Clustering and hotel room prices in Dubai

In this article, we study the influence of the room properties, hotel amenities, hotel location, and, more importantly, the characteristics of hotels in the surrounding area on the prices of hotel rooms. The effects of different determinants are estimated using the hedonic price model for a cross-section of 250 hotels in Dubai. In addition to the typical characteristics of hotels and hotel rooms such as hotel amenities, star rating, and room size, we include location-specific characteristics such as accessibility to public transportation, airport, and, more importantly, clustering variables to capture the effects of local competition and spillovers from surrounding hotels. Our results indicate significant and strong effects of accessibility to attractions, transportation, hotel’s star rating, and room size, as expected. Our estimations also indicate that local competition reduces the room price, and local quality spillover increases the room price, and both effects are predominantly limited to the hotel’s immediate surroundings. Our estimations indicate that having one more hotel in the immediate surroundings decreases the room price by about one percent, and an increase in the average quality of the hotels in the immediate surroundings by one star rating increases the room price by more than 20%.

An ecological interval two-stage fuzzy shadow price model for environmental flow allocation in the Shaying River Basin

In recent times, social water use has overstepped into the domain of ecological water use, disrupting environmental flow and, thus, destroying the ecological environment. This research aims to coordinate social and natural water use to bring about optimal economic benefits, while ensuring environmental flow requirements. In this study, an interval two-stage fuzzy shadow price model (ITS-SPM) has been developed, which combines two-stage programming (TSP) and system of water value to optimize environmental flow. The ITS-SPM is mainly characterized as system benefits constituted by expected water resource benefits and water shortage penalty. This model has removed the uncertainties of economic data and environmental water demand (expressed fuzzy and interval). It has been found that adjusting the social water structure can effectively solve the problem of insufficient ecological flow. The ITS-SPM can make the adjustment of social water use more reasonable, which will produce benefits, unlike the current agricultural water reduction policy. Under the premise of guaranteeing optimal economic benefits, the added value of environmental water use in different scenarios is (social water structure adjustment) as follows: in 2020, it was expected that Shaying River water would increase by at least 13.49%; in 2025, it is expected to increase by at least 33.35%; in 2030, the increase will be by at least 57.54%; and in 2035, it will be by at least 77.50%.

Applying the Input-output Price Model to Identify Inflation Processes

We try to examine the potential of input-output price model to identify mechanisms of price formation and transmission. Contrary to previous research focused on overcoming the specific limitations of the model, we test its overall performance. In the presented study the historical values of the commonly used Consumer Price Index were decomposed according to the classic input-output price model for an open economy. A sequence of ex-post simulations under various assumptions was used to identify the sources of inflation. This study required the use of input – output tables in current and previous year’s prices. The proposed method of decomposition might be a starting point to create a framework for studying different aspects of inflation process.JEL: C67, E31, E37

Asset Prices Under Knightian Uncertainty

We extend Lucas’s classic asset-price model by opening the stochastic process driving dividends to Knightian uncertainty arising from unforeseeable change. Implementing Muth’s hypothesis, we represent participants’ expectations as being consistent with our model’s predictions and formalize their ambiguity-averse decisions with maximization of intertemporal multiple-priors utility. We characterize the asset-price function with a stochastic Euler equation and derive a novel prediction that the relationship between prices and dividends undergoes unforeseeable change. Our approach accords participants’ expectations, driven by both fundamental and psychological factors, an autonomous role in driving the asset price over time, without presuming that participants are irrational.

ENHANCING THE ACCURACY OF MALAYSIAN HOUSE PRICE FORECASTING: A COMPARATIVE ANALYSIS ON THE FORECASTING PERFORMANCE BETWEEN THE HEDONIC PRICE MODEL AND ARTIFICIAL NEURAL NETWORK MODEL

The Hedonic Price Model (HPM), a prominent model used in real estate appraisal and economics, has been argued to be marred with nonlinearity, multicollinearity and heteroscedasticity problems that affect the accuracy of price predictions. An alternative method called Artificial Neural Network Model (ANN) was identified as capable of addressing the shortcomings of HPM and produces superior predictive performance. Hence, this study aims to evaluate the forecasting performance between HPM and ANN using Malaysian housing transaction data from the period between 2009 to 2018, sourced from the Valuation and Property Service Department, Johor Bahru. The models’ performance was evaluated and compared based on their statistical and predictive performance. Results showed that ANN outperformed HPM in both statistical and predictive performance. This study benefits the expansion of academic and practical knowledge in enhancing the accuracy of house price forecasting.

THE DEVELOPMENT OF PENANG SHOP PRICE INDEX (PSPI) USING LASPEYRES HEDONIC PRICE MODEL

The index is considered an important benchmark and is a decision-making tool in the financial and capital markets, as well as in the property market. In Malaysia, continuous monitoring of property price movements is important as almost half of banking exposure is on property. Further, NAPIC has published indicators displaying the performance of property such as MHPI and PBO-RI. However, indicators regarding the price of commercial property are still less widely published in Malaysia. This study was conducted to develop indicators related to the price of commercial property, especially to shop property. This study has focused on the state of Penang as a study area. The literature review methodology is used to identify existing methods and practices used in developing the index of commercial property both in Malaysia and internationally. In determining the appropriate form of hedonic functions for the development of PSPI, analysis of dependent and independent variables was performed. Meanwhile, the development of the index is based on the Laspeyres hedonic model which is the same as the development of MHPI and PBO-RI. The development of PSPI will be able to help the industry and investors to make decisions and benchmark the performance of shop. This is also one of the pilot studies in Malaysia to form an indicator of commercial property.