Determinants of Mortgage Default and Consumer Credit Use: The Effects of Foreclosure Laws and Foreclosure Delays

The mortgage default decision is part of a complex household credit management problem. We examine how factors affecting mortgage default spill over to other credit markets. As home equity turns negative, homeowners default on mortgages and home equity lines of credit at higher rates, whereas they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the preservation of credit cards over housing debt. Although mortgage nonrecourse statutes increase default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase default rates for housing and nonhousing debts. Our analysis highlights the interconnectedness of debt repayment decisions.     

STRUCTURAL CHANGES IN INDONESIAN INDUSTRY AND TRADE: AN INPUT‐OUTPUT ANALYSIS

This study evaluates the current achievement of industrialization in Indonesia and clarifies what the major challenges are for sustaining industrialization. This is done by examining structural changes in the economy from the period before to the period after economic crisis using the method of input‐output (I‐O) analysis. After tracing the history of economic development in Indonesia, changes in industry and trade between 1995 and 2000 are viewed using skyline chart analysis, industrial linkage analysis, and growth‐factor decomposition analysis. Results indicate that from 1995 to 2000, the manufacturing industry expanded the share of production, strengthened export orientation, and lowered import dependency. However, these phenomena appear to have resulted primarily from slumps in growth factors other than export demand as well as sharp declines in the value of the rupiah. This study shows that the current decrease of investment is a bottleneck in industrialization and indicates an urgent need for Indonesia to improve the investment environment, particularly for foreign investors.     

SEQUENTIAL MERGERS WITH DIFFERING DIFFERENTIATION LEVELS*

We study sequential merger incentives under presence of product differentiation. Two sets of firms produce closely related goods, whereas each set produces more differentiated goods. Merger incentives under product differentiation are found to be stronger for two firms producing closely related goods than more differentiated goods. Also, after one merger, other firms are willing to follow with their own merger, resulting in sequential mergers. This result is consistent with the recent mergers in the video game software industry in Japan.     

ANALYSIS OF HOUSEHOLD SAVING: PAST,PRESENT, AND FURTURE*

The first part of this paper gives a very brief and selective review of theoretical and empirical research on household consumption and saving over the last fifty years. It is argued that the recent accumulation of stylized facts about individual households calls for further development of theory. The second part reviews a model that has a potential for explanining those stylized facts.     

SELF‐CONTROL PROBLEMS AND CONSUMPTION‐SAVING DECISIONS: THEORY AND EMPIRICAL EVIDENCE*

Time‐discounting is a fundamental preference which affects wealth accumulation. If people are impatient, they may spend their earnings instantaneously, and do not save enough for the future. People are often time‐inconsistent, i.e., they often put exceptionally high value on immediate consumption compared to any time in the future. Whether they are aware or not, these individuals are susceptible to self‐control problems. In this paper, we review theoretical and empirical research on time‐inconsistency and self‐control problems, particularly on consumption and saving, and discuss their policy implications.     

MULTIPLIER EFFECTS OF PUBLIC SERVICES IN A TWO‐SECTOR MODEL OF MONOPOLISTIC COMPETITION

In a two‐sector model of monopolistic competition, this paper explores what impacts an expansion of government spending on public services has on national income. In the short run where entry and exit of firms are restricted, a rise in government spending on services like health care (which has only a role of substituting for market services) increases national income, but that on services like elderly care (which has not only this role but also another role of contributing to home production of services) decreases it. These results are reversed in the long run. Welfare effects of public services are also examined.     

STABILITY OF THE COURNOT SOLUTION AND FREE ENTRY: A NOTE*

Taking a traditional approach, I show that by using the discrete adjustment system, the Cournot solution in a free entry oligopoly with increasing returns to scale is stable only when the number of firms is very small. We must pay attention to stability when using the free entry Cournot oligopoly model.     

On the Existence and Uniqueness of Pure-Strategy Nash Equilibrium in Asymmetric Rent-Seeking Contests

There can be three types of heterogeneity among players in a rent‐seeking contest. First, effectiveness of player's effort on the winning probabilities may differ among players. Secondly, players may evaluate the rent or prize of the rent‐seeking contest differently. Thirdly, players may face different financial constraints. This article proves under standard assumptions in the literature that there exists a unique pure‐strategy Nash equilibrium in a general asymmetric rent‐seeking contest with these three types of heterogeneity among players.