IS LAND LEASING A SOLUTION TO UNAFFORDABLE HOUSING?

The increase in U.S. mortgage rates from nine per cent in 1976 to fifteen per cent in 1982 raised monthly mortgage payments by about sixty per cent, even before rising house prices in the United States over this period are taken into account. Not surprisingly, attention has been focused on ways and means of counteracting spiralling housing costs. One proposed solution is land leasing. Under such an arrangement, the homebuyer purchases the house but leases the land. (There may be an option to buy the land at some time in the future.) Land leasing reduces the overall purchase price, and hence lowers the minimum down-payment and the initial monthly mortgage payment. In Hawaii, land leasing has been a readily available alternative to land owning throughout the postwar period. The analysis of residential housing prices in Hawaii provides some quantitative estimates of the relative prices of leasehold versus fee simple properties. The average price differential is surprisingly small. One explanation of these small price differentials, for which a model is developed and tested here, is that borrowing-constrained households use high discount rates to calculate the present value of the future land price that they will, in effect, have to pay at the expiration of the lease. These discount rates are estimated in a nonlinear hedonic property price equation. The results are then employed to answer the question: Under what conditions would a leaseholder buy the land outright before the expiration of the lease?     

RELATIVE PRICE DISPERSION, AGGREGATE PRICE MOVEMENT, AND THE NATURAL RATE OF UNEMPLOYMENT

This paper develops a model of relative price stickiness and examines its implications for the relationship between relative prices, inflation, and the natural rate of unemployment. Estimation of the model demonstrates that causality in the relationship between relative and aggregate prices runs in both directions. However, microeconomic disturbances have been the primary source of relative price change variance over the postwar period, and these micro disturbances have exerted a strong effect on inflation in the short run. It also is shown that micro relative price change dispersion has had a significant influence on the natural rate of unemployment.     

RESERVE PRICE VERSUS ENTRY FEE IN STANDARD AUCTIONS

Analysis of standard auction rules when bidders are risk averse is usually carried out under the assumption that the seller is able to set an optimal reserve. The role of entry fees has been generally overlooked in that analysis. We consider bidders with constant absolute risk aversion and show that reserve price is an essential tool in the second price auction while entry fee is essential in the first price auction. Furthermore, setting a reserve price and entry fee combination optimally may change some of the rankings of the standard auctions that hold under optimal reserves. (JEL D44)     

Research on the treatment of couple distress

This article reviews the research on couple therapy over the last decade. The research shows that couple therapy positively impacts 70% of couples receiving treatment. The effectiveness rates of couple therapy are comparable to the effectiveness rates of individual therapies and vastly superior to control groups not receiving treatment. The relationship between couple distress and individual disorders such as depression and anxiety has become well established over the past decade. Research also indicates that couple therapy clearly has an important role in the treatment of many disorders. Findings over the decade have been especially promising for integrative behavioral couples therapy and emotion-focused therapy, which are two evidence-based treatments for couples. Research has also begun to identify moderators and mediators of change in couple therapy. Finally, a new and exciting line of research has focused on delineating the principles of change in couple therapy that transcends approach.     

THE LIMITS TO GROWTH

This article examines aggregate real estate firm mortality rates in a group of metropolitan areas during the 1960s and 1970s. Real estate firms play a critical role in the local growth machine, yet no research has examined the environmental limits which these firms experience. A set of ecological hypotheses are constructed which detail the influence of task and institutional environments on aggregate firm mortality rates. The findings show the sensitivity of firms to their local context, although standard market forces are not operating. In addition, period differences suggest that larger societal forces interact with the local land market, increasing aggregate mortality rates over time. Results support recent observations of the local land market made by the "new urban sociology."     

Recent Trends in Metropolitan-Nonmetropolitan Fertility1

Abstract Although decline and convergence in metropolitan (metro) and nonmetropolitan (nonmetro) fertility levels are longterm trends, a detailed analysis of the period since 1970 shows a pattern of exceptions and conditions which underscore the need for giving continued attention to differences by residence. There was a divergence of metropolitan and nonmetropolitan fertility rates in the 1970–1980 decade, but the renewed convergence since 1980 has made an important contribution to the turnaround reversal of metropolitan-nonmetropolitan population change. This recent rate convergence is not a simple coming together of the age-specific rates, but the balancing of changes in opposite directions for younger and older women. Metro-nonmetro differences widened in favor of nonmetro for women 20–24 years of age and in favor of metro for women over 30 years of age. The apparent catching up of postponed first and second births is found primarily among metropolitan women over 30 years of age.     

Anthropometric change: implications for office ergonomics

Well-designed office workspaces require good anthropometric data in order to accommodate variability in the worker population. The recent obesity epidemic carries with it a number of anthropometric changes that have significant impact on design. We examine anthropometric change among US civilians over the last 50 years, and then examine that change in a subset of the US population--the US military--as military data sets often have more ergonomic dimensions than civilian ones. The civilian mean stature increased throughout the period 1962 to 2006 for both males and females. However, the rate of increase in mean weight was considerably faster. As a result, the male obesity rate changed from 10.7% in 1962 to 31.3% in 2006. The female change for the same period was 15.8% to 33.2%. In the Army, the proportion of obesity increased from 3.6% to 20.9%, in males. In the absence of national US ergonomic data, we demonstrate one approach to tracking civilian change in these dimensions, applying military height/weight regression equations to the civilian population estimates. This approach is useful for population monitoring but is not suitable for establishing new design limits, as regression estimates likely underestimate the change at the ends of the distribution.     

OPTION VALUE: A GENERAL APPROACH

This article examines a potential bias if expected consumer surplus is used to measure the benefits of a price change under uncertainty. This bias, which is called option value, may be positive or negative. A general framework is developed for analyzing the determinants of the sign of option value, and this framework is applied to three types of uncertainty: income uncertainty, quality uncertainty, and uncertainty over consumer tastes. In the first two cases, option value has a determinate sign; however, in the last case, option value may be positive, negative, or zero in an unpredictable fashion.     

FOOD PRICES,WAGES, AND WELFARE IN RURAL INDIA

With soaring food prices in recent years has come alarm about rising poverty in the developing world. Less appreciated, however, is that many of the poor in agricultural economies may benefit from higher wages. This study finds that wages for manual labor in rural India, both within and outside agriculture, rose faster in districts growing more of those crops with large producer price run‐ups over the 2004–2009 period. Based on a general equilibrium framework that accounts for such wage gains, rural households across the income spectrum are found, contrary to more conventional welfare analysis, to benefit from higher agricultural prices. (JEL Q17, Q18, F14)     

ON THE INFREQUENT ADJUSTMENT OF PRICE BY FIRMS

Many firms change price no more than twice a year. This phenomenon is readily explained by very small price adjustment costs, and the fact that the firm's rate of profit is often insensitive to deviations in the interval between price changes from its optimal level. As a result, firms which change price only once or twice a year may earn almost as much profit as firms that adjust price optimally. This refutes the standard objection that price adjustment costs are too small to matter. The argument does not require extreme assumptions about the flatness of the firm's profit function.     

Measuring the impact of price changes on poverty

This paper develops a methodology to measure the impact of price changes on poverty measured by an entire class of additive separable poverty measures. This impact is captured by means of the price elasticity of poverty. The total effect of changes in price on poverty is explained in terms of two components, income and distribution effects. The income effect measures the change in poverty when all prices increase uniformly, whereas the distribution effect captures the change in poverty because of changes in relative prices. Using this decomposition, the paper derives an empirically operational index, which reveals whether the price changes have been pro-poor or anti-poor. The paper also derives a new price index for the poor. While this index can be computed for any poverty measures, our empirical analysis applied to Brazil is based on three poverty measures, the head-count ratio, the poverty gap ratio and the severity of poverty. The empirical analysis shows that price changes in Brazil during the 1999–2006 periods have been anti-poor. Nevertheless, during the last 2 to 3 years, the price changes have affected the poor less adversely than the non-poor.     

MODELING GROWTH (AND LIBERALIZATION) USING SMOOTH TRANSITIONS ANALYSIS

Economic liberalization has been a pervasive phenomenon over the last twenty years. Programs have been initiated on the assumption that liberalization promotes economic growth, but the empirical evidence for this is limited. This paper takes a novel approach to modeling growth and structural change as smooth transitions. This allows us to model deterministic change without imposing discrete changes. We use smooth transition analysis to reappraise the time-series properties of long-run growth rates in a number of developing countries which have undertaken liberalization. Our results challenge conventional wisdom on both methodological and empirical grounds.     

Economywide Impact of Maize Export Bans on Agricultural Growth and Household Welfare in Tanzania: A Dynamic Computable General Equilibrium Model Analysis

Export bans have been frequently used by developing countries in recent years in an attempt to ensure domestic food supplies and insulate domestic market prices from international price hikes. This article uses Tanzania to examine the impact of export bans using a computable general equilibrium model. We find that banning cross‐border maize exports has very little effect on the national food price index and that the benefits from lower maize prices are captured primarily by urban households, while maize producer prices decrease significantly. The export ban further decreases the wage rate for low‐skilled labour and the returns to land, while returns to non‐agricultural capital and wage rates for skilled labour increase, further hurting poor rural households and thus increasing poverty for the country as a whole.     

LG(BT) Families and Counting

Counting and understanding lesbian and gay families have gained attention over the last decade in popular culture, policy, and academic research. Contentious debates on family values and same‐sex marriage, increasing rates of social tolerance for homosexuality, and a greater general academic attention on issues of sexual orientation have partially spurred this attention in demographic analysis of lesbian and gay families. It is becoming increasingly clear that sexual orientation and gender identity have an effect on demographic processes and life outcomes. Although not perfect, practically speaking, drawing on nationally representative survey data has allowed us to illuminate the presence of same‐sex families and their children. These findings have an iterative relationship with social change, public policy, and increasing tolerance for diversity. This article reviews the recent demographic contributions related to lesbian, gay, bisexual, and transgender (LGBT) families. Due to research concentrations, the content of this article not only mostly addresses what is known about gay and lesbian families but also offers future directions to fill research voids including a call for greater attention to and visibility for families with bisexual and transgender members.     

Does Gold Price Matter for Divorce Rate in Iran?

The increasing divorce rate has become a major social concern for policy makers in the Islamic government of Iran. The price of gold coin is an important factor in cost-benefit analysis for individuals in their marriage and divorce decisions in Iran. Dowries (Mehrieh) are usually in the form of gold coin and a wife has a legal right to request them from her husband upon both parties signing the marriage contract. Increasing the price of gold coin may intensify the internal stress and struggles within families, leading to a higher probability of divorce. We investigated the long-run relationship between real price of gold coin and divorce rate for the case of Iran over the period 1980–2014. Controlling for other factors such as women’s education, social globalization, economic growth rate, and the war period with Iraq, our regression results showed that there is a positive and significant long-run relationship between real price of gold coin (as well as unanticipated changes in real price of gold coin) and marital instability.     

Beyond Profitability: The Dutch Transatlantic Slave Trade and its Economic Impact

Dutch research into the slave trade and its importance to the Dutch economy has often limited itself to investigating the financial success of slave trading companies, calculating the success of slaving by its profit rates. The central argument made in this article is that gross margin is a better indicator for the importance of the slave trade to the Dutch Republic. Even if a slave trading company did not make a net profit on a voyage, such a voyage led to extra activities such as shipbuilding or the production of trade goods. This article provides a reconstruction of this gross margin for the entire period that the Dutch were engaged in the trans-Atlantic slave trade by combining the most recent data on the size of the slave trade (including illicit trade) with data on both African and American price data of slaves.     

INPUT CHOICES UNDER PRICE UNCERTAINTY

Theory shows that, depending on risk preferences and technological parameters, price uncertainty may alter firms' choice of capital intensity. This paper presents an empirical analysis of the effect of price uncertainty on firms' choices of capital and labor stocks. Empirical results from a cross-section of manufacturing industries, as well as within-industries over time, show that greater price uncertainty increases an industry's capital-labor ratio. It appears that risk aversion does not dominate firms' decision making. These empirical findings have implications for the analysis of factor demand and productivity, and capacity utilization rates.     

AUTOMOBILE FUEL EFFICIENCY: MEASUREMENT AND EXPLANATION

This paper extends the hedonic technique of adjusting for quality change to a new area: the construction of a quality-adjusted automobile fuel efficiency index. This index, which holds constant a wide range of characteristics that affect observed fuel economy, rises by over 20 percent from 1949 until the late 1960s. The advent of increasingly stringent antipollution regulations coincides with its decline through the mid-1970s. Thereafter, the constant-quality index rises sharply. This paper will demonstrate that the fall and rise over the last decade coincide with the reductions in allowable automobile exhaust emissions and the rising relative price of petroleum, respectively.     

Hyper-Segmentation and Exclusion in Financial Services in the U.S.

Abstract

The last twenty years has been a period of major structural change for the financial services sector in the United States. Some of this restructuring has been prompted by technological change, but public policy has actively facilitated the increased mobility of capital to places where it brings the highest short-term private return but not necessarily the greatest long-term social return. While deregulation and technology have combined to provide a wider choice of services and increased price pressure in the lucrative segments of different financial markets, the pursuit of affluent customers has left lower-income consumers and very small firms at a disadvantage. The sector overall has moved toward a hyper-segmentation of customer bases by income and race, leaving many communities served primarily by higher-cost and sometimes abusive financial services firms.     

HOUSING MARKET CAPITALIZATION OF ENERGY-SAVING DURABLE GOOD INVESTMENTS

Energy conservation in the residential sector depends, in large measure, upon the willingness of builders and homeowners to invest in the durable goods which result in an energy efficient house. Since these durable goods generally become attached permanently to the dwelling unit and since ownership of the unit is likely to change within the expected lifetime of the installed equipment, the incentive to invest in conservation measures depends upon the efficiency of the housing market in capitalizing the financial benefits of future fuel savings. This paper examines housing market efficiency in this regard by first estimating an hedonic price index with the annual fuel bill included as an explicit attribute of the structure. Then, from the estimated hedonic price of a one-dollar reduction in annual fuel costs and assumed fuel price escalation rates and remaining lifetimes of the equipment, implicit housing market discount rates are calculated. The relatively low estimated discount rates indicate that the housing market performs efficiently in capitalizing future fuel savings.