Jane Black

House Price, the Supply of Collateral and the Enterprise Economy

This paper investigates the extent to which the supply of collateral affects business formation in the United Kingdom. Bank loans are typically secured on the entrepreneurs house. Using a variety of data and formulations, evidence is found that a 10 percent rise in the value of unreleased net housing equity increases the number of new VAT registrations by some 5 percent. Since the authors find that businesses formed in response to increases in the value of housing assets seem to be of at least average quality as measured by survival chances, there appears to be a large pool of untapped entrepreneurial talent. Copyright 1996 by Royal Economic Society.

Creating a Good Atmosphere: Minimum Participation for Tackling the 'Greenhouse Effect.'

This paper explores the implications of setting a minimum ratification level on an international agreement to tackle the greenhouse effect. Several aspects of the ratification level are considered, including the threshold number of signatories required to affect agreement, the potential number of participating countries, and the distribution of benefits from taking action. The likelihood of reaching agreement on a ratification level is also considered. It is shown, for example, that the optimal ratification level is reasonably robust to variations in circumstances and that the prospects for effecting a treaty may be improved by there being a large number of countries. Copyright 1993 by The London School of Economics and Political Science.

Everyone may benefit from subsidising entry to risky occupations

This paper shows that in the presence of costly state verification, directly or indirectly subsidising entry to risky occupations may benefit everyone. The result holds even in the presence of private insurance. Indeed, it may be desirable to prohibit private insurance in favour of subsidies to hazardous activities. These findings do not depend on the government having an advantage over the private sector in observing outcomes. The explanation is that through its influence on equilibrium price, feasible fiscal policy can shift the return distribution so as to create collective insurance more cheaply than is possible through private contracting with its requirement of costly auditing. Amongst applications is a case for a loss-making state bank offering high interest-rate loans.

Asset price variability in a rational expectations equilibrium

This paper shows that in a rational expectations equilibrium with different types of agents who are informed and uniformed about a piece of information, price variability may increase as the proportion of agents who are informed increases. This is a surprising result and the paper establishes the conditions under which price variability will increase as the percentage of informed agents increases.

Time series volatility of commodity futures prices

This article examines the pattern of volatility over time of a series of commodity futures prices, and focuses in particular on the futures price variability as the maturity date of the futures contract approaches. In a rational expectations model of asymmetric information, the article provides conditions under which the Samuelson hypothesis—that the variability of futures prices increases as maturity approaches—will be true.

The nature of credit-market failure

Abstract Hidden knowledge gives rise to over-lending if, as evidence suggests, the returns distributions preferred by borrowers are also favoured by lenders. Even the Stiglitz-Weiss model yields over-lending when entrepreneurs are sufficiently risk averse.

Asset Price Variability under Asymmetric Information

This paper examines the effect of a change in the percentage of informed participants in an asset market on the variability of prices. The authors consider equilibrium in the asset market before the information is revealed to a subset of traders. They find that ex ante price variability is increased by a rise in the proportion of informed market participants. Copyright 1990 by Royal Economic Society.

Insiders and outsiders and efficient asymmetric information contracts

Abstract The employment levels implied by an efficient contract with asymmetric information are shown to deviate from Walrasian levels if a distinction if drawn between ‘insiders and outsiders’. If insiders alone negotiate the contract there will be over-employment for low levels of demand and there may be either over or under-employment for high levels.