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.

An introduction to radial basis functions for system identification: a comparison with other neural network methods

A look is taken at the use of radial basis functions (RBFs), for nonlinear system identification. RBFs are firstly considered in detail themselves and are subsequently compared with a multi-layered perceptron (MLP), in terms of performance and usage.

Belowground biomass functions and expansion factors in high elevation Norway spruce

Biomass allocation to above- and belowground compartments in trees is thought to be affected by growth conditions. To assess the strength of such influences, we sampled six Norway spruce forest stands growing at higher altitudes. Within these stands, we randomly selected a total of 77 Norway spruce trees and measured volume and biomass of stem, above- and belowground stump and all roots over 0.5 cm diameter. A comparison of our observations with models parameterised for lower altitudes shows that models developed for specific conditions may be applicable to other locations. Using our observations, we developed biomass functions (BF) and biomass conversion and expansion factors (BCEF) linking belowground biomass to stem parameters. While both BF and BCEF are accurate in belowground biomass predictions, using BCEF appears more promising as such factors can be readily used with existing forest inventory data to obtain estimates of belowground biomass stock. As an example, we show how BF and BCEF developed for individual trees can be used to estimate belowground biomass at the stand level. In combination with existing aboveground models, our observations can be used to quantify total standing biomass of high altitude Norway spruce stands.

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.

Wiener System identification using B-spline functions with De Boor recursion

A simple and effective algorithm is introduced for the system identification of Wiener system based on the observational input/output data. The B-spline neural network is used to approximate the nonlinear static function in the Wiener system. We incorporate the Gauss-Newton algorithm with De Boor algorithm (both curve and the first order derivatives) for the parameter estimation of the Wiener model, together with the use of a parameter initialization scheme. The efficacy of the proposed approach is demonstrated using an illustrative example.

Asymptotic expansions for Taylor coefficients of the composition of two functions

We give an asymptotic expansion for the Taylor coe±cients of L(P(z)) where L(z) is analytic in the open unit disc whose Taylor coe±cients vary `smoothly' and P(z) is a probability generating function. We show how this result applies to a variety of problems, amongst them obtaining the asymptotics of Bernoulli transforms and weighted renewal sequences.

Generalised prime systems with periodic integer counting function

We study generalised prime systems (both discrete and continuous) for which the `integer counting function' N(x) has the property that N(x) ¡ cx is periodic for some c > 0. We show that this is extremely rare. In particular, we show that the only such system for which N is continuous is the trivial system with N(x) ¡ cx constant, while if N has finitely many discontinuities per bounded interval, then N must be the counting function of the g-prime system containing the usual primes except for finitely many. Keywords and phrases: Generalised prime systems. I

Rational intuitionism

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

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.