No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Impact of North Korean Threats on Housing Prices in South Korea: A Research Note
Abstract
Prior studies have uncovered a variety of exogenous events or activities that can impact the housing prices in a region. For more than seventy years, tensions between North Korea and South Korea have run high, and are sometimes violent. This study examines the impact that different threats have on housing prices in South Korea. Using three different measures of threats by North Korea, we examine housing prices in thirteen different city regions in South Korea. The results indicate a significant impact for three of the regions, regions that have a large United States military presence or are very close to the demilitarized zone. However, the study does not find a significant impact for the country of South Korea in general, or most of the regions studied.
ResearchGate has not been able to resolve any citations for this publication.
We investigate how corporate stock returns respond to geopolitical risk in the case of South Korea which has experienced large and unpredictable geopolitical swings that originate from North Korea. To do so, a monthly index of geopolitical risk from North Korea (the GPRNK index) is constructed using automated keyword searches in South Korean media. The GPRNK index, designed to capture both upside and downside risk, corroborates that the geopolitical risk sharply increases in the occurrence of nuclear tests, missile launches, and military confrontations, and decreases significantly around the times of summit meetings and multilateral talks. Using firm-level data, we find that heightened geopolitical risk reduces stock returns, and the reductions in stock returns are larger especially for large firms, firms with a higher share of domestic investors, and firms with higher ratio of fixed assets to total assets. The results suggest that international portfolio diversification and investment irreversibility are important channels through which geopolitical risk affects stock returns.
This study investigates the impact of North Korea’s nuclear tests on Asian stock
markets. Two approaches are used separately in order to identify how stock market
returns and volatilities change immediately after the nuclear tests. We find that the
Chinese stock market tends to be more sensitive to unexpected shocks from North
Korea’s nuclear tests than other Asian stock markets. However, relatively, the
Japanese stock market is little influenced by the nuclear tests though Japan is not
only geographically close to North Korea but also politically vigilant to North Korea’s
nuclear threats. Also, we find that strengthened return correlations (linearity) do not
necessarily increase stock return volatilities.
The current study explains how corruption, terrorism, political stability and oil price has an effect on on the Iraq stock exchange utilizing corruption perception index as a proxy of corruption, global terrorism index as proxy for terrorism, political stability and oil price with ISX60 index as proxy of stock market for the period (2005-2019) using Ordinary Least Square method. The results show that the level of corruption, terrorism activities and political stability coefficient is significantly positive with Iraq stock exchange. In contrast, the oil price coefficient is significantly negative with Iraq stock exchange, which means that lower levels of corruption, less terrorism activities and more stability in political system have strong influence on stock market development in Iraq. The study concludes that the explanatory variables are important for Iraq stock exchange. Hence, the study suggests the policy makers to develop stock market by implementing policies and strategies to overcome high level of corruption, terrorism activities especially after ISIS/ISIL announcement has been made public. There is a need for transparency and creating stable political environment through good governance practices in order to attract more foreign investment and promote economic development. Factors like terrorism and corruption make economic and political systems unstable and has an adverse effect on on Iraq’s stock exchange performance.
Cost estimating based on a building cost index plays an important role in project planning and cost management by providing accurate cost information. However, an effective method to predict the building cost index of New Zealand is lacking. This study proposes a transfer function method to improve the forecasting accuracy of the building cost index. In this study, the New Zealand house price index is included in the transfer function models as an explanatory variable to produce cost forecasts. The proposed method is used to estimate the building cost index of residential buildings including one-story houses, two-story houses, and town houses in New Zealand. To demonstrate the effectiveness of the proposed method, this study compares the cost forecasts generated from the transfer function models and the autoregressive integrated moving average (ARIMA) models. The results indicate that the proposed transfer function method can achieve better outcomes than ARIMA models by considering the time-lag causality between building costs and New Zealand house prices. The proposed method can be used by industry professionals as a practical tool to predict project costs and help the professionals to better capture the inherent relationships between cost and house prices.
An accurate cost estimate not only plays a key role in project feasibility studies but also in achieving a final successful outcome. Conventionally, estimating cost typically relies on the experience of professionals and cost data from previous projects. However, this process is complex and time-consuming, and it is challenging to ensure the accuracy of the estimates. In this study, the bivariate and multivariate transfer function models were adopted to estimate and forecast the building costs of two types of residential buildings in New Zealand: Low-rise buildings and high-rise buildings. The transfer function method takes advantage of the merits of univariate time series analysis and the power of explanatory variables. In the dynamic project conduction environment, simply including building cost data in the cost forecasting models is not valid for making predictions, because the change in demand must be considered. Thus, the time series of house prices and work volume were used to explain exogenous effects in the transfer function model. To demonstrate the effectiveness of transfer function models, this study compared the results generated by the transfer function models with autoregressive integrated moving average models. According to the forecasting performance of the models, the proposed approach achieved better results than autoregressive integrated moving average models. The proposed method can provide accurate cost estimates that can help stakeholders in project budget planning and management strategy making at the early stage of a project.
This article exploits data on the pattern of violence across regions and over time to estimate the impact of the peace process in Northern Ireland on house prices. After establishing a negative correlation between killings and house prices, we estimate the parameters of a Markov switching model with conflict and peace as latent states. We use the model to estimate the size of the peace dividend as captured in house price changes. (JEL D74, R23, R31)
The year 2005 brought record numbers of hurricanes and storm damages to the United States. Was this a foretaste of increasingly destructive hurricanes in an era of global warming? This study examines the economic impacts of U.S. hurricanes. The major conclusions are the following: First, there appears to be an increase in the frequency and intensity of tropical cyclones in the North Atlantic. Second, there are substantial vulnerabilities to intense hurricanes in the Atlantic coastal United States. Damages appear to rise with the eighth power of maximum wind speed. Third, greenhouse warming is likely to lead to stronger hurricanes, but the evidence on hurricane frequency is unclear. We estimate that the average annual U.S. hurricane damages will increase by $8 billion at 2005 incomes (0.06 percent of GDP) due to global warming. However, this number may be underestimated by current storm models. Fourth, 2005 appears to have been a quadruple outlier, involving a record number of North Atlantic tropical cyclones, a large fraction of intense storms, a large fraction of the intense storms making landfall in the United States, and an intense storm hitting the most vulnerable high-value region in the country.
A large, detailed data set is used to examine the effect of the Loma Prieta (World Series) earthquake on housing prices in the San Francisco Bay area. This relationship is examined while controlling for potential confounding variables, such as location-specific risk and the timing of the earthquake. The results indicate that the Loma Prieta earthquake caused an area wide reduction in property values. In addition, it seems that individuals considered other measures of earthquake risk in their housing purchases, yielding a measurable price gradient. These results are relatively robust, remaining stable across estimated functional forms and independent variable sets. Copyright American Real Estate and Urban Economics Association.
In the 1960s many American cities experienced violent, race-related civil disturbances. This article examines census data from 1950 to 1980 to measure the riots' impact on the value of central-city residential property, and especially on black-owned property. Both OLS and IV estimates indicate that the riots depressed the median value of black-owned property between 1960 and 1970, with little or no rebound in the 1970s. Census tract data for a small number of cities suggest relative losses of population and property value in tracts that were directly affected by riots compared to other tracts in the same cities.
With the progress of high-quality development in China, residents have begun to focus on the air quality of their residential areas in an effort to reduce the health threats of air pollution. Gradually, the risk associated with air pollution has become an important factor affecting housing prices. To quantitatively analyze the impact of air pollution on house prices, panel data, including data for fine particulate matter (PM2.5) concentrations, house prices and other auxiliary variables from 2009 to 2018, were collected from 16 districts in Beijing, China. Based on this dataset, ordinary least squares (OLS), moderating effect and threshold effect models were constructed for empirical investigation. Within the studied decade, PM2.5 pollution shows a significant decreasing trend of −3.79 μg m−3 yr−1 (p < 0.01). For house prices, the opposite trend was found. The empirical results indicate that PM2.5 pollution has a negative effect on house prices and that every 1% increase in PM2.5 causes an approximately 0.541% decrease in house prices. However, the inhibition of PM2.5 on housing prices is moderated by regional educational resources, especially in areas with high education levels. In addition, per capita disposable income can also cause heterogeneities in the impact of PM2.5 on house prices, whereby the threshold is approximately CNY 101,185. Notably, the endogeneity problems of this study are solved by the instrumental variable method, and the results are robust. This outcome suggests that the coordinated control of air pollution and balanced educational resources among regions are required for the future sustainable development of the real estate market.
This study examines the impact of terrorism on stock market returns through an extensive dataset of 23 countries over the period of 2001–2017. Stock market returns are examined in the context of different aspects of terrorist attacks such as number of suicide attack, number of people killed in terrorist attacks, attacks in major and capital city, the distance of terrorist attack from capital city, property damaged due to terrorist attack and nationality of the victims being killed in a terrorist attack. Consistent with previous studies, our regression analysis reveals that assaults in capital city and severity of attacks negatively influence the index returns. Particularly, the results provide some new insights, with respect to terrorist attacks intended for targeting specific locations with strategic advantages, and assaults in close proximity of capital are found to have more pronounced and devastating effect on the stock market returns. Moreover, foreigners are strategically more valuable targets for terrorists in order to disrupt the smooth functioning of capital markets. The analyses of sub samples, reveal that developing economies are more fragile and developed markets are more resilient to terrorism. Our robust analysis through event methodology confirms our main findings and reveal that negative response of stock market to terrorist attacks is more prominent in developing countries and developed capital markets are more resilient to the negative shocks of terrorist attacks.
Do external security threats shy away from foreign investors? While classical political economy theories focusing on property rights protection posit that security threats undercut financial inflows, recent empirical studies report rather mixed evidence. We add to this body of research by investigating the effect of North Korean military provocation on financial inflows in South Korean stock markets. We contend that (i) foreign investors favor conservative over liberal governments, and (ii) investors have learned over time that North Korean threats lead to electoral gains for the conservative party. Our time series analysis of the monthly Korean stock market data in the post-liberalization period (2000–2018) reveals that North Korean threats led to increases in capital inflows if these threats were made under liberal governments or in the period before parliamentary elections.
We investigate the extent to which hurricanes affect the prices of residential real estate in Dare County, NC from 1999 through 2012. We find a price discount of roughly 3.8% in the 60 days following a storm. However, this discount is only temporary and becomes unobservable beyond 60 days post-storm. The discount is larger for lower quality properties and those purchased by local buyers and appears to be concentrated in inland properties. Overall, our results provide valuable insight into the pricing inefficiencies exhibited in the coastal residential real estate markets following exogenous major weather events.
This paper examines the relationship between terrorist attacks and stock market performance, by employing the “event-study” methodology to examine eleven major terrorist attacks that occurred in the 21st century. Results suggest that earlier events appear to result in higher negative abnormal returns when compared to more recent ones. Where evident, these abnormal returns seem to persist beyond the date of the event, but tend to disappear rather quickly. Some events appear to exhibit a “spill-over” effect influencing international stock markets too. Our most important finding is that recent events do not seem to influence local or international markets, thus suggesting that investors have learnt to better assess terror events and react more calmly to them.
This paper explores the economic costs of conflict using a unique experiment. We analyze the effects of Hezbollah’s massive surprise rocket attack against northern Israel during the 2006 Second Lebanon War and the continued threat posed by the organization’s expanding rocket arsenal on the housing market, the labor market and patterns of migration flows and sorting. Relying on hedonic and repeat sales approaches and using a difference-in-differences identification strategy for 2000-2012, we show that the attack led to a 6-7 percent decline in house prices and rents in the most severely hit localities relative to other localities in northern Israel. These effects persisted until 2012, suggesting that the public continued to view the rocket threat as credible. In contrast, we find practically no effect on labor market conditions, migration flows and sorting.
This paper examines the effects of North Korean threats, as measured by the proprietary North Korean Threat Index (NKTI), on financial markets in South Korea and Japan. We examine the effects of the threats on stock markets, foreign exchange markets, and overnight interest rates. We consider causality in mean and variance tests to determine any link between the NKTI and financial variables. The causality-in-mean test results indicate the presence of a causal link running from North Korean threats to stock returns and exchange rate returns in both countries, but no significant link to the overnight interest rate in either country. The causality-in-variance test results indicate no significant impact emanating from North Korean threats. Integrating the North Korean economy into the global economy stands to eliminate these threats and thus to contribute to regional financial stability.
The major economic story of the last decade has been the surge and collapse of house prices worldwide. Yet political economists have had little to say about how this critical phenomenon affects citizens' welfare and their demands from government. This article develops a novel theoretical argument linking housing prices to social policy preferences and policy outcomes. I argue that homeowners experiencing house price appreciation will become less supportive of redistribution and social insurance policies since increased house prices both increase individuals' permanent income and the value of housing as self-supplied insurance against income loss. Political parties of the right will, responding to these preferences, cut social spending substantially during housing booms. I test these propositions using both microdata on social preferences from panel surveys in the USA, the UK, and a cross-country survey of 29 countries, and macrodata of national social spending for 18 countries between 1975 and 2001.
We perform event analysis on particular episodes of tension in the Korean peninsula between 2000 and 2008, and investigate the effect of the events on South Korean financial markets (stock markets, bond yield spreads and the exchange rate) given that South Korea would be the first affected by a military aggression from North Korea. Surprisingly, in nearly all cases, these events, which have often been dramatized in the world media, have no significant impact on either of these variables or only a very small one. We also find no significant impact of events on listed firms that would a priori be likely to suffer from increased tension between the two Koreas. Since financial markets often contain better predictions than expert opinions or surveys, these results strongly suggest that the North Korean threat is non‐credible.
Engineering News-Record (ENR) publishes its Construction Cost Index (CCI) monthly. CCI is the weighted average price of construction activities in 20 United States (US) cities. CCI has widely been used for cost estimation, bid preparation and investment planning. Cost estimators and investment planners are not only interested in the current CCI, but also are interested in forecasting changes in CCI trends. However, CCI is subject to significant variations that are difficult to predict. An important step towards forecasting CCI trends is to identify its leading indicators. The research objective is to identify the leading indicators of CCI using empirical tests. The results of Granger causality tests show that consumer price index, crude oil price, producer price index, GDP, employment levels in construction, number of building permits, number of housing starts and money supply are the leading indicators of CCI. The results of Johansen’s cointegration tests show that money supply and crude oil price are the leading indicators with long-term relationships with CCI. These findings contribute to the body of knowledge in CCI forecasting. CCI can be predicted more accurately using its leading indicators. Cost estimators and capital project planners can benefit from better forecasting through reduction in uncertainty about future construction costs.
Since the passage of the Terrorism Risk Insurance Act of 2002, corporate terrorism insurance is sold as a separate policy from commercial property coverage. In this article, we determine whether companies differ in their demand for property and terrorism insurance. Using a unique data set of insurance policies purchased by large U.S. firms, combined with financial information of the corporate clients and of the insurance provider, we apply a two-stage least squares approach to obtain consistent estimates of premium elasticity of corporate demand for property and terrorism coverage. Our findings suggest that both are rather price inelastic and that corporate demand for terrorism insurance is significantly more price inelastic than demand for property insurance. We further find a negative relation between the solvency ratios of both property and terrorism risk coverage, with a stronger effect on the latter, indicating that companies use their ability to self-insure as a substitute for market insurance. Our results are robust to the application of alternative estimators as well as changes in the econometric specifications.
This paper examines the impact of public perception of earthquake risk on Istanbul's housing market by investigating the spatial distribution of the average house values and the changes in average house prices in Istanbul between 1995 and 2000. Soil type and distance to the fault lines in the Sea of Marmara are used as proxies for public perception of earthquake risk. The results of regression analysis show that distance from fault lines is an important factor in explaining house values and its impact on house values increased after the 1999 Kocaeli earthquake. Furthermore, there is a quadratic relationship between soil type and house values. However, none of the measures of earthquake risk significantly affect the change in house values. These findings suggest that public perception of earthquake risk enhanced and the public information about earthquake hazard had significant impact on house values.
The event study methodology is used to assess the effects of terrorism on global capital markets. We examine the U.S. capital market's response to 14 terrorist/military attacks dating back to 1915 and global capital markets' response to two recent events—Iraq's invasion of Kuwait in 1990 and the September 11, 2001 terrorist attacks. U.S. capital markets are more resilient than in the past and recover sooner from terrorist attacks than other global capital markets. Evidence suggests that this increased market resilience can be partially explained by a stable banking/financial sector that provides adequate liquidity to promote market stability and minimize panic.
Forecasting housing price index in Turkey using ARIMA transfer function and artificial neural networks
- M Abuanzeh
Abuanzeh, M. (2023). Forecasting housing price index in Turkey using ARIMA
transfer function and artificial neural networks. International Research Journal
of Modernization in Engineering Technology and Science, 5(3). Retrieved from
chromeextension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.irjmets.com/uplo
adedfiles/paper/issue_3_march_2023/34127/final/fin_irjmets1678528137.pdf
North Korea's provocations and South Korea's stock market
- S Lim
Lim, S. (2012). North Korea's provocations and South Korea's stock market.
SERI Quarterly, 5(1), 132-138.