Housing Collateral and Entrepreneurship

We show that collateral constraints restrict firm entry and postentry growth, using French administrative data and cross‐sectional variation in local house‐price appreciation as shocks to collateral values. We control for local demand shocks by comparing treated homeowners to controls in the same region that do not experience collateral shocks: renters and homeowners with an outstanding mortgage, who (in France) cannot take out a second mortgage. In both comparisons, an increase in collateral value leads to a higher probability of becoming an entrepreneur. Conditional on entry, treated entrepreneurs use more debt, start larger firms, and remain larger in the long run.     

Do IFRS Reconciliations Convey Information? The Effect of Debt Contracting

We examine whether earnings reconciliation from U.K. generally accepted accounting principles (GAAP) to International Financial Reporting Standards (IFRS) convey information. As a result of debt contracting, mandatory accounting changes are expected to affect the likelihood of violating existing covenants based on rolling GAAP, leading to a redistribution of wealth between shareholders and lenders. Consistent with this prediction, we find significant market reactions to IFRS reconciliation announcements. These market reactions are more pronounced among firms that face a greater likelihood and costs of covenant violation and early announcements. While the association between later announcements and weaker market reactions is consistent with contractual implications of technical changes to earnings, which investors quickly learn to predict, it is inconsistent with IFRS forcing all firms in the sample to reveal firm-specific information through accruals. Thus, by showing that mandatory IFRS also affects debt contracting, we expand on existing IFRS research that focuses on how accounting quality and cost of capital are impacted.     

Mature Consumer Awareness and Attitudes Toward Retirement Housing and Long-Term Care Alternatives

The retirement housing and long-term care industries have been responding to the needs of aging consumers by developing a wide range of housing facilities and personal care services. The increasing variety of long-term care options is expected to better satisfy the heterogeneous needs of older consumers. Results of a national study and qualitative research suggest that many present and potential consumers of supportive housing and long-term care services do not have a good understanding of these offerings. Many are unaware of the alternatives available. Mature consumers often perceive all long-term care negatively as nursing homes. The proliferation in the variety of housing and long-term care services and the lack of standardization in labeling products may be contributing to the misunderstanding of various options. This misunderstanding leads to consumers not obtaining the housing and long-term care services best suited to their needs. Government agencies, consumer interest groups, and housing and long-term care providers can help to differentiate products and educate consumers to better serve their needs.     

Consumer-to-Consumer Relationships: Satisfaction with Other Consumers' Public Behavior

This national study of 554 adults investigated consumers' satisfaction with 32 behaviors in which other consumers may engage when in public business environments. Respondents were most pleased when other consumers demonstrated “gregarious” behaviors, but generally were displeased with “violent” or “grungy” behaviors. Satisfaction ratings also were found to vary somewhat by situational context (i.e., restaurant versus bowling center) and respondent characteristics (i.e., demographics, religion, smoking behavior, and alcohol consumption). Implications for consumers and businesses are discussed.     

ADDICTIVE DRUG USE MANAGEMENT POLICIES IN A LONG‐RUN ECONOMIC MODEL*

A model of illicit, addictive drug use is proposed when users have foresight. Impacts of drug use penalties, penalties on drug use‐related crime, support for drug user rehabilitation as well as the effects of health‐related, harm‐minimisation policies are analysed. In the short run, government policies impact only on the drug use intensities of existing addicted and casual users. Longer term policy‐induced user‐cost changes impact on new user and addict numbers through their effect on recruitment into addiction and quit dynamics. Effects of policies on user numbers, usage intensities and impacts on long‐run social costs are analysed over this long‐term horizon. The model provides a setting for analysing the long‐run effects of illicit drug management policies on the social costs of illicit drug use and allows assessment of drug use abstinence and harm minimisation policy tradeoffs.     

GHG Targets as Insurance Against Catastrophic Climate Damages

The climate system is an angry beast and we are poking it with sticks 1 . A critical issue in climate change economics is the specification of the so‐called “damages function” and its interaction with the unknown uncertainty of catastrophic outcomes. This paper asks how much we might be misled by our economic assessment of climate change when we employ a conventional quadratic damages function and/or a thin‐tailed probability distribution for extreme temperatures. The paper gives some numerical examples of the indirect value of various greenhouse gas (GHG) concentration targets as insurance against catastrophic climate change temperatures and damages. These numerical exercises suggest that we might be underestimating considerably the welfare losses from uncertainty by using a quadratic damages function and/or a thin‐tailed temperature distribution. In these examples, the primary reason for keeping GHG levels down is to insure against high‐temperature catastrophic climate risks.     

Silver production and the money supply in England and Wales, 1086–c.1500

The contribution of English and Welsh lead mines to the silver supplies of mints between Domesday Book and the end of the fifteenth century is assessed in this article, comparing evidence for the size of silver production with mint output data. It is shown that the proposal that northern Pennine mines were the principal source of the silver in the late twelfth‐century English currency is untenable. Welsh mines supplied limited amounts of silver to local mints around 1200. Devon silver made a significant but not predominant contribution to mint output at times of bullion scarcity in the 1290s and the mid‐fifteenth century. Imported silver was usually a greater source of the metal in the English currency than locally mined silver, and gold coins constituted most of England's money supply from the mid‐fourteenth century onwards.     

Financial Control of a Competitive Economy with Public Goods but Without Randomness

The monetary and fiscal control of a simple economy without outside randomness is studied here from the microeconomic basis of a strategic market game. The government’s bureaucracy is treated as a public good that provides services at a cost. A conventional public good is also considered.