Municipal welfare functions

In this paper the concept of a municipal welfare function is defined. It reflects the evaluation by local authorities of several levels of local expenditures. On the basis of an extensive survey among all Dutch municipal authorities these functions are estimated for about 550 Dutch municipalities with respect to total expenditures and differentiated with respect to several portfolios, like public works, education, etc. The variation of the estimated municipal welfare parameters is explained by objectively measurable municipal characteristics like the number of the inhabitants, age distribution of inhabitants and houses, number of unemployed, regional situation.     

Fiscal Coordination and Political Competition

This contribution investigates fiscal coordination in the framework of two countries asymmetric in respect of their capital–labor endowment. When tax policies are decided by majority voting inside each country, and they are not coordinated at a supranational level, factors of production are inefficiently allocated, at equilibrium. Our main result shows that fiscal coordination, via a minimum capital tax, does not always lead to a Pareto–improvement for the median voter's welfare, with respect to the noncooperative outcome.     

Spatial analysis of the U.S. lodging industry, 1963–1977

Data from the U.S. Department of Commerce Census of Business in 1963, 1972, and 1977 were compared on a state by state basis and by standard metropolitan statistical areas in order to analyze the spatial growth points of the U.S. lodging industry. The results point to major lodging growth areas in the Sunbelt states with central Florida, Las Vegas, Nevada and Hawaii as outstanding nodes of development. Metropolitan lodging growth has taken place in the Sunbelt cities with populations of 100,000 to one million, with above average growth in those cities located in the coastal zone.     

Securitization,Risk‐Taking and the Option to Change Strategy

This article models the riskiness of structured securitization deals. The deals are put together by “banks,” which can exercise strategic options over the risk put into the deals. The banks face a trade‐off between the benefits of risk‐taking now and future franchise benefits if the deal pays off. The key insight is a convex relationship between the value of the bank's equity position and the risk in the deal. Although there is a continuum of possible risk, banks choose either the highest or lowest levels of risk open to them. Changes in strategy are discontinuous and unpredictable; a history of low risk‐taking may be a prelude to increased risk‐taking later. Competition, to the extent of reducing franchise value, can lead to more risk‐taking, as can more information in the market. The model provides insights into the risk‐taking that led up to the Great Recession and to institutions that are “Too Big to Fail.”     

Why are REITS Currently So Expensive?

Over the last several years, the price of listed real estate stocks has been unusually high relative to dividends. I find that neither low interest rates nor low risk premia can account for the high valuation ratios. Lower interest rates have been offset by rising risk premia to keep expected returns close to average. Instead, the market has priced in future income growth on commercial properties far above the growth rates seen in the data. High implied growth rates are less extreme for nontraditional REIT sectors. Income growth expectations are also less extreme for international listed real estate.     

Spillovers in Space: Does Geography Matter?

Using U.S. firm level panel data we simultaneously assess the contributions to productivity of three potential sources of research and development spillovers: geographic, technological, and product market (“horizontal”). To do so, we construct new measures of geographic proximity based on the distribution of a firm's inventor locations as well as its headquarters. We find that geographic location is important for productivity, as are technology (but not product) spillovers, and that both intra and inter–regional (counties) spillovers matter. The geographic location of a firm's researchers is more important than its headquarters. These benefits may be the reason why local policy makers compete so hard for the location of local R&D labs and high tech workers.     

Portfolio performance gauging in discrete time using a Luenberger productivity indicator

This paper proposes a pragmatic, discrete time indicator to gauge the performance of portfolios over time. Integrating the shortage function (Luenberger, 1995) into a Luenberger portfolio productivity indicator (Chambers, 2002), this study estimates the changes in the relative positions of portfolios with respect to the traditional Markowitz mean-variance efficient frontier, as well as the eventual shifts of this frontier over time. Based on the analysis of local changes relative to these mean-variance and higher moment (in casu, mean-variance-skewness and mean-variance-skewness-kurtosis) frontiers, this methodology allows to neatly separate between on the one hand performance changes due to portfolio strategies and on the other hand performance changes due to the market evolution. This methodology is empirically illustrated using a mimicking portfolio approach (22 and 23) using US monthly data from January 1931 to August 2007.     

Foresight in the Brussels Capital Region

This paper presents results from the Iris Futures research project. The research was aimed at exploring the potential role of foresight in the development of the Brussels Capital Region and the identification of tools, capabilities and conditions for an improved application of foresight in Brussels. An overview was created of the characteristics of 60 future oriented activities and 120 organisations involved in such activities At the outset questions on organisational or institutional fragmentation and collaboration were not intended to be in the foreground of the research but over the course of the research this issue was observed to have a significant adverse impact on foresight capacity in Brussels. The case of the Brussels Capital Region demonstrates that institutional and organisational fragmentation need to be overcome for a futures oriented practice to have opportunity. De-fragmentation, bottom-up and institutionally, is both a condition for and an effect of the futures oriented practice underlying the foresight capacity of organisations.     

Inter-market competition for NYSE-listed securities under decimals

Blume and Goldstein (J Finance 52:221–244, 1997) suggest that quote competition between trading venues may diminish following tick size reductions. We test this suggestion by studying the competitive landscape in the NYSE-listed stocks before and after decimalization. We find that NBBO (National Best Bid and Offer) participation by non-NYSE venues declines following decimalization consistent with the prediction. At the same time, the importance of quote competitiveness in attracting order flow increases. In addition, although not as active in determining and maintaining the best quotes under decimals, non-NYSE venues become more active in price discovery. Finally, decimalization leads to lower trading costs and to smaller differences in trading costs across trading venues.