HEDONIC IMPUTATION AND THE PRICE INDEX PROBLEM: AN APPLICATION TO HOUSING

In this study, we show how use of the hedonic imputation method complicates the price index problem. In addition to the usual choice between formulas such as Fisher and Törnqvist, the fact that index compilers have some discretion over which prices are imputed implies that it is necessary to choose as well between different varieties of each formula. The functional form of the hedonic model must also be taken into account. We illustrate the importance of these issues in a housing context using house price data for three regions in Sydney over a 3‐yr period. (JEL C43, E31, O47, R31)     

IMPACT OF COMPETITION,INVESTMENT, AND REGULATION ON PRICES OF MOBILE SERVICES: EVIDENCE FROM FRANCE

In this paper, we assess the impact of competition, investment, and regulation on prices of mobile services in France. We estimate hedonic price regressions using data on tariff plans offered by the main mobile telecommunications operator in France between May 2011 and December 2014. In this time period, the obtained quality‐adjusted price index decreased by about 42.8% as compared to a decline in weighted average prices without quality‐adjustment of 8.7%. In a second step, we relate the quality‐adjusted prices to a set of competition, investment, and regulation variables and find that the launch of 4G networks by mobile operators was the main driver of price reductions for classic tariffs with commitment. Low‐cost tariffs without commitment which were introduced to pre‐empt the entry of low‐cost competitor declined at the time of entry. Moreover, we find that regulation, which is approximated by the level of mobile termination charges and international roaming price caps for voice and data, has a joint significant impact on quality‐adjusted prices. In percentage terms, competition is responsible for about 23.4% of total price decline and investments in 4G for 56.1%. We conclude that the reduction in quality‐adjusted prices in the last years was largely caused by competition between operators for a new 4G technology and by entry of a fourth low‐cost operator. (JEL L13, L50, L96)     

REPUTATION,PRICE, AND DEATH: AN EMPIRICAL ANALYSIS OF ART PRICE FORMATION

We analyze how an artist's death influences the market prices of her works of art. Death has two opposing effects on art prices. By irrevocably restricting the artist's oeuvre, prices, ceteris paribus, increase when the artist dies. On the other hand, an untimely death may well frustrate the collectors' hopes of owning artwork that will, as the artist's career progresses, become generally known and appreciated. By frustrating expected future name recognition, death impacts negatively on art prices. In conjunction, these two channels of influence give rise to a hump‐shaped relationship between age at death and death‐induced price changes. Using transactions from fine art auctions, we show that the empirically identified death effects indeed conform to our theoretical predictions. We derive our results from hedonic art price regressions, making use of a dataset which exceeds the sample size of traditional studies in cultural economics by an order of magnitude. (JEL Z11, J24, G12)     

SUPERSTITION IN THE HOUSING MARKET

We provide the first solid evidence that Chinese superstitious beliefs can have significant effects on house prices in a North American market with a large immigrant population. Using real estate data on close to 117,000 house sales, we find that houses with address number ending in “4” are sold at a 2.2% discount and those ending in “8” are sold at a 2.5% premium in comparison to houses with other addresses. These price effects are found either in neighborhoods with a higher than average percentage of Chinese residents, consistent with cultural preferences, or in repeated transactions, consistent with speculative behavior. (JEL D03, R2, Z1)     

不断完善住房制度,努力构建有中国特色的住房保障体系

我国住房保障体系主要解决老百姓＂住有所居＂的问题,关键要在不同时间段使老百姓的住房条件适应社会发展的要求。要达到这个目标,需要不断完善住房制度改革。总体上,低收入者要有社会保障,中、高收入者要走商品化道路,中等偏下这一块要有政府支持,如发展公共租赁房,在房价上涨较快的地区增加限价商品房供应,通过三个不同的层次来达到老百姓＂住有所居＂的目标,构建有中国特色的住房保障体系。     

Housing for the aging population

Based on the concept of ‘aging in place,’ design of houses in the past years are explored. Design features in the built environment become barriers for aging people with functional limitations. Initially, houses were designed according to the required needs of the user with the physical limitations. Later, adaptable house design was introduced that allows the house to meet the specific needs of the user, while maintaining the appearance of the house until more obvious accessibility features are needed. Today, ‘design for all’ is recognised as a tool for ensuring physical accessibility for aging people. The holistic perspective embedded in the universal design theory should be systematically and consistently developed during the design process.     

REGIONAL HOUSE PRICE DYNAMICS AND VOTING BEHAVIOR IN THE FOMC

This paper examines the impact of house price gaps in Federal Reserve districts on the voting behavior in the Federal Open Market Committee (FOMC) from 1978 to 2010. Applying a random effects ordered probit model, we find that a higher regional house price gap significantly increases (decreases) the probability that this district's representative in the FOMC casts interest rate votes in favor of tighter (easier) monetary policy. In addition, our results suggest that Bank presidents react more sensitively to regional house price developments than Board members do. (JEL E31, E58, R31)     

A POSSIBLE EXPLANATION OF THE MISSING DEFLATION PUZZLE

Following the Great Recession, despite large and persistent slowdown in economic activity, the fall in inflation was modest. This is known as the missing deflation puzzle. In this paper, we develop and estimate a New Keynesian model to provide an explanation for the puzzle. The new model allows for time-varying volatility in cross-sectional idiosyncratic uncertainty and accounts for changes in intermediate input prices. We show that inflation did not fall much because intermediate input prices were increasing. (JEL E31, E32, E52)     

DaMatta revisited

Roberto DaMatta famously argues that in the Brazilian cultural universe stable moral codes buttress familial hierarchy in the house, while situational negotiations underscore egalitarian utopias in the street. In this article, I revise this analytic construct, which a priori assumes that the person of the house and the “individual” of the street are mutually exclusive social categories. Rather than polarize house and street as distinct cultural domains diametrically opposed to one another, I demonstrate ethnographically that houses in the Brazilian state of Maranhão are conceptually continuous with the street to varying degrees. I argue that moral indebtedness in both these domains locally manifests through the emotional economies of respect (respeito), by which persons/individuals introduce measures of emotional proximity or distance into various types of material exchange relations. Both men and women ultimately channel these types of relations into the space of their family houses, which thus become hubs for the circulation of core social values.     

Housing and building materials in low-income settlements in Dar es Salaam

Dar es Salaam (Tanzania) is one of the fastest growing cities in sub-Saharan Africa. As in other sub-Saharan cities, government housing programmes have reached only a tiny percentage of urban residents. The vast majority either build for themselves or live as tenants in swahili houses provided by others. This paper examines the process of house building in Dar es Salaam through a survey of 90 house-owners in nine low-income settlements in the city. It is shown that in the past decade the price of manufactured building materials has risen steeply following the implementation of liberalisation policies. Despite this, house owners still strive to build modern houses in concrete blocks, which offer higher standards of comfort and security as well as bringing in higher income from rents. Those who cannot afford to do so, are obliged either to rent one or more rooms in a house constructed by others or to build a modest house using traditional materials. Although these materials are available in the market, some housebuilders still collect their own. There is evidence of increasing distance from the source, the substitution of inferior species and declining quality, all of which indicate that resources are coming under pressure.     

SHOULD OIL PRICES RECEIVE SO MUCH ATTENTION? AN EVALUATION OF THE PREDICTIVE POWER OF OIL PRICES FOR THE U.S. ECONOMY

This paper evaluates the potential gains from using oil prices to forecast a variety of measures of inflation, economic activity, and monetary policy–related variables. With a few exceptions, oil prices do not have any predictive content for these variables. This finding is robust to the use of rolling forecast windows, the use of industry‐level data, changes in the forecast horizon, and allowing for nonlinearities. (JEL Q43, E37, C32)     

Borrowing,Dwelling, Owing

Abstract

Taking the movie The Company Men (John Wells, 2010) as its starting point, the article attempts to think the condition of indebtedness in its connection with living in and with a home. Through readings of Martin Heidegger’s “Building Dwelling Thinking,” the article claims that the predicament of the indebted person and his or her house can be described as linked to a shift in the way we view houses, from “places of dwelling” to “standing-reserves.”     

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?     

IDENTIFYING THE ROLE OF RISK SHOCKS IN THE BUSINESS CYCLE USING STOCK PRICE DATA

I analyze the sources of U.S. business cycle fluctuations in an estimated Dynamic Stochastic General Equilibrium model with a rich set of nominal and real rigidities and various exogenous disturbances. The model includes a shock to the expected risk‐premium, which introduces a time‐varying wedge between the policy rate set by the central bank and the cost‐of‐capital of firms. In the aggregate data, most U.S. corporations finance their investment using internal funds, and stock prices reveal the opportunity cost of this type of financing. I therefore use corporate market value and dividend data in the Bayesian estimation of the model to identify risk shocks. Variance decomposition exercises show that these shocks account for a substantial part of the variation in the stock market, as well as the variation in output and investment, especially at short forecast horizons. The variation of these variables at longer forecast horizons are mainly captured by shocks to investment‐specific technological change. Historical decomposition points to the important role played by risk shocks in the run up of stock prices and output in the late 90s, and in the reversal of these variables in the early 2000s and during the recent recession. (JEL E32, E44)     

Middle-Aged and Elderly Finnish Households Considering Moving,Their Preferences,and Potential Downsizing Amidst Changing Life Course and Housing Career

We examine the moving and housing preferences of middle-aged and older in Finland, a country where population composition and movement through the life course are changing. A logistic regression reveals that middle-aged, moderate income residents, renters, those who have lived in their houses only a short time, and residents who are generally dissatisfied are most likely to consider moving. Downsizing appeals to residents with lower incomes who live alone, and who have been in their current houses longer. All potential movers agree on the importance of transportation access and a neighborhood grocery store; however, those preferring to downsize are also interested in house and neighborhood design as well as services that will allow aging in place. Income limitations may create affordability problems for some potential movers.     

Housing,memory and everyday life in contemporary Britain

With specific reference to public policy and the housing market in post-Second World War Britain, this article explores the relationship between housing, memory and everyday life. It argues that the house owes its cultural and emotional power to its capacity to separate itself ideologically from what Marc Augé calls the ‘non-places’ of everyday life. The extent to which houses have come to be seen as refuges from the non-place requires a great deal of symbolic work to conceal their sameness and everydayness. The association of the house with nostalgia, in particular, represents a denial of what Henri Lefebvre sees as the ‘residuality’ of the everyday, its capacity to lag behind the more dramatic transformations of modernity. In order to explore these questions, the article focuses on different types of housing in contemporary Britain, which are all based on a serial repetition and collectivity that are often denied. It examines: how the demolished terraced house and the surviving slum reveal the broader structures of everyday life in a way that the refurbished middle-class town house, alternating between a commodified past and a self-promoting futurism, specifically conceals; how the high-rise estates represent the most visible manifestation of the residuality of the everyday; and how new suburban houses are built in ‘timeless’ vernacular styles and sold as well-equipped interiors for exclusively privatized use, in a way that obscures their links to systems of mass production and consumption. The article concludes that the cultural economy of houses denies the reality of uneven development, and the ways in which our carefully refurbished homes are achieved at the expense of other everyday spaces.     

REAL EXCHANGE RATE,MONETARY POLICY,AND THE U.S. ECONOMY: EVIDENCE FROM A FAVAR MODEL

This paper examines the effects of exchange rate depreciation to the U.S. economy in a factor‐augmented vector autoregression model using monthly data of 148 variables for the post–Bretton Woods period of 1973–2017. Exchange rate shock is identified to reflect exogenous disturbances to the foreign exchange market, and movements in exchange rate that are not accounted for by changes in the U.S. monetary policy. We find that depreciation is expansionary and inflationary to the broad U.S. economy, the current account improves over time conforming to the J‐curve theory, and monetary policy is leaning against the wind. (JEL E3, E5, F31, F32, F41)     

RACIAL DIFFERENCES IN HOMEOWNERSHIP and HOUSING WEALTH, 1970–1986

Black couples are found to own a disproportionately low share of aggregate housing wealth in the United States because they are less likely than whites to be homeowners and because black-owned houses have lower market values than white-owned houses. Probability of ownership and house value equations (corrected for selectivity bias) are estimated with national data for 1970, 1980, and 1986. Trends in racial differences in homeownership and house value are identified and reasons for their existence are investigated.     

LIQUIDITY RISK AND TIME‐VARYING CORRELATION BETWEEN EQUITY AND CURRENCY RETURNS

Using the data of 20 major Organization for Economic Co‐operation and Development countries over time, this article documents new evidence on real equity and real currency prices: higher real returns in the home equity market relative to its foreign counterparts are generally associated with real home currency depreciation at monthly frequency, but this negative correlation breaks down or even reverses during times of relatively higher aggregate economic uncertainty or volatility. This article also argues that a long‐run risks‐type model with time‐varying liquidity risk in stock markets can provide one plausible explanation for the time‐varying correlation structure. (JEL E43, F31, G12, G15)     

AN EXAMINATION OF LINEAR AND NONLINEAR CAUSAL RELATIONSHIPS BETWEEN COMMODITY PRICES AND U.S. INFLATION

This article uses both linear and nonlinear causality tests to examine the causal relationships between changes in commodity prices and U.S. inflation. Prior to the Great Moderation, there is evidence that changes in commodity price indices linearly lead inflation. The stability of the causal relationship appears to vary over time with a stronger bivariate link established before the Great Moderation. Further, there is evidence of significant nonlinear causality from raw industrials and metals indices to inflation with most of this detected nonlinear relationship being captured using the Baba, Engle, Kraft, and Kroner asymmetric generalized autoregressive conditional heteroskedasticity model. This implies that the observed nonlinear Granger causality is largely driven by unanticipated shocks and volatility spillovers in the run‐up of commodity prices in late 2000. (JEL C18, C22, E31)