Rational speculative bubbles: an empirical investigation of the London Stock Exchange

In recent years, a sharp divergence of London Stock Exchange equity prices from dividends has been noted. In this paper, we examine whether this divergence can be explained by reference to the existence of a speculative bubble. Three different empirical methodologies are used: variance bounds tests, bubble specification tests, and cointegration tests based on both ex post and ex ante data. We find that, stock prices diverged significantly from their fundamental values during the late 1990's, and that this divergence has all the characteristics of a bubble.

Rational expectations? Developer behaviour and development cycles in the central London office market

Purpose – Expectations of future market conditions are acknowledged to be crucial for the development decision and hence for shaping the built environment. The purpose of this paper is to study the central London office market from 1987 to 2009 and test for evidence of rational, adaptive and naive expectations. Design/methodology/approach – Two parallel approaches are applied to test for either rational or adaptive/naive expectations: vector auto-regressive (VAR) approach with Granger causality tests and recursive OLS regression with one-step forecasts. Findings – Applying VAR models and a recursive OLS regression with one-step forecasts, the authors do not find evidence of adaptive and naïve expectations of developers. Although the magnitude of the errors and the length of time lags between market signal and construction starts vary over time and development cycles, the results confirm that developer decisions are explained, to a large extent, by contemporaneous and historic conditions in both the City and the West End, but this is more likely to stem from the lengthy design, financing and planning permission processes rather than adaptive or naive expectations. Research limitations/implications – More generally, the results of this study suggest that real estate cycles are largely generated endogenously rather than being the result of large demand shocks and/or irrational behaviour. Practical implications – Developers may be able to generate excess profits by exploiting market inefficiencies but this may be hindered in practice by the long periods necessary for planning and construction of the asset. Originality/value – This paper focuses the scholarly debate of real estate cycles on the role of expectations. It is also one of very few spatially disaggregate studies of the subject matter.

Rational intuitionism

In this paper I give a critical overview of the views of the main Rational Intuitionists from 18th to 20th century.

Historicizing counterurbanization: in-migration and the reconstruction of rural space in Berkshire (UK), 1901-51

This article uses census data for Berkshire to argue that large-scale counterurbanization began much earlier than is generally recognized in some parts of southern England. This was not just movement down the urban hierarchy, which as Pooley and Turnbull have demonstrated was a long-term feature of England’s settlement system, but in some cases at least amenity-driven migration to rural areas of the kind increasingly recognized as a core component of recent counterurbanization. Despite a reduction of acreage Berkshire’s rural districts saw a 54% rise in population between 1901 and 1951. The sub-regional pattern of growth is assessed to gauge whether ‘clean break’ migration to the remote west of the county (which remained effectively out of commuting range from London throughout the period) was taking place, or whether counterurbanization was confined to the more accessible eastern districts. However, whilst population did increase in both west and east, it was in fact the central districts that grew most impressively. Three case study parishes are investigated in order to gauge the nature and consequences of counterurbanization at a local level. Professional and business migrants figure prominently, seeking to preserve and promote the rural attributes of their new communities, without however cutting their ties to urban centres. It is argued that migration to rural Berkshire in the first half of the twentieth century cannot adequately be described either as a form of extended suburbanization or an anti-metropolitan ‘clean break’. Rather, early counterurbanization marks the first stage on the long road to a post-productivist countryside, in which countryside becomes detached from agriculture, there is socio-economic convergence between town and country, and the ‘rural’ increasingly becomes defined by landscape and identity rather than economic function.

Beyond tokenism? Community-led planning and rational choices: findings from participants in local agenda-setting at the neighbourhood scale in England

The article confronts some key issues raised in the literature on public participation via a series of interrogatory questions drawn from rational choice theory. These are considered in relation to the design and process of public participation opportunities in planning and wider processes of local governance at the neighbourhood scale. In doing this, the article draws on recent research that has looked in some depth at a form of community-led planning (CLP) in England. The motives and expectations of participants, the abilities of participants, as well as the conditions in which participation takes place are seen as important factors. It is contended that the issues raised by rational choice theory are pertinent to emerging efforts to engage communities. As such, the article concludes that advocates of public participation or community engagement should not be afraid of responding to the challenges posed by questions of motive and reward of participants if lasting and worthwhile participation is to be established. Indeed, questions such as 'what's in it for me?' should be regarded as legitimate, necessary and indeed standard, in order to co-devise meaningful and durable participation opportunities and appropriate institutional environments. However, it is also maintained that wider considerations and capacity questions will also need to be confronted if participation is to become embedded as part of participatory neighbourhood-scale planning.

Intrinsic and rational speculative bubbles in the U.S. housing market 1960-2011

This paper examines the dynamics of the residential property market in the United States between 1960 and 2011. Given the cyclically and apparent overvaluation of the market over this period, we determine whether deviations of real estate prices from their fundamentals were caused by the existence of two genres of bubbles: intrinsic bubbles and rational speculative bubbles. We find evidence of an intrinsic bubble in the market pre-2000, implying that overreaction to changes in rents contributed to the overvaluation of real estate prices. However, using a regime-switching model, we find evidence of periodically collapsing rational bubbles in the post-2000 market

The system identification and control of Hammerstein system using non-uniform rational B-spline neural network and particle swarm optimization

In this paper a new system identification algorithm is introduced for Hammerstein systems based on observational input/output data. The nonlinear static function in the Hammerstein system is modelled using a non-uniform rational B-spline (NURB) neural network. The proposed system identification algorithm for this NURB network based Hammerstein system consists of two successive stages. First the shaping parameters in NURB network are estimated using a particle swarm optimization (PSO) procedure. Then the remaining parameters are estimated by the method of the singular value decomposition (SVD). Numerical examples including a model based controller are utilized to demonstrate the efficacy of the proposed approach. The controller consists of computing the inverse of the nonlinear static function approximated by NURB network, followed by a linear pole assignment controller.

Exploring the construction of social class in educational discourse: the rational order of the nation state vs. global uncertainties

This article aims to create intellectual space in which issues of social inequality and education can be analyzed and discussed in relation to the multifaceted and multi-levelled complexities of the modern world. It is divided into three sections. Section One locates the concept of social class in the context of the modern nation state during the period after the Second World War. Focusing particularly on the impact of ‘Fordism’ on social organization and cultural relations, it revisits the articulation of social justice issues in the United Kingdom, and the structures put into place at the time to alleviate educational and social inequalities. Section Two problematizes the traditional concept of social class in relation to economic, technological and sociocultural changes that have taken place around the world since the mid-1980s. In particular, it charts some of the changes to the international labour market and global patterns of consumption, and their collective impact on the re-constitution of class boundaries in ‘developed countries’. This is juxtaposed with some of the major social effects of neo-classical economic policies in recent years on the sociocultural base in developing countries. It discusses some of the ways these inequalities are reflected in education. Section Three explores tensions between the educational ideals of the ‘knowledge economy’ and the discursive range of social inequalities that are emerging within and beyond the nation state. Drawing on key motifs identified throughout, the article concludes with a reassessment of the concept of social class within the global cultural economy. This is discussed in relation to some of the major equity and human rights issues in education today.

Implications of non-cylindrical flux ropes for magnetic cloud reconstruction techniques and the interpretation of double flux rope events

Magnetic clouds (MCs) are a subset of interplanetary coronal mass ejections (ICMEs) which exhibit signatures consistent with a magnetic flux rope structure. Techniques for reconstructing flux rope orientation from single-point in situ observations typically assume the flux rope is locally cylindrical, e.g., minimum variance analysis (MVA) and force-free flux rope (FFFR) fitting. In this study, we outline a non-cylindrical magnetic flux rope model, in which the flux rope radius and axial curvature can both vary along the length of the axis. This model is not necessarily intended to represent the global structure of MCs, but it can be used to quantify the error in MC reconstruction resulting from the cylindrical approximation. When the local flux rope axis is approximately perpendicular to the heliocentric radial direction, which is also the effective spacecraft trajectory through a magnetic cloud, the error in using cylindrical reconstruction methods is relatively small (≈ 10∘). However, as the local axis orientation becomes increasingly aligned with the radial direction, the spacecraft trajectory may pass close to the axis at two separate locations. This results in a magnetic field time series which deviates significantly from encounters with a force-free flux rope, and consequently the error in the axis orientation derived from cylindrical reconstructions can be as much as 90∘. Such two-axis encounters can result in an apparent ‘double flux rope’ signature in the magnetic field time series, sometimes observed in spacecraft data. Analysing each axis encounter independently produces reasonably accurate axis orientations with MVA, but larger errors with FFFR fitting.