Asset Price Changes Research Articles

URBAN LOCATION AND HOUSING PRICE APPRECIATION

ABSTRACT The rate of appreciation in the asset price of housing is shown to vary systematically with location. Differences in appreciation rates occur because asset prices depend on rates of rental price changes, and the time pattern of rental price changes should vary systematically. Based on theoretical arguments in the literature, rates of rental price appreciation should vary with location, age, and size of the unit. The hypothesis that these factors are also associated with differences in the rate of asset price change is tested using data from five SMSAs. The hypothesis is confirmed for distance from the city center and age of the unit but not for size of the housing unit.

Asset substitutability and monetary policy: An alternative characterization

A distance function is defined for a simple portfolio choice problem and then used to express the impact on asset prices of a change in an asset stock as the sum of a substitution and a wealth effect. Substitutes and complements are defined with reference to qualtity rather than price changes. This method of characterizing asset substitutability leads to simpler and more easily interpreted results when analyzing monetary policy that does the standard approach which expresses asset price changes in terms of the price elasticities of the asset demand functions.

The Employment Multiplier after Disequilibrium Dynamics

This paper concerns modifications in the short-run multiplier analysis in disequilibrium theory by Barro & Grossman and Malinvaud, when changes in asset stocks, wages and prices in the medium run are taken into account by utilizing the steadystate multiplier of government expenditure. The analysis is carried out in the context of a simple macroeconomic model with one good, labor and one asset (money). If wages and prices remain constant in the medium run, the demand multiplier becomes larger than the very short-run analysis suggests, while the supply multiplier even changes its sign from negative to positive. With variable wages and prices, results are in general indeterminate, but sufficient flexibility can make both the demand and the supply multiplier smaller than the immediate very short-run multipliers.

Stock Market Margin Requirements

IN MY judgment," maintained William McChesney Martin, Jr., Chairman of the Board of Governors, Federal Reserve System, "we can never under the present margin regulations have the same result that occurred in terms of a financial crash in 1929 through undermargined accounts, low margins resulting in a financial debacle."' A widely used elementary economics textbook claimed, "Margin requirements have exercised an important restrictive influence on security speculation, as contrasted with the uncontrolled period of the late 1920's... Nearly everyone agrees that Federal Reserve margin requirements exercise a healthy restraint on speculative stock purchases in a boom" (Bach, 1963, p. 116). But what evidence is there that margin requirements have the effects claimed? At the December meetings of the American Economic Association, George J. Stigler, in the Presidential address, called on economists to test their assumptions that state regulation of private activity has indeed been successful (Stigler, 1965). This article brings together some data on the efficacy of margin requirements. While the figures can only be considered preliminary, and more data should be collected to test margin requirements, the data that are available and presented here indicate that not one of the aims of the legislation establishing margin requirements has been accomplished.2