Explaining the Great Moderation: Credit in the Macroeconomy Revisited

This study in recent history connects macroeconomic performance to financial policies in order to explain the decline in volatility of economic growth in the US since the mid-1980s, which is also known as the ‘Great Moderation’. Existing explanations attribute this to a combination of good policies, good environment, and good luck. This paper hypothesizes that before and during the Great Moderation, changes in the structure and regulation of US financial markets caused a redirection of credit flows, increasing the share of mortgage credit in total credit flows and facilitating the smoothing of volatility in GDP via equity withdrawal and a wealth effect on consumption. Institutional and econometric analysis is employed to assess these hypotheses. This yields substantial corroboration, lending support to a novel ‘policy’ explanation of the Moderation.real estate, macro volatility

Risk and De-Collectivisation: Evidence from the Czech Republic

The replacement of wage-labour farms by family farms in Central and Eastern Europe during the transformation has been more limited than was initially expected. In this paper a formal framework is developed in order to analyse the behaviour of family farms and socialist-style farms in the presence of risk, given the typical post-socialist environment. Management incentives, ownership structure, lump-sum transfers and consumption choices are shown to have the potential to limit the size of family farms relative to socialist-style farms. The hypotheses are tested with survey data collected by the author in the Czech Republic.transition, agriculture, structural change, risk, survey data, Risk and Uncertainty, D21, D81, O18, Q12,

"Causes of Financial Instability: Don’t Forget Finance"

Given the economy's complex behavior and sudden transitions as evidenced in the 2007–08 crisis, agent-based models are widely considered a promising alternative to current macroeconomic practice dominated by DSGE models. Their failure is commonly interpreted as a failure to incorporate heterogeneous interacting agents. This paper explains that complex behavior and sudden transitions also arise from the economy's financial structure as reflected in its balance sheets, not just from heterogeneous interacting agents. It introduces "flow-of-funds" and "accounting" models, which were preeminent in successful anticipations of the recent crisis. In illustration, a simple balance-sheet model of the economy is developed to demonstrate that nonlinear behavior and sudden transition may arise from the economy’s balance-sheet structure, even without any microfoundations. The paper concludes by discussing one recent example of combining flow-of-funds and agent-based models. This appears a promising avenue for future research.Credit Crisis; Finance; Complex Systems; DSGE; Agent-based Models; Stock-flow Consistent Models

This is not a credit crisis

Using an analogy with ancient Babylonia as its leading motive, this Viewpoint argues that the credit crisis is the symptom of an underlying problem. Fuelled by government policies, unprecedented debt levels were run up in industrialized countries over the last quarter century. Present policies of financial sector bailouts are not only unwise use of taxpayer’s money. They maintain economic structures opposed to what Classical liberals such as JS Mill envisaged as a free market economy.credit crisis; debt; Babylonia; Mill; Liberalism

The effect of tyres and a rubber track at high axle loads on soil compaction-Part 2: Multi-axle machine studies

This paper reports on a study of the effect of the passage of multi-axle harvesting machines on the soil physical properties. In particular, it investigates the effect of the rear tyre of a combine harvester on the amount of soil compaction subsequent to the passage of the front tyre/track. The work was conducted in controlled laboratory conditions to determine the effect of a simulated self-propelled combine harvester with a total machine weight of 30–33 t. This was assessed by embedding talcum powder tracer lines in the soil to measure soil displacement and soil density changes. Dry bulk density and penetrometer resistance were also measured. The results showed that the benefit of the rubber track found by Ansorge and Godwin [2007a. The effect of tyres and a rubber track at high axle loads on soil compaction: Part 1: Single Axle Studies. Biosystems Engineering 98 (1), 115–126] was maintained after the additional passage of the rear tyre. After the passage of a track the effect of rear tyre size was insignificant, but the rear tyre size had a significant influence on soil density when following a leading tyre. This was due to a higher strength layer at the soil surface created by the track which was able to withstand the load of the subsequent passes and protect the soil below from further compaction. Results similar to those found for a tracked machine were also achieved by three passes of a 900 mm section width tyre at 5 t load and 0.5 bar inflation pressure. The track results for the 33 t machine were very similar to those of a smaller combine harvester with a total load of 11 t and similar rut width. The study confirmed the benefit of tracks with regard to soil compaction and emphasised the fact that total axle loads and machine weights are less important than how the loads are distributed to the soil

Banks As Social Accountants: Credit and Crisis Through an Accounting Lens

This paper probes the role of banks and credit in our socio-economic system using the metaphor of banks as social accountants (Stiglitz and Weiss 1988). It highlights the credit nature of money, and thus the fact that money is an accounting construct. This motivates the viewing of financial booms and crises through an accounting lens. By accounting necessity, credit creation in deposit-taking institutions implies debt creation. The analysis is that self-amortizing credit to the real sector grows apace with the size of the economy while credit to financial asset markets creates a net debt overhead on the real economy, as illustrated by dissection of long-term credit flows in the US economy. The long boom in credit to the financial sector so led to the growth of debt since the 1980s and onto the credit crisis. Turning to the behavioral aspects of credit and debt growth, the paper also discusses the role of banks and regulators in facilitating the boom. It identifies three ways in which debt growth was de-emphasized in monitoring and policy making.credit; economic history; banks; accounting; crisis; regulation

Dietary habits of urban pigeons (Columba livia) and implications of excreta pH – A review

Pigeons are considered to be urban pests, causing untold damage to buildings and potentially impacting the health of humans who come into contact with them or their faeces. Pigeon faecal matter has been implicated in both health impacts and building damage, with the acidity of the excreta playing an important role. Purpose of the Review. This paper is a wide-ranging review of the chemical processes of excreta in the pigeon to aid our understanding of the potential problems of pigeons to buildings and human amenity in the urban space. The natural pH of pigeons is shown to vary based on the bird’s and age as well as reproductive stage. Key findings of the review. The influences of the altered diet between the rock dove (the wild progenitor of the feral pigeon) and the feral pigeon are detailed, indicating that the human-based diet of urban pigeons most likely causes the feral pigeon excreta to be more acidic than the rock dove excreta. This higher acidity is due in part to diet, but also to potential increases in faecal and/or uric acid volumes due to the low quality of humanbased diets. Again, this area of interest is highly data deficient due to the few number of studies and unspecified dietary intake before pH measurement. Implications of the review. Humans are increasingly concerned about pigeon populations (and presumably their accumulated faeces) in the urban space, and control comprises a large part of the interaction between humans and feral pigeons. This review provides a greater understanding of feral pigeons and the true effects of their excreta

How do the environmental extremes of Siberian permafrost soils shape the composition of the bacterial soil community?

Microbial communities in permafrost soils of the Siberian Arctic are exposed to extreme environmental conditions. The soils are frozen throughout the entire year except for the short summer period, when thawing of the uppermost 20 to 50 cm of the permafrost sediment allows for the formation of a so-called active layer. Active layers show steep temperature gradients between 10 to 18 °C near the surface and 0 to 1 °C near the permafrost table. Additionally, seasonal freezing and thawing processes lead to the formation of patterns of low-centered polygons. Low-centered polygons determine a pronounced small-scale heterogeneity with regard to their physical and chemical properties between the elevated polygon rims and the depressed polygon centers.Within the active layer of a polygon rim, vertical profiles of potential methane oxidation rates in respond to different temperatures indicated a shift in the temperature optimum from 21 °C near the surface to 4 °C near the permafrost table [1]. This temperature shift could not be shown in samples of the polygon center. Based on these results we used 16S rDNA clone libraries as well as in-situ cell counting to compare the bacterial, in particular the methane oxidizing, community near the surface and near the permafrost table in samples of the polygon rim. The phylogenetic analyses show that the composition of the bacterial community near the surface is significantly different from the bacterial community near the permafrost table. The results also show that bacterial diversity and abundance in Siberian permafrost soils are comparably high as in temperate terrestrial environments.[1] Liebner. S. and Wagner, D. (in press) Abundance, distribution and potential activity of methane oxidizing bacteria in permafrost soils from the Lena Delta, Siberia. Environmental Microbiology doi: 10.1111/j.1462-2920.2006.01120.