scholarly journals The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s

2015 ◽  
Vol 105 (4) ◽  
pp. 1439-1477 ◽  
Author(s):  
Raghuram Rajan ◽  
Rodney Ramcharan
Keyword(s):  
Asset Price ◽  
The United States ◽  
Bank Failures ◽  
Credit Crisis ◽  
Price Inflation ◽  
Farm Land ◽  
Credit Availability ◽  
Land Prices ◽  
Long Run ◽  
Boom And Bust

Does credit availability exacerbate asset price inflation? Are there long-run consequences? During the farm land price boom and bust before the Great Depression, we find that credit availability directly inflated land prices. Credit also amplified the relationship between positive fundamentals and land prices, leading to greater indebtedness. When fundamentals soured, areas with higher credit availability suffered a greater fall in land prices and had more bank failures. Land prices and credit availability also remained disproportionately low for decades in these areas, suggesting that leverage might render temporary credit-induced booms and busts persistent. We draw lessons for regulatory policy. (JEL E31, G21, G28, N22, N52, Q12, Q14)

scholarly journals Aging and Property Prices: A Theory of Very-Long-Run Portfolio Choice and Its Predictions on  Japanese Municipalities in the 2040s

2017 ◽  
Vol 16 (3) ◽  
pp. 48-74 ◽  
Author(s):  
Yoshihiro Tamai ◽  
Chihiro Shimizu ◽  
Kiyohiko G. Nishimura
Keyword(s):  
Portfolio Choice ◽  
Transition Economy ◽  
Aging Population ◽  
Residential Property ◽  
Price Inflation ◽  
Land Prices ◽  
Property Prices ◽  
Long Run ◽  
Property Price ◽  
Estimate Property

In this paper we investigate the effect of aging population on property (land) prices. A theory of very-long-run portfolio choice is developed for a transition economy from young and growing to rapidly aging population and applied to estimate property price inflation in Japanese municipal markets. The results are stunning. The simulation results in which income factors are assumed to be fixed at the 2005-10 growth level suggest that the average residential property price (land price) in the Japanese municipalities may decrease by as much as 19 percent from the present to 2020, 24 percent to 2030, and 32 percent to 2040.

scholarly journals Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010 *

2014 ◽  
Vol 129 (3) ◽  
pp. 1255-1310 ◽  
Author(s):  
Thomas Piketty ◽  
Gabriel Zucman
Keyword(s):  
Asset Price ◽  
The United States ◽  
Capital Taxation ◽  
Balance Sheets ◽  
Developed Economies ◽  
Long Run ◽  
Income Ratio ◽  
Aggregate Wealth ◽  
Eighteenth And Nineteenth Centuries ◽  
Rich Countries

Abstract How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970–2010 national balance sheets recently compiled in the top eight developed economies. For the United States, United Kingdom, Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise` of wealth-income ratios in recent decades, from about 200–300% in 1970 to 400–600% in 2010. In effect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600–700%). This can be explained by a long-run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the β=sg Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long-run wealth-income ratio β is about 300% if g = 3% and 600% if g = 1.5%. Our results have implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares.

The Impact of Monetary and Fiscal Policies on the Stock Market in the United States (U.S); Evidence from Linear ARDL Framework

2020 ◽  
Vol 11 (1) ◽  
pp. 132-132
Author(s):  
Aref Emamian
Keyword(s):  
United States ◽  
Stock Market ◽  
The United States ◽  
Real Effective Exchange Rate ◽  
Annual Data ◽  
Fiscal Policies ◽  
Long Run ◽  
The Us ◽  
Short Run ◽  
The Impact

This study examines the impact of monetary and fiscal policies on the stock market in the United States (US), were used. By employing the method of Autoregressive Distributed Lags (ARDL) developed by Pesaran et al. (2001). Annual data from the Federal Reserve, World Bank, and International Monetary Fund, from 1986 to 2017 pertaining to the American economy, the results show that both policies play a significant role in the stock market. We find a significant positive effect of real Gross Domestic Product and the interest rate on the US stock market in the long run and significant negative relationship effect of Consumer Price Index (CPI) and broad money on the US stock market both in the short run and long run. On the other hand, this study only could support the significant positive impact of tax revenue and significant negative impact of real effective exchange rate on the US stock market in the short run while in the long run are insignificant. Keywords: ARDL, monetary policy, fiscal policy, stock market, United States

The Small Bank Failures of the Early 1990s: Another Story of Boom and Bust

2016 ◽  
Author(s):  
Kushal Balluck ◽  
Artus Galiay ◽  
Glenn Hoggarth
Keyword(s):  
Bank Failures ◽  
Small Bank ◽  
Boom And Bust

China's Western Horizon

2020 ◽  
Author(s):  
Daniel S. Markey
Keyword(s):  
Political Influence ◽  
The United States ◽  
The Political ◽  
Regional Politics ◽  
National Wealth ◽  
Long Run ◽  
Political Implications ◽  
Foreign Policies ◽  
Belt And Road ◽  
Infrastructure Investments

This book explains how China’s new foreign policies like the vaunted “Belt and Road” Initiative are being shaped by local and regional politics outside China and assesses the political implications of these developments for Eurasia and the United States. It depicts the ways that President Xi Jinping’s China is zealously transforming its national wealth and economic power into tools of global political influence and details these developments in South Asia, Central Asia, and the Middle East. Drawing from extensive interviews, travels, and historical research, it describes how perceptions of China vary widely within states like Pakistan, Kazakhstan, and Iran. Eurasia’s powerful and privileged groups often expect to profit from their connections to China, while others fear commercial and political losses. Similarly, statesmen across Eurasia are scrambling to harness China’s energy purchases, arms sales, and infrastructure investments as a means to outdo their strategic competitors, like India and Saudi Arabia, while negotiating relations with Russia and America. The book finds that, on balance, China’s deepening involvement will play to the advantage of regional strongmen and exacerbate the political tensions within and among Eurasian states. To make the most of America’s limited influence along China’s western horizon (and elsewhere), it argues that US policymakers should pursue a selective and localized strategy to serve America’s aims in Eurasia and to better compete with China over the long run.

scholarly journals Cross-section instability in financial markets: impatience, extrapolation, and switching

2021 ◽  
Author(s):  
Roberto Dieci ◽  
Xue-Zhong He
Keyword(s):  
Financial Markets ◽  
Cross Section ◽  
Asset Price ◽  
Asset Market ◽  
Long Run ◽  
Short Run ◽  
And Performance ◽  
Equilibrium Market ◽  
High Degree ◽  
Fundamental Price

AbstractThis paper presents a stylized model of interaction among boundedly rational heterogeneous agents in a multi-asset financial market to examine how agents’ impatience, extrapolation, and switching behaviors can affect cross-section market stability. Besides extrapolation and performance based switching between fundamental and extrapolative trading documented in single asset market, we show that a high degree of ‘impatience’ of agents who are ready to switch to more profitable trading strategy in the short run provides a further cross-section destabilizing mechanism. Though the ‘fundamental’ steady-state values, which reflect the standard present-value of the dividends, represent an unbiased equilibrium market outcome in the long run (to a certain extent), the price deviation from the fundamental price in one asset can spill-over to other assets, resulting in cross-section instability. Based on a (Neimark–Sacker) bifurcation analysis, we provide explicit conditions on how agents’ impatience, extrapolation, and switching can destabilize the market and result in a variety of short and long-run patterns for the cross-section asset price dynamics.

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