Financing multifamily rental housing: The changing role of lenders and investors

Abstract

A broad consensus exists that there are significant barriers to accessing capital markets for multifamily rental housing, particularly for housing targeted at low‐and moderate‐income households. While there is a growing secondary market for multifamily mortgages, the market is in the early stages of development and remains quite small. Expanding this market requires increasing standardization of mortgages, increasing credit quality with better underwriting and credit enhancement, and educating investors as to the risks and returns of multifamily investments. In addition, dramatically improved data collection on the performance of multifamily investments and analysis on the determinants of success are needed.     

Markets vs. polls as election predictors: An historical assessment

Prediction markets have drawn considerable attention in recent years as a tool for forecasting elections. But how accurate are they? Do they outperform the polls, as some scholars argue? Do prices in election markets carry information beyond the horserace in the latest polls? This paper assesses the accuracy of US presidential election betting markets in years before and after opinion polling was introduced. Our results are provocative. First, we find that market prices are far better predictors in the period without polls than when polls were available. Second, we find that market prices of the pre-poll era predicted elections almost on par with polls following the introduction of scientific polling. Finally, when we have both market prices and polls, prices add nothing to election prediction beyond polls. To be sure, early election markets were (surprisingly) good at extracting campaign information without scientific polling to guide them. For more recent markets, candidate prices largely follow the polls.     

Can markets be expected to prevent themselves from self‐destruction?

Even if competitive markets have shown themselves to be the most efficient organizational form for creating economic efficiency, the question of how they can avoid destructive influence from agents with opportunistic motives remains unresolved. Different institutional approaches have argued that to be efficient, markets need to be embedded in a set of formal and informal institutions. Because such institutions will in the long run make all market agents better off, they are labeled efficient institutions. Contrary to what is argued in neoclassical economics, it is unlikely that such institutions will be created endogenously by market agents because the institutions are to be understood as genuine public goods. Moreover, if such institutions have been established, we should expect market agents to face a collective action problem when sustaining them, leading to the destruction of the institutions. The conclusion is that if left to themselves, markets should be understood as inherently self‐destructive.     

Creating flows of interpersonal bits: the automation of the London Stock Exchange,c. 1955–90

Abstract

This article deals with the concept of market information. In particular, it argues that references to the so-called conduit metaphor, which represents markets as a series of information flows, hide the localized, historically contingent and materially mediated practices of the economy. Following the tradition of the performative theory of social institutions, this article argues that the specific meaning of ‘market information’ and its concrete manifestations (e.g. prices) depend on the sociotechnical character of the calculative practices through which market participants orient their economic actions. The point is illustrated through a historical reconstruction of the introduction of price and quote dissemination technologies in the London Stock Exchange between 1955 and 1990. By highlighting the historical and technological contingency of prices, the case of the London Stock Exchange shows that it is impossible to provide a universally and temporally invariant definition of market information.     

State and local pension plans' equity holdings and returns

This article explores recent trends in the size and performance of the equity investments of state and local pension plans. It also provides a context for the discussion about investing Social Security trust fund reserves in private equities. Equity holdings and returns for five of the largest private pension plans were compared with those of state and local pension plans. Key findings discussed in the article include: Equities were the largest investment in the aggregate portfolio of state and local pension plans in 1999 and represented 67 percent of the $3 trillion in aggregate state and local pension assets. Equity allocation of the five private plans resembled that of the aggregate. About 80 percent of state and local pension plan holdings were domestic equities in 1999. The five largest plans had about the same domestic/foreign allocation of equity investments during that same period. In 1999, state and local pension plans held about 11 percent of the U.S. equity market, which includes foreign equities held in the United States. State and local pension plans held about 10 percent of domestic equities in the U.S. equities market that same year. Returns on equity investments over a 10-year period were more than 17 percent for both private pensions and state and local pension plans. Although private plans tend to have slightly higher total returns, the difference stems from the higher equity asset allocation of the private pensions that were studied.     

The progress of the betting in a baseball game: A comment

In their article in the current issue of this journal, Sauer et al. compare the evolution of prices of in-game betting markets of baseball games to an empirical model of scoring based on the probability of various game events occurring. The authors correctly suggest this in-game betting market provides an opportunity to examine the efficiency of gambling markets, as the value of the security being examined can be known with a greater degree of precision than the fundamental value of securities being traded in general financial markets. While we appreciate the progress that has occurred, we believe that with some fairly simple changes, the authors may be able to improve the precision of their model to the point where a more powerful commentary on potential market efficiency could be developed. We offer suggestions on more precisely matching of the two sources of data, timing of the events, and dealing with games in which there is a clear pre-game favorite. We close with suggestions for extensions.     

Question,ethos, event: Foucault on Kant and Enlightenment

The use of labour values as a basis for economic calculation in a socialist economy is defended. A resource allocation mechanism is outlined that uses a combination of labour value calculation with market clearing prices for consumer goods. Conditions for full employment are specified. A type theoretic analysis of economic calculation is presented. Information theory is used to estimate the information content of real price vectors. It is demonstrated that both price calculations and value calculations are type theory equivalent and that both involve information loss. It is shown that modern computer technology is capable of computing up to date labour values with comparative ease.     

Are bureaucrats efficient? An application to the provision of AFDC

The question on how bureaucrats behave in the provision of a public service has been the subject of a considerable amount of research, most of which has been largely theoretical and inconclusive, especially on the issue of efficiency. This paper builds a bureaucratic theoretical model and provides empirical evidence by examining the workings of a government bureau, supplying a public service, namely Aid to Families with Dependent Children (AFDC), at the state level. It builds and estimates a generalized short run cost function that allows for systematic relative price inefficiency and does not require cost minimization subject to market prices as a maintained hypothesis. The model tests cost minimization as a testable special case. The estimating procedure allows us to test for a number of other features of the technology that are of interest such as productivity growth, marginal costs, returns to scale, technical change, and factor demands.     

Political Positions,Hierarchies and Political Markets: Towards a New Theory on Political Recruitment*

This article adresses itself to the problem of political recruitment. Most recruitment studies are based on models of recruitment where the model presupposes more candidates than positions. Studying local committees we cannot presuppose excess demand for political positions. The article tries to introduce economic theory into the study of political recruitment. With concepts of market, supply, demand and prices, the article discusses recruitment to various types of positions. When we have extreme market conditions with either excess demand or lack of demand, the recruitment processes can best be understood in terms of hierarchical forces. The sales of less important positions in a situation with low demand for these positions could best be understood in terms of market mechanism. Comparing an economic market with a political market, the article finds variation in the transaction structure. The economic markets have a specific transaction structure, with specific obligations linked to transactions, while the political markets have a more unspecified transaction structure with more unspecified obligations linked to the transactions. A less specified transaction structure has lower transaction costs in a hierarchy than in a market. This, the author believes, could explain why some transactions take place in markets while others take place in hierarchies.     

Some empirical evidence on rent-seeking

We tested for the capture of net gains by winners in rent-seeking competitions, using the most prominent announcements of government favors in the Canadian economy over a twelve-year period. Stockholders' returns were not significantly different from zero. One possible explanation is that government assists firms only when assistance creates political gains. Refusing to transfer economic rents to firms maximmizes the resources available to serve political purposes. This kind of behavior by government officials would imply that government has market power, which is consistent with several well-known theories of government.     

Bugs,predations or manipulations? Incompatible epistemic regimes of high-frequency trading

Abstract

Calls for greater transparency as well as corporate and individual accountability have emerged in response to the recent turbulence in financial markets. In the field of high-frequency trading (HFT), suggested solutions have involved a call for increased market information, for example, or better access to the inner workings of algorithmic trading systems. Through a combination of fieldwork conducted in HFT firms and discourse analysis, I show that the problem may not always stem from a lack of information. Instead, my comparative analysis of different market actors (regulators, market analysts and traders) shows that the diverse and complex ways in which they access and construct knowledge out of information in fact lead to what I call different epistemic regimes. An understanding of how epistemic regimes work will enable us to explain not only why the same market event can be viewed as very different things – as market manipulation, predation or error – but also why it is so difficult to arrive at a unified theory or view of HFT. The comparative perspective introduced by the idea of epistemic regimes might also serve as a starting point for the development of a cultural approach to the study of financial markets.     

Internal markets in the public sector: the case of the British National Health Service

This article discusses the application of internal markets to the publicly financed British National Health Service (NHS). The objective of internal markets is to obtain, through the stimulus of competition, greater efficiency, effectiveness, and responsiveness to consumer needs than would be obtained through continued direct government provision. There have been real advances in the NHS attributable to the internal market, not the least of which is a growth of debate, dynamism, experimentation, and entrepreneurial attitudes that contrasts sharply with the glacial pace of change prior to 1990. However, there is also a sense in which the reforms have, thus far, failed to achieve all their promoters hoped for. It is far from clear that efficiency gains exceed the high transaction costs associated with the reform. Competition remains restricted, information is inadequate, and the regulatory and legal framework is flawed. Lack of transparency and a clear publicly stated ‘end vision’ of the reform process, together with a refusal to evaluate it systematically, have heightened already intense controversy. This has blurred the fact that the internal market is not a panacea and cannot alone be expected to solve the problems of a health service where demand is accelerating faster than the resources available through taxation. (© 1997 by John Wiley & Sons, Ltd.)     

Political cheating

This paper shows that how a politician votes is unrelated to whether he faces re-election. This contradicts the universal agreement by economists that political behavior is constrained by the threat of re-election. Contrary to the existing work on ideology, I show that ideology can prevent rather than cause opportunistic behavior. My discussion of ideology can explain why the last period does not affect how a politician votes but only how often he votes. Besides providing an explanation for how politicians can internalize the long-run returns to investments through ideology, my results show that political parties have no effect on how retiring congressmen vote. Finally, I shall try to argue that politicians are search and not experience goods.     

ECONOMIC THEORY AND POLICY ANALYSIS: CONCEPTUAL GUIDELINES FOR PUBLIC POLICY-MAKERS

Abstract: Traditionally public policy analysis has been able to employ the conceptual framework offered by the theory of market failure in order to evaluate the efficiency of market outcomes. However, until fairly recently, no corresponding analytical structure existed which could facilitate the examination of the efficiency and equity characteristics of government or non-market outcomes. Quite apart from public choice theory, an embryonic normative theory of government failure has now been developed which can act as a conceptual analogue to the market failure paradigm. At present, three theories of government failure coexist in the literature: Wolf's theory of non-market failure; Le Grand's theory of government failure; and Vining and Weimer's theory of govern- ment production failure. These models form the basis for a more universal theory of government failure. Nevertheless, in its current state of development this seminal literature can still assist in rational public policy design subject to certain caveats. Foremost amongst these is the need for policy analysts to augment the efficiency and equity criteria with some additional broader normative measures, and the necessity for care to be taken in the use of allocative efficiency as a benchmark in non-market circumstances.     

Introduction: The dynamics of ideas

Abstract

Participants in today's financial markets confront a sea of data. While the availability of market data has benefits it also creates problems, notably those relating to questions of meaning, judgement and intervention: how to make sense of these flows – how to see the ‘market’, its futures, and thus act pre-emptively. Over more recent years financial organizations have been turning to new technologies of representation, in particular the design and application of visualization software in an effort to enable better visual imagination of and interaction with markets as they unfold in real time. ‘What you see is what you risk’ in many respects captures the thinking or at least the desire underlying the employment of the latest visualization software. The more powerful one's vision the better able one is to participate in increasingly complex financial markets, at least in theory.

Based on recent interviews with those involved in developing and using the latest visualization software within some of the key markets of global finance, and developing the influential work of Daniel Beunza and David Stark, and Karin Knorr Cetina, in particular, this paper adopts a cultural-economy-of-finance perspective to examine the implications of these new techniques of representation. The paper argues that the latest visual turn within finance should be afforded a more central position in the study of contemporary financial market practices.     

POLITICS AND REGULATION: THE PUBLIC CHOICE APPROACH

Abstract: Government regulation of the economy has been the subject of criticism both on the grounds of efficiency and equity. Traditional economic theories explaining regulation may be deficient insofar as they assume a benevolent welfare maximizing government, intervening only to correct "market failures". Political theories of interest group influence (for example pluralist, capture, Marxist theories) provide some more realistic insights into regulation, but fail to yield rigorous, testable propositions. The theory of public choice applies the rigour of economic analysis to political behaviour and suggests some useful approaches to the explanation of regulation, focusing on the public goods problem of organizing large groups of actors for collective action and on the role of the political entrepreneur in mobilizing large numbers of voters. The public choice approach may also be useful in suggesting strategies for deregulation in some key areas of the Australian economy currently under scrutiny (for example banking, airlines, telecommunications).     

An Investigation of the Characteristics of Local Governmental Units Disclosing High Deposit and Investment Credit Risk as Defined by Governmental Accounting Standards Board Statement No. 3

As a result of severe financial losses by local governments in the mid-1980s due to falling interest rates, the Governmental Accounting Standards Board Statement No. 3 was issued. The GASB No. 3 provides information for assessing a government's actual and future deposit, investment market, and credit risks. This article investigates the number of governments disclosing deposits and investments in the high risk category and determines if there are common characteristics among those reporting high risk deposits and investments.     

现代科技在信访举报工作中的运用

随着科学技术的发展和人们效率观念的增强,运用现代信息技术开展信访工作势在必行。时下,用现代科技信息技术开展信访工作存在着"无需作为论"、"无所作为论"、"有限作为论"的认识误区。必须解放思想,更新观念,积极探索运用现代科技开展信访工作的新途径,高度重视计算机技术、信息技术、通信技术在信访举报工作中的运用,不断提升信访举报工作的科技含量,切实提高信访举报工作的效能。