Not Here? Housing Market Policy and the Risk of a Housing Bust

Can a US-style housing bust happen in Canada? Recent swings in Canadian house prices have raised concerns about the possibility. To evaluate the likelihood of a US style housing market crash in Canada, this paper examines what caused the US housing boom and bust from 2000 to 2009. A decline in underwriting standards played an essential role in the US housing market boom and dramatic bust. While monetary policy was very similar in both countries from 2000 to 2008, housing markets (especially the subprime component) were structured and regulated differently in each. Canadian housing policies, which avoided the sharp decline in underwriting standards seen in the US, worked well in reducing the possibility of a housing bust in Canada during 2008-2009, and continue to mitigate the risk of a massive wave of defaults in the future.Financial Services, housing bust, real estate, Canadian housing policies, US-style housing bust

An Integrated System Dynamics Model for Analyzing Behaviour of the Social-Energy-Economic-Climatic System: Model Description

The feedback based integrated assessment model ANEMI represents the society-biosphereclimate- economy-energy system of the earth and biosphere. The development of ANEMI model is done using the system dynamics simulation approach that (a) allows understanding and modeling of complex global change and (b) assists in the investigation of possible policy options for mitigating, and/or adopting to global changing conditions, within an integrated assessment modeling framework. This report presents ANEMI model and its nine individual sectors: climate, carbon cycle, land-use, population, food production, hydrologic cycle, water demand, water quality, and energy-economy. Two versions of the model are developed and presented in the report. The first one represents the society-biosphere-climate-economy-energy system on a global level. The second one is developed for regional presentation of Canada. The development of Canada model is based on the top down approach and various disaggregation techniques. To evaluate market and nonmarket costs and benefits of climate change, ANEMI model integrates an economic approach, with a focus on the international energy stock and fuel price, with climate interrelations and temperature change. The market clearance mechanism of economy sector introduces optimization within the simulation framework, which makes the model unique and different from any other integrated assessment model available in the published literature. The model takes account of all major greenhouse gases (GHG) influencing global temperature and sea-level variation. Several of the model sectors are built from the basic structure of the previous version of ANEMI. However, they are integrated in a novel way, the water sectors in particular. The integration of optimization within the simulation framework of the ANEMI model is timely, as recognition of the importance of energy based economic activities in determining long-term Earth-system behaviour grows. Experimentation with different policy scenarios demonstrated their consequences on future behaviour of the society-biosphere-climate-economy-energy system through feedback based interactions. The use of ANEMI model improves both, scientific understanding and socio-economic policy development strategy. This report describes the model structure in details and illustrates its use through the analysis of three policy scenarios.https://ir.lib.uwo.ca/wrrr/1037/thumbnail.jp

An Integrated System Dynamics Model for Analyzing Behaviour of the Social-Energy-Economic-Climatic System: User’s Manual

The User\u27s Manual is planned to assist the user in (i) understanding the ANEMI model structure; and (ii) learning how to use the model for policy simulation. ANEMI model is a research product and is not developed as a commercial software. This manual contains a brief description of the main features of the Vensim system dynamics simulation software (Ventana, 2010), as well as integrated simulationoptimization procedure developed by incorporating MATLAB (MathWorks, 2007) functionalities with Vensim system dynamics simulation. With the help of Vensim and MATLAB software packages, the user can use, modify and/or run the ANEMI models provided with the manual. The step-by-step instructions are provided for using ANEMI model for policy simulation. Advanced features of the ANEMI model, such as subscripting (arrays), linking external functionality to implement optimization within simulation, are presented using ANEMI simulation models as an example to accelerate the learning process. This manual also contains a detailed description of DLL (Dynamic-Link Library) file generation procedure by Visual Studio software package (Microsoft, 2008). The full description of the ANEMI model is provided in Akhtar et al (2011) available on the CD-ROM.https://ir.lib.uwo.ca/wrrr/1038/thumbnail.jp

A Service of zbw Leibniz-Informationszentrum Wirtschaft Leibniz Information Centre for Economics Re-Examining the Role of Sticky Wages in the U.S. Great Contraction: A Multi- sector Approach Economic Policy Research Institute EPRI Working Paper Series Re-

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Accounting for the rise in consumer bankruptcies

Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age population in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive financial intermediaries who can observe households' earnings, age and current asset holdings to evaluate several commonly offered explanations. We find that increased uncertainty (income shocks, expense uncertainty) cannot quantitatively account for the rise in bankruptcies. Instead, the rise in filings appears to mainly reflect changes in the credit market environment. We find that credit market innovations which cause a decrease in the transactions cost of lending and a decline in the cost of bankruptcy can largely accounting for the rise in consumer bankruptcy. We also argue that the abolition of usury laws and other legal changes are unimportant

Determinants of Relative Price Variability during a Recession: Evidence from Canada at the Time of the Great Depression

Most studies find that relative price variability (RPV) is a U-shaped or V-shaped function of anticipated inflation, and a V-shaped function of unanticipated inflation. One exception is Reinsdorf (1994), who finds that RPV in the United States during the 1980s recession was monotonically decreasing in unanticipated inflation. We suggest a reason for this difference, and test our conjecture using data from inter-war Canada. Our results indicate that in recessionary conditions a positive inflation shock does reduce RPV. However, this reduction is unlikely to correspond to higher consumer utility; this has implications for the conduct of monetary policy during a recession

Determinants of Relative Price Variability during a Recession: Evidence from Canada at the Time of the Great Depression

Most studies find that relative price variability (RPV) is a U-shaped or V-shaped function of anticipated inflation, and a V-shaped function of unanticipated inflation. One exception is Reinsdorf (1994), who finds that RPV in the United States during the 1980s recession was monotonically decreasing in unanticipated inflation. We suggest a reason for this difference, and test our conjecture using data from inter-war Canada. Our results indicate that in recessionary conditions a positive inflation shock does reduce RPV. However, this reduction is unlikely to correspond to higher consumer utility; this has implications for the conduct of monetary policy during a recession

The Impact of Climate Change and Climate Policy on the Canadian Economy

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