Michael A. Goldberg

The Location of International Financial Activity: An Interregional Analysis

GOLDBERG M. A., HELSLEY R. W. and LEVI M. D. (1989) The location of international financial activity: an interregional analysis, Reg. Studies 23, 1–7. This paper examines the determinants of the spatial distribution of financial activity. The determinants of the sizes of the financial services sector are estimated using data for a sample of US states. Although our analysis is limited by the availability of data, the results are strong and clear. The level of international financial activity is positively and significantly related to per capita income, the level of imports, and the number of corporate headquarters. The results indicate that international trade is intensive in its use of financial services and that financial services tends to be exported along with goods. GOLDBERG M. A., HELSLEY R. W. et LEVI M. D. (1989) La localisation des operations financieres internationales: une analyse interregionale, Reg. Studies 23, 1–7. Cet article examine les determinants de la distribution geographique des opera...

On the development of international financial centers

As the world has shifted from the production of goods to the production of services, and as world trade has burgeoned, the internat ional financial services sec to r has become increasingly important . Its role in the world economy is pivotal a t present as a reading of daffy headlines wiU show. Additionally, in ternat ional financial services are increasingly being concentra ted in major urban centers ( international financial centers or IFCs) and the abil i ty to a t t r ac t , r e t a in and expand these services is seen by many as a key component of future urban economic development. However, l i t t le research has been done on the economic forces a f fec t ing the development of geographic centers of internat ional finance. Kindleberger [1974] hypothesized that this is due to the issue falling between two areas of invest igat ion: urban and regional economics, which is concerned with Iocational ma t t e r s , but which concentrates on commerce, industry, and housing rather than finance, and monetary and financial economics, which has l i t t le in teres t in geographic location. Research on the economic factors influencing the development of in ternat ional financial centers has undoubtedly also been hindered by the diverse and complex data sets required for empirical work in this field. Kindleberger [1974, p. 68], ref lec t ing on his comparat ive , his tor ical account of the development of centers of international finance, noted that his analysis is qual i ta t ive rather than quanti tat ive, a charac te r i s t i c which derives from the l imi ta t ions of the writer, the magnitude of the task of deriving comparable data from a wide number of countries, and an in teres t more in process than in de ta i led outcome. In a series of classic studies of financial ac t iv i ty in the United States , Goldsmith [1958, 1965, 1968, 1969] documented many aspects of the regional d is t r~ut ion of banking and financial act iv i ty . However, Goldsmith did not evaluate empirical ly the causes or determinants of the distr ibution. Recent empir ical research, spawned by the renewed interes t in internat ional

The European Union as a country portfolio

Abstract This paper applies portfolio principles to explore potential diversification benefits of the European Union (EU). We apply the portfolio approach to judge whether a particular membership configuration of the EU dominates alternative possibilities based on growth rates and growth rate volatilities. Our conclusions are that, for the original six members of the EU (the EU6), no subset of countries would have dominated in growth/volatility terms, and that few portfolio benefits have been realized by expansion of the EU beyond the original six members. We also conclude that adding Turkey or Norway, whose economies are different from other EU members, would improve the growth and stability of the EUs portfolio of countries. Lastly, we find that the original EU6 was not far from an efficient portfolio.

Interest Rate Risk, Residential Mortgages and Financial Futures Markets

Residential mortgage markets in both the United States and Canada have recently been dominated by instruments such as variable-rate and short-term rollover mortgages which require borrowers to assume a greater burden of interest rate risk. An outstanding question is whether this approach to risk allocation is Pareto optimal or whether there are other more effective methods of dealing with the risk created by interest rate volatility. This study examines the potential for shifting this risk from the mortgage market to the financial futures market. After considering the rationale for expecting that neither mortgage borrowers nor lenders wish to absorb the high levels of risk present in the existing financial environment, this study discusses the hedging of interest rate risk through financial futures markets. Empirical tests are then performed to evaluate the effectiveness of U.S. futures markets for hedging positions from the U.S. mortgage market. These results indicate that the interest rate risk inherent in residential mortgages can be substantially shifted through one or more positions in the existing futures contracts and long-term, fixed-rate mortgages may still be financially feasible under conditions of interest rate volatility. Copyright American Real Estate and Urban Economics Association.

Combining intersectoral flows and shift-share techniques: A hybrid regional forecasting model

Summary and conclusionsIntersectoral flows analysis is a static technique. There is no dynamic or growth element. Shift-share analysis on the other hand is a growth oriented analytical tool with no capability for modelling the internal structure of a regional economy. It therefore seems useful to combine the shift-share and intersectoral flows approaches. The shift parameters provide a growth component for the final demand sectors of the intersectoral flows matrix.Externalities are incorporated into the model through the shift parameters which drive the final demand categories of the regional economy. This is deemed to be a fruitful approach at present because it can incorporate a variety of linear and non-linear externalities and is amenable to simulation. It also overcomes in theory some of the principal criticisms of shift-share. The economy, flexibility and potential rigour of this approach appears to us to provide the most likely operational approach to externalities in the immediate future.

Correlates of natural and urban systems

ConclusionsWe have argued above for a systems view of the city. In particular we have asked that the city be looked at as a particular kind of system: a natural system. By taking this view many of the advances made by systems ecologists in studying more limited ecosystems become available to us.The ecological perspective in urban studies is not new. We feel, though, that previous work has looked at but a few of the important and analogous concepts in natural science. The most critical omission of earlier work has been in the area of stability and complexity. We have tried to define these concepts as finely as is meaningful and to illustrate them and their application to the urban scene.If there is one single conclusion or point upon which we would like to close, it is this: Complexity must be a planning parameter. The intricacy and complexity of urban systems must be preserved and not diminished. It is entirely likely that in the future the maintenance of complexity in the urban ecosystem will be an important planning criterion.

Environmental decision-making: Social indicators, simulation, and public choice

A number of parallels exist between the development of social indicators and of simulation models. This paper seeks to clarify the nature of these parallels and to place them in their respective places vis-a-vis decisions dealing with complex and changing environmental problems. After delineating the role of social indicators and simulation in environmental decision-making, the paper closes with a number of areas where caution and concern are especially important. The principal conclusion is that decision-making for complex environmental problems must be synthetic in nature, and must ultimately rely on well functioning democratic political processes, since political decisions are inherently synthetic. We must avoid simple decisions dictated by technical expediency (unless of course the body politic prefers such decision models and is made aware of alternative technical opinions). In an arena of open political debate and sound technical discussion, the paper concludes that environmental decisions can be taken that respect both the ecosystem and its human inhabitants.