Home Warranties: An Analysis of an Emerging Development in Consumer Protection

Although warranty coverage on consumer products is a universally accepted form of protection, the extension of similar coverage to buyers of new and used homes is a developing practice. Home warranties serve a dual purpose: they reduce a homebuyer's risk of substantial financial loss, and protect the builder, seller or real estate vendor from legal liability should undisclosed material defects occur after a sale. In an effort to examine consumer reactions to home warranties, a mail survey was conducted of recent purchasers residing in four central counties of New York State. It was found that two-thirds of the 571 single-family homeowners who responded were aware of warranties on new housing and 97 percent were in favor of such coverage. Only 22 percent were aware of warranties for resale homes and 56 percent favored such coverage. Unexpected defects costing more than $100 were experienced by 55 percent of the sample. However, only 27 percent of the sample had defects which were warrantable under most current warranty programs.     

Fiscal Restraints: Seven Lessons From West Germany

West German attempts to discipline runaway welfare and other state expenditure present telling lessons for Mrs Thatcher, Sir Keith Joseph, Norman Fowler and Michael Heseltine.     

Effects of Low Income Families' Ability and Willingness to Use consumer Credit on Subsequent Outstanding Credit Balances

This study investigates consumer credit use of 618 low income families selected from the 1983 and 1986 Survey of Consumer Finances. The low income family's ability and willingness to use credit along with selected interaction variables are tested in a hierarchical multiple regression model. Significant determinants of the amount of credit outstanding in 1986 were household head's employment status and age, credit balance in 1983, and two interaction variables: specific attitude toward credit with head's educational level and with debt balance in 1983. Implications of the use of consumer credit by low income families are discussed.     

Review of the Housing Allowance Program

Housing allowances are being touted as the popular solution to the low-income housing problem. This article briefly examines the historical background, past research, factors, and issues which must be considered in designing an effective program. Major household concerns considered are: equity, eligibility and allowance formulas. Attention is given to program goals and their influence on the amount and kind of subsidy, definition of income and allowance formula selected. The response of the housing market to the new demand created is examined along with related factors such as requirements that recipients live in standard dwelling units and collusion opportunities for landlords and recipients. Based on research conducted on the food stamp program, household expenditure change is projected. Finally the impact of a housing allowance on other support programs and the need for program integration and administrative simplicity is considered.     

High school students' knowledge of telemarketing fraud tactics in the U.S.A.

Telemarketing fraud is a rapidly increasing problem with widespread economic implications for consumers and society. Given the extent of the problem, government agencies and consumer organizations are involved in educational efforts aimed at reducing telemarketing fraud. But does education make a difference? The effects of an educational experience on the knowledge of high school students with regard to telemarketing fraud tactics were explored in a controlled setting, in this study. Analyses of pre- and post-test results for treatment and control groups revealed an increased knowledge of telemarketing fraud tactics from a lesson on legitimate and fraudulent telemarketing practices. Even after controlling for age, gender and rural/urban residence a significant difference in average test scores continued to exist.     

Asset Prices,News Shocks,and the Trade Balance

We analyze the relationship between asset prices and the trade balance estimating a Bayesian VAR for a broad set of 38 industrialized and emerging market countries. To derive model‐based identifying restrictions, we model asset price shocks as news shocks about future productivity in a two‐country dynamic stochastic general equilibrium model. Such shocks are found to exert sizable effects on the trade balance. Moreover, the effects are highly heterogeneous across countries. For instance, following a news shock that implies on impact a 10% increase in domestic equity prices relative to the rest of the world, the U.S. trade balance will worsen by up to 1.0 percentage points, but much less so for most other economies. We find that this heterogeneity appears to be linked to the financial market depth and equity home bias of countries. Moreover, the channels via wealth effects and via the real exchange rate are important for understanding the heterogeneity in the transmission.     

Migration of the Talented: Can Europe Catch Up with the U.S.?

We develop a model to analyze migration of highly talented individuals within and into Europe. First, we show that if transferability of human capital is endogenous, i.e., if high migration flows and high human capital transferability are mutually interdependent, Europe might be trapped in a low‐migration equilibrium. Second, we show that high mobility within a Federation is necessary to attract highly talented immigrants into the Federation. We study in how far and in what way the European public policy behind the Bologna and the Lisbon Process can contribute to higher mobility in Europe.