Relocation Opportunities and Mortgage Default

This paper presents a theoretical model of residential mortgage default when borrowers face beneficial as well as costly relocation opportunities. It amplifies and extends previous work by providing explicit conditions leading to default. The model also establishes when a borrower's relocation decision and default decision are dependent and when they are not.
A central result is that there is a range of book equity wherein the decision to default is not determined solely by the current level of equity or the borrower's ability to continue the mortgage payments. Rather, various costs and benefits, both tangible and intangible, enter into the decision. Specific conditions are identified that lead to relocation without default, default and relocation, and no default or relocation. The effects of changes in the variables upon default probability are presented.
Assuming that the borrower does not wish to retain ownership in the property, the model also predicts whether an individual borrower will choose prepayment or default when a relocation is made. The choice depends on the value of the relocation opportunity faced by the borrower, as well as financial variables such as house value, mortgage balance, and transaction costs. This finding suggests that existing empirical analyses of default may have omitted explanatory variables.     

2007年3月美国第16届国际特许展

美国第16届国际特许展于今年3月30日在首都华盛顿举行,为期3天的会议共有300多个参展商,以及15000多名来自85个国家的专业观众参加。很多人都是     

Two-Stage Acquisitions, Free-Riding, and Corporate Control

This study examines two-stage acquisitions, focusing upon first- and second-stage excess returns for both acquired and acquiring firms, and analyzing the relation between acquisition returns and ownership interest. The evidence suggests that target firm shareholders do not free-ride. Evidence is also provided indicating that premiums are paid by the majority holder to acquire a remaining minority interest.     

Efficiency wages and income taxes

The paper was written during a visit at the Ludwig-Maximilian-University of Munich in the summer of 1988. The hospitality of this institution, as well as the financial support from a Ruhrgas Scholarship under the West German Norwegian Scholarship Scheme, is gratefully acknowledged. Participants at various seminars have given useful comments and criticism. I am also grateful to two anonymous referees for their comments to an earlier version of the paper.     

Global monetary policy under a dollar standard

This paper derives an optimal monetary policy in a world with a dollar standard, defined as an environment in which all traded goods prices are set in US dollars, so that exchange rate pass-through into the US price level is zero. We show that the US is essentially indifferent to exchange rate volatility, while the rest of the world places a high weight on exchange rate volatility. In a Nash equilibrium of the monetary policy game, US preferences dominate; the equilibrium is identical to one where the US alone chooses world monetary policy. Despite this, we find surprisingly that the US loses from the dollar's role as an international currency, since the absence of exchange rate pass-through leads to inefficient expenditure allocations within the US. Finally, we derive the conditions for a dollar standard to exist.     

Japan's Security Policy in East Asia

Japan's strategic thinking has been driven by three main factors: a fear of isolation, calculation of the geopolitical strength of China (and to a lesser extent, Korea), and accommodation to the prevailing international power structure. During the Cold War Japan aligned with Washington, but maintained sufficient distance to explore a mutually beneficial relationship with China based on Japan's dominant economic position. As Chinese power has grown and Japan's own economic tools for statecraft have slowed, Tokyo has moved closer to the United States to balance Chinese power. Japan has also had to seek new ways to shape the security environment in Asia, turning to multilateral diplomacy such as the Changmai Initiative. Where Japan's diplomacy in Asia in the 1980s and 1990s emphasized Japan's unique ability to champion "Asian" values with the West, increasingly Tokyo has emphasized its unique ability to champion universal values of democracy and rule of law in Asia. This theme has been used by conservative governments to improve Japan's brand over China, but also builds on a tradition of Japanese diplomatic efforts to take a lead in rule-making in the region. Prime Minister Koizumi's assertive foreign policy helped to reinvigorate Japan's international position, but he moved from the traditional three part formulation of Japan's orientation – the U.S. alliance, the UN system and Asia – to a simpler two part formulation of "the U.S.-Japan alliance and international cooperation." The lack of focus on Asia has contributed to growing tensions with South Korea and China over history issues, even as Japan's global and broader regional standing has increased according to most opinion polls. These regional challenges will continue to confront future Prime Ministers well past Koizumi.     

Smoothly mixing regressions

This paper extends the conventional Bayesian mixture of normals model by permitting state probabilities to depend on observed covariates. The dependence is captured by a simple multinomial probit model. A conventional and rapidly mixing MCMC algorithm provides access to the posterior distribution at modest computational cost. This model is competitive with existing econometric models, as documented in the paper's illustrations. The first illustration studies quantiles of the distribution of earnings of men conditional on age and education, and shows that smoothly mixing regressions are an attractive alternative to nonBayesian quantile regression. The second illustration models serial dependence in the S&P 500 return, and shows that the model compares favorably with ARCH models using out of sample likelihood criteria.     

Asset specificity and economic organization

This paper examines the optimization problem of firm and market organization in which both production cost and transaction cost differences are expressed as a function of asset specificity. In general, markets enjoy advantages by aggregating the demands of many buyers, thereby realizing economies of scale or scope. Such production cost savings need to be assessed in relation to the transaction cost advantages that internal organization sometimes enjoys over markets in adapting to changed circumstances. As it turns out, both production cost economies and the transaction cost differences between firm and market organization vary systematically with the characteristics of the investments. This paper employs a unified framework to assess the choice of organization form. The condition of asset specificity is featured.