House Price Volatility and Household Indebtedness in the United States and the United Kingdom

Recent household financial models predict that collateral-constrained households are more likely to increase debt-financed spending in response to rising house values. We augment this model to consider the use of unsecured debt such as credit cards. Using household panel data, we consider microeconomic evidence on the behaviour of households in the United States and the United Kingdom in response to rising house prices. The evidence confirms that previously collateral-constrained households in both countries increase their indebtedness more than unconstrained households as house prices rose. But whereas United Kingdom households used house price gains primarily to refinance existing unsecured debt, United States households were more likely to increase their total indebtedness. Our results imply that on average households in the United States extract as much as 10% of their housing equity gains to fund consumption spending, and suggest that housing wealth effects predominantly arise through unbinding liquidity constraints.Housing wealth; collateral; unsecured debt; consumer spending.

Housing Wealth and Household Indebtedness: Is there a Household 'Financial Accelerator'?

The 'financial accelerator' model when applied to households states that shocks to household balance sheets (primarily changes in house prices) amplify fluctuations in consumer spending by tightening or relaxing collateral constraints on borrowing. We construct an alternative model where households also have access to unsecured debt, and examine the effect of shocks to house prices on debt-financed consumption in this augmented setting. Our alternative model reduces the amplitude of fluctuations in debt-financed consumer spending arising from fluctuations in household asset values. The paper tests the applicability of the two models using panel data for the United Kingdom that allow us to measure collateral constraints, changes in asset values and financial indebtedness at the household level.Collateral, consumer spending, Housing wealth, unsecured debt.

Housing Wealth and Household Indebtedness: Is there a Household ‘Financial Accelerator’?

The ‘financial accelerator’ model when applied to households states that shocks to household balance sheets (primarily changes in house prices) amplify fluctuations in consumer spending by tightening or relaxing collateral constraints on borrowing. We construct an alternative model where households also have access to unsecured debt, and examine the effect of shocks to house prices on debt-financed consumption in this augmented setting. Our alternative model reduces the amplitude of fluctuations in debt-financed consumer spending arising from fluctuations in household asset values. The paper tests the applicability of the two models using panel data for the United Kingdom that allow us to measure collateral constraints, changes in asset values and financial indebtedness at the household level.Housing wealth; collateral; unsecured debt; consumer spending.

Housing Wealth, Liquidity Constraints and Self-Employment

This paper investigates the existence of liquidity constraints facing entrepreneurs in the United Kingdom. Using a household-level panel data set, entry to selfemployment is shown to be a function of household net worth. We use inheritances and unanticipated movements in house prices as instruments for shocks to liquidity. Results indicate that inheritances are a poor instrument for liquidity constraints because both past and future inheritances predict entry to self-employment. House prices shocks are a more plausible instrument because self-employed households disproportionately re-mortgage, but our results again indicate little evidence of house price shocks unbinding liquidity constraints facing the would-be self-employed.Self-employment, liquidity, windfalls.

Financial Literacy ad Indebtedness: New Evidence for UK Consumers

We utilise questions concerning individual ‘debt literacy’ incorporated into market research data on households’ unsecured debt positions to examine the association between consumer credit and individual financial literacy. We examine the relationship between individual responses to debt literacy questions and household net worth, consumer credit use and over-indebtedness. We find that financially illiterate households have lower net worth, use higher cost credit and are more likely to report credit arrears or difficulty paying their debts. However, financially literate households are more likely to co-hold liquid savings and revolving consumer credit, suggesting that the co-holding might arise as a result of rational financial behaviour. We consider the potential endogeneity of financial literacy.

The Internationalisation of Public Welfare Policy

With increasing globalisation of knowledge, there are increased opportunities to 'learn' from the experience ofpolicy interventions elsewhere. This paper presents evidence on the extent of international convergence inpublic policy, with particular focus on labour, welfare, savings and retirement policy. Questions addressed inthis framework include: to what extent is policy diffusion or convergence a real and relevant phenomenon?What role have economists played in the transfer of policy across national domains? Has policy transfer led to'better' public policy? Are there any practical limitations to policy convergence?welfare policy, internationalisation, globalisation, public policy, policy transfer, OECD

Credit counseling: a substitute for consumer financial literacy?

Is financial literacy a substitute or complement for financial advice? We analyze the decision by consumers to seek financial advice in the form of credit counseling. Credit counseling is an important component of the consumer credit sector for consumers facing debt problems. Our analysis accounts for the endogeneity of an individual’s financial situation to financial literacy, and the endogeneity of financial literacy to exposure to credit counseling. Results show counseling substitutes for financial literacy. Individuals with better literacy are 60% less likely to use credit counseling. These results suggest that credit counseling provides a safety net for poor financial literacy

Variability and bias in active and passive ground-based measurements of effective plant, wood and leaf area index

In situ leaf area index (LAI) measurements are essential to validate widely-used large-area or global LAI products derived, indirectly, from satellite observations. Here, we compare three common and emerging ground-based sensors for rapid LAI characterisation of large areas, namely digital hemispherical photography (DHP), two versions of a widely-used commercial LAI sensor (LiCOR LAI-2000 and 2200), and terrestrial laser scanning (TLS). The comparison is conducted during leaf-on and leaf-off conditions at an unprecedented sample size in a deciduous woodland canopy. The deviation between estimates of these three ground-based instruments yields differences greater than the 5% threshold goal set by the World Meteorological Organization. The variance at sample level is reduced when aggregated to plot scale (1 ha) or site scale (6 ha). TLS shows the lowest relative standard deviation in both leaf-on (11.78%) and leaf-off (13.02%) conditions. Whereas the relative standard deviation of effective plant area index (ePAI) derived from DHP relates closely to us in leaf-on conditions, it is as large as 28.14-29.74% for effective wood area index (eWAI) values in leaf-off conditions depending on the thresholding technique that was used. ePAI values of TLS and LAI-2x00 agree best in leaf-on conditions with a concordance correlation coefficient (CCC) of 0.796. In leaf-off conditions, eWAI values derived from DHP with Ridler and Calvard thresholding agrees best with TLS. Sample size analysis using Monte Carlo bootstrapping shows that TLS requires the fewest samples to achieve a precision better than 5% for the mean +/- standard deviation. We therefore support earlier studies that suggest that TLS measurements are preferential to measurements from instruments that are dependent on specific illumination conditions. A key issue with validation of indirect estimates of LAI is that the true values are not known. Since we cannot know the true values of LAI, we cannot quantify the accuracy of the measurements. Our radiative transfer simulations show that ePAI estimates are, on average, 27% higher than eLAI estimates. Linear regression indicated a linear relationship between eLAI and ePAI-eWAI (R-2 = 0.87), with an intercept of 0.552 and suggests that caution is required when using LAI estimates

The boomerang returns? Accounting for the impact of uncertainties on the dynamics of remanufacturing systems

Recent years have witnessed companies abandon traditional open-loop supply chain structures in favour of closed-loop variants, in a bid to mitigate environmental impacts and exploit economic opportunities. Central to the closed-loop paradigm is remanufacturing: the restoration of used products to useful life. While this operational model has huge potential to extend product life-cycles, the collection and recovery processes diminish the effectiveness of existing control mechanisms for open-loop systems. We systematically review the literature in the field of closed-loop supply chain dynamics, which explores the time-varying interactions of material and information flows in the different elements of remanufacturing supply chains. We supplement this with further reviews of what we call the three ‘pillars’ of such systems, i.e. forecasting, collection, and inventory and production control. This provides us with an interdisciplinary lens to investigate how a ‘boomerang’ effect (i.e. sale, consumption, and return processes) impacts on the behaviour of the closed-loop system and to understand how it can be controlled. To facilitate this, we contrast closed-loop supply chain dynamics research to the well-developed research in each pillar; explore how different disciplines have accommodated the supply, process, demand, and control uncertainties; and provide insights for future research on the dynamics of remanufacturing systems

Star formation in 30 Doradus

Using observations obtained with the Wide Field Camera 3 (WFC3) on board the Hubble Space Telescope (HST), we have studied the properties of the stellar populations in the central regions of 30 Dor, in the Large Magellanic Cloud. The observations clearly reveal the presence of considerable differential extinction across the field. We characterise and quantify this effect using young massive main sequence stars to derive a statistical reddening correction for most objects in the field. We then search for pre-main sequence (PMS) stars by looking for objects with a strong (> 4 sigma) Halpha excess emission and find about 1150 of them over the entire field. Comparison of their location in the Hertzsprung-Russell diagram with theoretical PMS evolutionary tracks for the appropriate metallicity reveals that about one third of these objects are younger than ~4Myr, compatible with the age of the massive stars in the central ionising cluster R136, whereas the rest have ages up to ~30Myr, with a median age of ~12Myr. This indicates that star formation has proceeded over an extended period of time, although we cannot discriminate between an extended episode and a series of short and frequent bursts that are not resolved in time. While the younger PMS population preferentially occupies the central regions of the cluster, older PMS objects are more uniformly distributed across the field and are remarkably few at the very centre of the cluster. We attribute this latter effect to photoevaporation of the older circumstellar discs caused by the massive ionising members of R136.Comment: 15 pages, 12 figures. Accepted for publication in The Astrophysical Journa