities of London, New York and Tokyo. Notwithstanding the significance of property processes within these global cities, metropolitan areas outside of the core financial centres have also experienced major transformations in their property markets. This paper examines the character of Auckland's speculative office property boom of the 1980s which resulted in a level of output comparable to global cities such as Paris and Frankfurt. We argue that the wholesale reregulation of the New Zealand economy in the 1980s, and in particular the liberalization of financial markets and the share market, provided a context in which the structure of agents associated with the provision of office space was radically altered. The rise of property companies, and their dominance of the development process throughout the boom and subsequent crash, is detailed. Whilst Auckland's property boom conforms to the global experience, we argue that the specific character and intensity of the development process in Auckland highlights the need to appreciate the ‘particularity of place’.     

Mexico from bust to boom: A political evaluation of the 1976–1979 stabilization programme

This paper evaluates Mexico's recent experience of economic stabilization policies (under the the 3-yr Extended Fund Facility arranged with the IMF in September 1976) from a comparative politics standpoint. By comparison with various South American experiences of inflation and stabilization that were discussed in the same Wilson Centre workshop, Mexico's short-term performance must be rated quite favourably. This was not a case in which Fund orthodoxy prevailed at every point, nor was the Fund analysis accepted without qualification by Mexico's policy-markers. At the end of the period, economic disequilibria, as measured by IMF criteria, remained considerably larger than the 3-yr plan had envisaged, but ‘confidence’ had been restored and rapid growth was in prospect. The interpretation offered in the paper is that Mexico's cyclical pattern of presidential politics largely determined the effective contents of the stabilization package, and that the resilience of the Mexican system of political management goes far to explain why the economic outcome was more favourable than in the South American cases. An accident of geological endowment (the nation's huge oil resources) certainly accentuated the process of recovery from ‘bust’ to ‘boom’, but this factor did not operate in isolation, and should not be considered an adequate explanation on its own. The impact of a geological endowment upon economic conditions depends upon political mediation. However, although this paper seeks to highlight the contribution of Mexican political management to the recent short-term economic improvement, it concludes with some qualifications. The final section considers some constraints on the scope and efficacy of Mexican ‘reformism’, particularly in relation to longer-term and more structural problems.     

Reviews

YUGOSLAVIA IN TURMOIL.

Simmie, J. and Dekleva, J. 1991: Yugoslavia in Turmoil: after self-management?, London: Pinter Publishers, £35.00 cloth.

THE DEFENCE OF WELFARE.

Whitfield, D. 1992: The Welfare State. London: Pluto, £45.00 cloth, £19.95 paper.

GLOBAL FINANCE.

Budd, L. and Whimster, S. (eds) 1992: Global Finance and Urban Living, London: Routledge, £40.00 hardback, £13.99 paperback.

LABOUR MARKET RESEARCH.

Moore, B. and Townroe, P. 1990: Urban Labour markets - Reviews of Urban Research, Department of the Environment: HMSO, £11.25.     

ON THE FUNCTIONAL FORM OF EARNINGS AND STOCK PRICES: INTERNATIONAL EVIDENCE AND IMPLICATIONS FOR THE E/P ANOMALY

This paper examines the functional form of earnings and stock prices on US and Finnish stock markets. Although the functional specification of the components of financial ratios based on purely accounting numbers has received considerable attention, the functional form of earnings and stock prices has not been investigated carefully enough. This investigation is, however, important because of the common use of E/P ratio in financial statement analysis. The empirical evidence provided by this study indicates that the proportional relationship between earnings and stock prices is rejected in both countries. In addition, it is discovered that this deviation from proportionality is a major factor producing the so-called E/P anomaly in these two countries.