Impacts of monetary policies on housing affordability in Australia

Housing affordability has become a major policy issue in many countries across the world since the rapid inflation of house prices. This paper empirically investigates how monetary policies affect housing affordability in Australia from 1998 to 2009. Three primary variables associated with the housing sector and monetary policy, which are money supply, interest rates and house prices, are studied for all eight capital cities in Australia in this research. Shocks of such variables are identified by a structural vector autoregression (SVAR) model with restrictions that are consistent with economic theoretical framework. Based upon the analysis using the structural decomposition of impulse response on quarterly data, it can be discovered that the monetary policy plays an active role in housing affordability via adjustments of money supply and interest rates during the observed period in Australia. The empirical results from this research may be used for decision makers to determine money supply and interest rates from the perspective of housing affordability.

Mega-events and the "Showcase" effect: investigating the moderating influence of exposure to the 2004 Olympic games telecast and interest in the Olympic movement- an Australian perspective

Survey-based research explored the moderating effects of "exposure" to the Australian free-to-air telecast of Athens 2004 and "interest" in Olympic Games in developing behavioral intentions to visit Greece in the future. Differences were found between groups with low and high levels of exposure to the telecast, and also between groups with high levels of interest in the Olympic Games, but these were only marginal. When the combinatorial influences of these two variables were considered simultaneously, their effects were generally synergistic. The article calls for further research on this area of mega-events, as the results, while of significance, provide food to continue the broader debate on the role of mega-events in developing tourism to their host destinations after their staging.

Further evidence on the corporate use of derivatives in Australia : the case of foreign currency and interest rate instruments

In a recent issue of this journal Nguyen and Faff (2002) reported on an empirical exploration of the motives behind the aggregate use of financial derivatives by Australian companies. Employing the same sample of firms, the current paper extends their analysis to investigate similar issues, this time focussing separately on foreign currency and interest rate derivatives. At a specific level, our results reveal the following. A firm is more likely to use foreign currency derivatives if it is large and has more debt in its capital structure. Interest rate derivatives, on the other hand, are more likely to be used if a firm is larger, more levered, more liquid and pays higher dividends. These results are consistent with existing hedging theories. Market to book value (proxying growth opportunities), however, portrays an inconsistent relationship with the likelihood of interest rate derivative usage. When it comes to the extent of usage, a firm uses foreign currency derivatives more extensively if it is smaller, pays higher dividends and has more debt. Similarly, interest rate derivatives are used more extensively to address a high level of debt and a high dividend payout policy. At a general level, the current study confirms the core finding of Nguyen and Faff (2002), namely, that Australian companies use derivatives with a view to value maximisation.

Growth and survival rates of large-type sporophytes of Ecklonia cava transplanted to a growth environment with small-type sporophytes

Stipe lengths of sporophytes of Ecklonia cava Kjellman have been reported to be longer along the southeast than southwest coast of the Izu Peninsula, central Japan. Two bays in this region that have natural populations of E. cava, but with different stipe lengths, were chosen for transplant experiments to examine if stipe length was an environmentally controlled trait. Transplant experiments were carried out in order to determine whether large-type sporophytes of E. cava with long stipes growing in Nabeta Bay (southeast Izu Peninsula, Japan) would turn into small-type sporophytes with short stipes when transplanted to Nakagi Bay (southwest Izu Peninsula). Ten juvenile sporophytes of E. cava (stipe length < 5 cm) were collected from Nabeta Bay (large-type habitat) and transplanted to Nakagi Bay (short-type habitat) in December 1995. As a transplant control, ten juvenile sporophytes of E. cava growing in Nakagi Bay were also transplanted to the same artificial reefs. Growth and survival rates of the sporophytes were monitored monthly for 3 y until December 1998. The transplanted sporophytes showed an increase in their stipe length and diameter from winter to spring, whereas almost no increase was observed from summer to autumn. However, the elongation was greater in Nabeta sporophytes than in Nakagi sporophytes. The primary blade length increased mainly from winter to early spring and decreased largely in autumn. Average primary blade lengths were similar in both Nabeta and Nakagi sporophytes from the end of the first year of transplanting. Although ca. 70% of both Nabeta and Nakagi sporophytes survived during the first 2 y after transplantation, no Nakagi sporophytes and only two Nabeta sporophytes survived to the end of the 3 y study period. Despite transplantation to Nakagi Bay, where short sitpes are naturally present, the sporophytes from Nabeta Bay persisted in having longer stipes, which suggests that stipe length is genetically, rather than environmentally, controlled.

Forecasting inflation, industrial output and exchange rates : a template study for India

This paper reports results from a forecasting study for inflation, industrial output and exchange rates for India. We cannot reject the null hypothesis for linearity for all series used except for the growth rate of the foreign exchange series and our analysis is based on linear models, ARIMA and bivariate transfer functions and restricted VAR. Forecasting performance is evaluated using the models’ root mean-squared error differences and Theil’s inequality coefficients from recursive origin static, fixed origin dynamic and rolling origin dynamic forecasts. For models based on weekly data, based on RMSEs, we find that the bivariate models improve upon the forecasts of the ARIMA model while for models based on monthly data the ARIMA model has almost always better performance. In choosing between the two bivariate models on the basis of RMSEs, our overall results tend to support the use of a restricted VAR, as this model had the best forecasting performance more frequently than the transfer function model.

Sense of community in science fiction fandom, part 2: comparing neighborhood and interest group sense of community

There is much debate in community psychology literature as to the dimensions underlying the construct psychological sense of community (PSOC). One of the few theoretical discussions is that of McMillan and Chavis (1986), who hypothesized four dimensions: Belonging; Fulfillment of Needs; Influence; and Shared Emotional Connection. Debate has also emerged regarding the role of identification within PSOC. However, few studies have explored the place of identification in PSOC. In addition, while PSOC has been applied to both communities of interest and geographical communities, to date little research has compared a single group’s PSOC with a community of interest to their PSOC with their geographical communities. The current study explored PSOC with participants’ interest and geographical communities in a sample (N = 359) of members of science fiction fandom, a community of interest with membership from all over the world. Support emerged for McMillan and Chavis' (1986) four dimensions of PSOC, both within participants’ PSOC with their geographical communities and with their community of interest, with the addition of a fifth dimension, that of Conscious Identification. All dimensions emerged as significant predictors of overall sense of community in both community types. Participants reported higher levels of global PSOC with fandom than with their geographical communities, a pattern that also emerged across all factors separately. These results, and implications for PSOC research, are discussed.

Examining structural breaks and growth rates in international health expenditures

Over the last decade, there has been a growing interest in examining health expenditures. In this paper, we study the behaviour of health expenditures in the G3 countries (USA, the UK, and Japan) and three European countries (the UK, Switzerland and Spain) over the period 1960–2000 from a different perspective, in that we examine: (1) whether there is a common structural break in health expenditures across the G3 and European countries; (2) whether structural breaks have slowed down health expenditure growth rates in these countries or vice versa. Our main findings are that: (1) health expenditures share a common break in both bivariate and trivariate cases, and structural breaks and break intervals suggest that either one or a combination of events (second oil price shock, the 1987 stock market crash and/or recessions) have contributed to the commonality of break in health expenditures in the G3, while the oil price shocks have been instrumental in the commonality of breaks for the European countries; (2) except for the UK, structural breaks have slowed down growth rates in health expenditures for the USA, Japan, Switzerland and Spain.

True and apparent scaling : the proximity of the Markov-switching multifractal model to long-range dependence

In this paper, we consider daily financial data of a collection of different stock market indices, exchange rates, and interest rates, and we analyze their multi-scaling properties by estimating a simple specification of the Markov-switching multifractal (MSM) model. In order to see how well the estimated model captures the temporal dependence of the data, we estimate and compare the scaling exponents H(q) (for q=1,2) for both empirical data and simulated data of the MSM model. In most cases the multifractal model appears to generate ‘apparent’ long memory in agreement with the empirical scaling laws.

On the relationship between stock prices and exchange rates for India

In this paper, we apply several variants of the EGARCH model to examine the role of depreciation of the Indian rupee on India's stock market returns using daily data. Our findings suggest that volatility persistence has been high; depreciation of the rupee has increased volatility; and asymmetric volatility confirms that negative shocks generate more volatility than positive shocks. We also find that an appreciation of the Indian rupee over the 2002 to 2006 has generated more returns and less volatility.

Real interest rates, inflation and the open economy : a regime-switching perspective on Australia and New Zealand

We investigate the time-series properties of Australian and New Zealand real interest rates within a Markov-switching framework. This enables us to identify characteristics in real interest rate behavior hitherto unacknowledged. We find that rates switch between alternative stationary regimes characterized by differing means, speeds of mean-reversion and volatility. For New Zealand, high rates of inflation increase the probability of remaining in a regime characterized by a faster speed of adjustment. Further application of this methodology considers the real interest rate differential between Australia and New Zealand and points to differing regimes based on volatility rather than persistence.

The dynamic relationship between real exchange rates, real interest rates and foreign exchange reserves : empirical evidence from China

This article examines the long-run and short-run relationship between China's real exchange rate, foreign exchange reserves and the real interest rate differential between China and the United States using monthly data from 1980 to 2002. Extensive testing for unit roots allowing for up to two structural breaks in the trend indicates that the variables are not integrated of the same order. Thus, the bounds testing approach to cointegration is used, which finds that there is a single long-run relationship between the three variables. In the long run the real exchange rate has a statistically significant positive effect on foreign exchange reserves. The coefficient on the real interest rate differential is also positive, but is statistically insignificant. In the short-run it is found that the relationship between the real exchange rate, real interest rate differential and foreign exchange reserves is non-monotonic.

The relationship between exchange rates, interest rates and Australian bank returns

Although there has been significant research on US financial intermediaries' stock returns and sensitivity to interest yields, there has only been limited research on Australian bank stock returns and key macro variables, such as interest rates and exchange rates. The aim of this article is to examine this relationship for four major Australian banks, namely the Australia New Zealand bank (ANZ), the Commonwealth Bank of Australia (CBA), the National Australia Bank (NAB) and the Westpac Banking Corporation (WBC). We use the EGARCH model and examine the relationship using monthly data covering the period 1992 to 2007. The results suggest that for all four banks: (1) there is a similar and statistically significant negative relationship between interest rates and stock returns; and (2) there is evidence of an increase in returns during the period of appreciation of the Australian dollar.