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on Microeconomic European Issues |
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Issue of 2014‒08‒02
23 papers chosen by Giuseppe Marotta Università degli Studi di Modena e Reggio Emilia |
| By: | Vincenzo Atella (Department of Economics and Finance and CEIS Tor Vergata, CHP-PCOR); Federico Belotti (CEIS Tor Vergata); Domenico Depalo (Bank of Italy); Andrea Piano Mortari (CEIS Tor Vergata) |
| Abstract: | Spatial econometric models are now an established tool for measuring spillover effects between geographical entities. Unfortunately, however, when entities share common borders but are subject to different institutional frameworks, unless this is taken into account the conclusions may be misleading. In fact, under these circumstances, where institutional arrangements play a role, we should expect to find spatial effects mainly in entities within the same institutional setting, while the effect across different institutional settings should be small or nil even where the entities share a common border. In this case, factoring in only geographical proximity will produce biased estimates, due to the combination of two distinct effects. To avoid these problems, we derive a methodology that partitions the standard contiguity matrix into within-contiguity and between-contiguity matrices, allowing separate estimation of these spatial correlation coefficients and simple tests for the existence of institutional constraints. We then apply this methodology to Italian Local Health Authority expenditures, using spatial panel techniques. We find a high and significant spatial coefficient only for the within-contiguity effect, confirming the validity of our approach. |
| Keywords: | spatial, health expenditures, institutional setting, panel data |
| JEL: | H72 H51 C31 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_967_14&r=eur |
| By: | Sipos, Ciprian; Buglea, Alexandru |
| Abstract: | The paper analyzes to what extent the evolution of the real estate market in the EU countries is influenced by the purchasing power of the citizens of those countries. This analysis is based on the developments of GDP per capita, purchasing power parities, House Price Index and production in construction in period 2008 - 2013 in the EU countries and is structured on three research hypotheses.The first research hypothesis assumes that purchasing power, quantified both by GDP per capita and through purchasing power parities, significantly influences the House Price Index. The second hypothesis assumes that purchasing power significantly influences the production in construction and the third hypothesis assumes that the House Price Index significantly influences the evolution of production in constructions.Testing these hypotheses result in a complex influence: the evolution of GDP per capita significantly influences the evolution of House Price Index, and the price index at his turn influences the evolution of production in construction. There was no significant correlation between the purchasing power and production in construction.Finally, is made a grouping of EU countries into four categories according to all indicators analyzed and are discussed the prospects of Real Estate market developments in the EU countries. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_177&r=eur |
| By: | de La Paz, Paloma Taltavull; Juarez, Francisco |
| Abstract: | The literature approach the lack on housing as one of the consequences of household poverty. This paper turns around the argument and assesses how housing tenure triggers poverty situations. It estimates several affordability indicators associated to housing tenure, finding empirical evidence of different poverty threshold among Spanish households depending on their tenant status. Using micro-data of the Survey of Quality of Life for Spain , data is segmented by residential tenure and calculate poverty lines for homeowners, renters (both at a market prices and below market prices) and the free housing , the four tenure formulas existing in the Spanish housing market. Results suggest that high ownership rate has prevent from poverty to a large number of homeowners with income below the poverty line, especially after the economic crisis in Spain. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_22&r=eur |
| By: | L. Behaghel; D. Blanchet; M. Roger |
| Abstract: | We analyze the influence of health and financial incentives on the retirement behavior of older workers in France, building upon Stock and Wise (1990) option value approach. The model accounts for three main retirement routes: the normal retirement, disability insurance (DI) and unemployment/preretirement pathways, and is estimated with a combination of microeconomic datasets that include the French data of the European SHARE survey. The estimates confirm that a decrease in the generosity of the pension and DI schemes induces people to stay longer in the labor market, and that people with better health tend to retire later. We present extreme situations simulating what individual's retirement behavior would have been if only one retirement route had existed and in the absence of constraints on work capabilities. We show that average years of work between 55 and 64 are nearly 14% greater when regular retirement incentives are applied to the whole population than when it is DI rules that are systematically applied. |
| Keywords: | Pensions, Social Security, Disability, Labor force participation, Senior. |
| JEL: | H55 J14 J26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:500&r=eur |
| By: | Appel-Meulenbroek, Rianne; Kemperman, Astrid; Liebregts, Marianne; Oldman, Tim |
| Abstract: | Purpose – Nowadays the worker is the most important production factor for knowledge organisations, and thus Corporate Real Estate Managers (CREM) must focus on supporting employees. Modern work environments must be designed to meet their preferences for satisfaction and leveraging talent. But the way employees experience and use the office environment depends on national culture, so implementing a new work environment might require different strategies in different countries. This paper describes research into employee preferences regarding work activities and the work environment in 5 European countries, and the implications of differences that came forward.Design/methodology/approach –Based on literature, hypotheses are formulated about the importance of different activities in and features/facilities of the modern work environment. These are tested with the Leesman database, from which 32,006 employee questionnaires from Sweden, the Netherlands, Great Britain, France and Germany were selected. The data are analysed with principal component analyses and Chi Square or F- Tests to study differences between the importance the employees in these 5 countries attached to 21 workplace activities, 19 workplace features and 18 workplace facilities.Findings – With regard to activities, the Germans value interaction activities, while the Dutch and Swedish employees mention collaboration activities as most important. With regard to workplace features/facilities, the French and Germans find it most important to be able to work place independent, while the Swedish care extra about meeting areas. Building services are only important to British employees. More differences between the countries are discussed, after relating the workplace components to the important activities.Implications –The results of this study make clear, that a one-size-fits-all concept is not always the best way for multinationals to support your employees.Originality value – Previous studies focused on employee satisfaction with the work environment that is offered (pre/post move) or asked designers about influence of culture. In this paper we actually ask employees what their preferences are, regardless of the current work environment. It is the first study that compares and tests differences between preferences of European employees on this scale, and also to study these preferences for the work environment in relation to preferences for certain activities and compare countries. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_46&r=eur |
| By: | Schier, Michael; Voigtländer, Michael |
| Abstract: | Home ownership rates in Germany have increased substantially in recent years. However, the rate still remains on a very low level and shows significant differences across regions. The reasons for these differences and the last developments are not clear. Generally, the decision between renting and buying a house or a flat depends on multiple individual factors like income or risk awareness. Additionally, heterogeneous developments in the real estate markets, indicated by prices, rents or taxes, cause differences in the profitability and the costs of homeownership and renting. The following study analyzes the tenure choice in 402 administrative districts in Germany between 2008 and 2012 with the help of an indicator measuring the relative profitability of letting and buying. The indicator is calculated by taking into account the average rental price and the different tax treatment of tenure choice, the property prices for different administrative districts in Germany, the interest and maintenance costs (user costs of housing). Since tax benefits of landlords are passed through to tenants when competition is severe, the indicator can be used to measure the relative profitability of renting and buying. By using a panel model, we investigate whether the demand for buying or renting – measured by search profiles in ImmobilienScout 24, the leading internet platform for private real estate transactions in Germany – is shifted by changing profitability of letting and buying. Control variables like vacancy rates, demographics or employment validate the robustness of the model as well as accounting for spatial autocorrelation. Results show, that households react on changing profitability and adjust their tenure choice partially to economic factors. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_82&r=eur |
| By: | Décamps, Aurélien; Gaschet, Frederic; Pouyanne, Guillaume; Virol, Stephane |
| Abstract: | This article aims at identifying emergent secondary centers and measuring their impact on residential and commercial real estate values, through the estimate of hedonic gradients. Urban sprawl combined with the formation of suburban employment centers have produced more complex spatial patterns characterized by polycentric structures. This paper assumes that these changes in urban forms have influenced location choices of both households and firms but have a differentiated impact on two types of urban values: residential and commercial real estate values.We use hedonic regressions to estimate the impact of the polycentric structure of the city on residential and commercial real estate values among other traditional factors. These estimations are completed by semi-parametric regressions in order to analyse sharply the form of the price gradients in a polycentric city. Data on residential and commercial real estate transactions come from PERVAL database recorded by French notary offices. The precise geolocation of transactions used in addition with a rich set of intrinsic characteristics of the buildings allows a sharp estimation of the spatial pattern of real estate prices. It is completed by a rich set of location attributes coming from several data sources recorded at a fine spatial scale and concerning mainly accessibility, socio-economic attributes, local amenities and equipments, distance to the main subcenters. The study is conducted within the Lyon and Bordeaux metropolitan areas in France, allowing a comparison of two different urban patterns and urban sizes. The various scales of the urban polycentrism are explored by taking into account two types of subcenters (by emergence and integration of satellite towns) and by estimating semi-parametric hedonic models. The first contribution of the paper is to analyse sharply two main trends of urban centrality through real estate values: residential centrality and employment centrality. The residential centrality is recomposed by the increasing influence of urban amenities at the expect of employment accessibility. Economic centrality is increasingly differentiated from residential centrality. The second contribution of this paper is to provide a precise estimation of the form of the hedonic gradients for residential and commercial real estate values through the use of semi-parametric regressions. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_175&r=eur |
| By: | Akimov, Alexey; Lee, Chyi Lin; Stevenson, Simon |
| Abstract: | A large number of studies have previously examined the effect of interest rate changes on the securitised real estate market. However, the majority have focused on aggregate index level data. Few studies have been undertaken on micro-level data. These lead to a question of whether previous findings can be generalised to individual firms. This study considers the impact of interest rate changes on European listed real estate companies. Using data since 1990 we examine both the aggregate index level sensitivity of European public real estate and also consider the micro-level firm specific sensitivity. Specifically, the study examines the following questions:1: Do interest rate changes have a significant impact on European real estate stocks? 2: Do real estate stocks in different markets behave differently in terms of their interest rate sensitivities?3: Do firm characteristics affect the interest rate sensitivity of real estate stocks?4: Has the interest rate sensitivity of real estate stocks changed pre, during and post financial crisis and quantitative easing ?By answering these questions, this study will offer contributions to the following areas. First, we extend the limited studies on interest rate sensitivity to European real estate markets, particularly emerging European property markets. Second, this study is the first to explicitly examine the linkages between real estate firm characteristics and interest rate sensitivity based on an international large sample. Thirdly, this is one of the first pieces of research to examine the impact of the financial crisis and quantitative easing on the interest rate sensitivity of listed real estate vehicles. The volatility of interest rates in Europe since the GFC means that a fuller understanding of interest rate sensitivity of real estate stocks over different market conditions is of importance for investors’ decision-making. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_77&r=eur |
| By: | Desislava Dikova; Andreja Jaklic; Anze Burger; Aliaz Kuncic (Institute for International Business/WU Vienna; Faculty of Social Sciences/University of Ljubliana; Faculty of Social Sciences/University of Ljubliana; Economic Development and Globalization Division/United Nations Economic and Social Commission for Western Asia) |
| Abstract: | The question how much internationalization is beneficial for emerging-market small and medium enterprises (EM SMEs) remains challenging for both international business (IB) scholars and managers. We explore export strategies of first time exporters and focus on the scope of EM SMEs internationalization activities. We tackle the question whether more focused or more diversified internationalization through exporting is beneficial for EM SMEs. We examine the impact of foreign market (geographic) diversification, product diversification and export intensity on firm performance of an entire population of EM SMEs from an emerging east European economy. In addition, we test whether a complex export strategy - an export strategy of simultaneous product- and geographic export diversification - is beneficial for EM SMEs. We use a panel population data of first time Slovenian exporters in the period 1994-2012. We find that diversified internationalization, both in terms of product- and foreign market diversity, and export intensity significantly improve productivity and sales performance for EM SMEs. Furthermore, EM SMEs with complex export strategies enjoy significantly improved productivity and sales performance. |
| Keywords: | first-time exporters, export performance, export diversification |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwiib:iibp1&r=eur |
| By: | Ryu, Jongpil |
| Abstract: | Uncertainty of global economy has been increasing after fiscal crisis in America and Europe. Consequently, real estate asset and office market in Europe has been unstable also. Whereas interest in office market in has increased, studies explaining difference in natural vacancy and rent adjustment rate in European cities are incomplete. Natural vacancy means vacancy rate at equilibrium, and gap between actual vacancy rate and natural vacancy rate plays important role in rent adjustment process. This paper explains natural vacancy rate and different rent adjustment rate in major European cities using quarterly date set since 2000. Results say that natural vacancy rate exists each city and rent adjustment rates are different in those cities significantly. Difference in rent adjustment rate informs that elasticity of excessive demand or supply is different in those cities. Further researches investigating factors that influencing rent adjustment rate are needed. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_215&r=eur |
| By: | Paolo Seri (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo") |
| Abstract: | The geographical diffusion of universities has been recently incentivized in Europe by the growing relevance attributed to them as a driver of local development and as a source of learning for firms. However, the decision processes about the location of the new universities and the design of their study programs are not informed by any clear scientific guidelines. This paper assesses an aspect of the ‘knowledge impact’ of such phenomena by measuring the additional human capital produced, absorbed and coherently utilized by the local production systems in which the new universities have been created. Since universities do not track the location of their graduates in a systematic way, an original survey was conducted among all the graduates of twelve new decentralized universities in the Marches region. The analysis demonstrates that the geographical diffusion of new universities within the region produces a very small incremental contribution in terms of the overall production of graduates. We found diverging results concerning the specific cases and tested for the determinants of decentralized universities’ effectiveness in terms of their contributions to the local learning processes. |
| Keywords: | University, Knowledge impact, Local development. |
| JEL: | I23 R11 O30 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:urb:wpaper:14_02&r=eur |
| By: | Vlachostergiou, Vassiliki; Hutchison, Norman |
| Abstract: | The scale of the real estate development investment challenge allied with capital budget constraints has meant that the prospect of implementing innovative finance instruments has gained considerable momentum in recent years, at a time when Western European government policy has shifted towards supporting the decentralisation of power to local authorities. For instance in the UK, the introduction of the Community Infrastructure Levy (CIL) has provided local authorities with revenue generating streams to fund infrastructure provision, contributing to the economic viability of real estate development. At a macro-level, the broader economic aspects of the ‘crisis’ of finance in the EU post 2007-08, have taken urban development and regeneration trajectories in different directions. Furthermore, the effects of this ‘crisis’ at a regional EU level have seen different national export structures and dependence on other sources of foreign-currency earnings.In this research, exploration of financial instruments for real estate development is taken from a pan-European perspective. Views are targeted to Western European nations of the United Kingdom, Germany, France, The Netherlands and Spain. The broader pan-European context has been researched institutionally, such as through the JESSICA (Joint European Support for Sustainable Investment in City Areas) initiative of the European Commission, developed in co-operation with the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB). The clear aim and output from the project has been to generate a contemporary conceptual model of financial instruments, used in real estate for urban development and regeneration in Western Europe, that have developed post 2007-08 Global Financial Crisis (GFC). The research has been sponsored by the RICS (Royal Institution of Chartered Surveyors) Research Trust. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_227&r=eur |
| By: | Bonifaci, Pietro; Copiello, Sergio |
| Abstract: | In the last years several studies about the relationship between buildings' energy performance and residential property prices in Europe have been published. Nevertheless, there is a lack of studies regarding the Italian real estate market, probably due to the difficulties to access official data on property characteristics and transactions prices.Following the recast of European Commission's Energy Performance of Building Directive (2010/31/EU), since 2012, in Italy, is mandatory to provide information about energy performance on the real estate advertisements for the sale of a property, including energy label and CO2 emissions. Buildings are rated on a scale A to G, with A being the highest rating.The purpose of this research is to evaluate the impact of buildings' energy performance, as expressed by Energy Performance Certificates (EPCs), on the prices of residential properties in the city of Padua, representative of medium-size cities in Northern Italy.The study is based on a hedonic price model which aims to estimate the impact on house prices due to the improvement of energy performance. The study adopts a semi-logarithmic regression model. The analysis is performed on a dataset of nearly a thousand dwellings, listed on websites for property sales.The model considers as dependent variable the offer prices of dwellings, and includes indipendent variables that represent attributes such as location, typology, dimension, mainteinance condition and other features, as well as the energy label.The dwellings are all located in the city of Padua, with the exclusion of some areas of the city centre, in which the location variable could prevail on the others independent variables. The data collection period lasted from July to September 2013.Empirical findings show a positive and statistically significant relationship between buildings with better EPCs and house prices. Furthermore the relationship is stronger from class G to C, than from class C to A. The price premium for a higher energy rating is tested for robustness and consistency. Nevertheless, the study reveals a negative gap between the net present value of potential future savings and the estimated price premium. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_38&r=eur |
| By: | J. Carluccio; D. Fougère; E. Gautier |
| Abstract: | Using a unique French firm-level dataset, we study how international trade affects the wage bargaining process at the firm level. Using instrumental variables techniques, we find that exports shocks have a positive effect on the probability that a firm-level wage agreement is signed, while shocks increasing imports of finished goods have the opposite effect. Exports increase wages for all occupational categories, whereas offshoring has heterogeneous effects. In firms where wage agreements are frequently signed, the export wage premium is larger, and blue-collar workers are protected against the negative impact of offshoring on wages. |
| Keywords: | trade, wages, collective bargaining. |
| JEL: | F16 J51 E24 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:498&r=eur |
| By: | L. Arrondel; M. Roger; F. Savignac |
| Abstract: | This article aims at linking the household wealth and income distributions for 15 European countries using the Household Finance and Consumption Survey. We study the role played by the household’s location in the income distributions in determining its location in the wealth distribution. A generalized ordered probit model is estimated to explain the role played by the position in the income distribution and by intergenerational transfers on the probability to be in a given wealth decile in each country. As expected, we obtain that a rise in income distribution or having received gifts and inheritances increases the probability to be in higher wealth deciles. Most importantly, we find evidences of heterogeneity in accumulation behaviours along the wealth distribution in France, Finland, Germany, Greece, Italy, Slovakia and Spain. The effect of income or inheritance on wealth accumulation varies, depending on the rank of the households in the wealth distribution. We also highlight some specificity in the top of the wealth distribution. |
| Keywords: | wealth and income distributions, inheritances, accumulation behaviours, cross-country comparisons, generalized ordered probit model. |
| JEL: | D31 C35 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:497&r=eur |
| By: | Devaney, Steven; Holtemöller, Oliver; Schulz, Rainer |
| Abstract: | Informational efficient prices are a necessary requirement for optimal resource allocation in the commercial real estate market. Prices are informational efficient if they reflect buildings' benefit to marginal buyers, thereby taking account of all available information on future market development. Prices that do not reflect available information may lead to over- or undersupply if developers react to these inefficient prices. In this study, we examine the efficiency of the UK commercial property market and the interaction between prices, construction cost, and new supply. We employ a dataset in our study that relates to the City of London office market over the period 1972-2011. First, we assess if real estate prices are in accordance with fundamental values, thereby testing for informational efficiency. By comparing prices and fundamental values, we can measure informational inefficiency and explore possible causes for it. Second, we assess if developers reacted correctly to the price signals. Development (or the lack thereof) should be triggered by deviations between fundamental values and cost; if prices do not reflect fundamental values, then they should have no impact on development decisions. We study empirically whether or not this was the case in what is commonly held to be one of the most mature and transparent real estate markets in the world. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2013_245&r=eur |
| By: | Miguel Almunia (University of Warwick); David López-Rodríguez (Banco de España) |
| Abstract: | This paper investigates the effects of monitoring the information trails generated by firms’ activities in order to improve tax compliance. We use quasi-experimental variation provided by a Large Taxpayers Unit (LTU) in Spain to empirically test the theoretical predictions on firms’ responses to an increase in monitoring effort. Firms with more than €6 million in reported revenue are monitored by the LTU, which devotes more resources to verifying the transactions reported by those firms. Using financial statements from practically the entire universe of Spanish firms for the period 1999-2007, we find substantial bunching of firms just below the LTU threshold. On average, we estimate that bunchers reduce their reported revenue by €101,000 (1.7% of total revenue) to avoid falling in the high enforcement regime. Adjusting for resource costs of evasion faced by firms, we estimate that the marginal bunching firm reduces its reported revenue by up to €593,000 (9.9%). The response is weak in sectors where most sales are made to final consumers (retail, restaurants) and strong in sectors where firms sell intermediate goods to other businesses (wholesale, manufacturing). This result suggests that the monitoring effort by the tax authorities and the traceability of the information reported by firms are complements, and both are necessary for effective tax enforcement. Finally, we provide suggestive evidence that firms under low monitoring effort also misreport their material and labour expenditures to evade taxes, even in the presence of third-party reporting. |
| Keywords: | tax enforcement, firms, bunching, Spain, Large Taxpayers Unit (LTU). |
| JEL: | H26 H32 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1419&r=eur |
| By: | Andrea Brandolini (Bank of Italy); Eliana Viviano (Bank of Italy) |
| Abstract: | This paper argues that we need more general statistical indices to analyse European labour markets. First, the paper discusses some normative aspects implicit in the current definition of the employment rate, which is a fundamental policy target in the new Europe 2020 strategy. Second, it proposes a class of generalised indices based on work intensity, as approximated by the total annual hours of work relative to a benchmark value. Third, it derives household-level employment indices within a consistent framework. These indices provide a more nuanced picture of the European labour markets, which better reflects the diversity in the use of part-time and fixed-term jobs as well as other factors affecting the distribution of work across and within households. |
| Keywords: | employment rate, jobless household rate, work intensity |
| JEL: | J21 E24 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_965_14&r=eur |
| By: | Fuerst, Franz; Oikarinen, Elias |
| Abstract: | This study uses a unique dataset of the Finnish housing market to investigate the hypothesised link between energy efficiency and house prices. It explores the following research questions: 1) Does the energy efficiency rating of a dwelling have an independent impact on its price and if so, how large is the price effect? 2) Does the energy efficiency rating affect the liquidity of housing? 3) Does a high energy efficiency rating always translate into lower maintenance costs (and vice versa)? 4) Has the capitalization of energy efficiency ratings into prices changed during 2006-2012, as the rating system has matured and the awareness of the rating system has grown? 5) Do the lower maintenance costs induced by energy efficiency fully capitalise into house prices? Controlling for a large number of spatial and property characteristics, we find that a low energy efficiency rating affects the price negatively but do not detect a significant premium for higher-rated buildings in most estimations. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_40&r=eur |
| By: | Mitrakos, Theodoros; Akantziliotou, Calliope; Vlachostergiou, Vassiliki; Tsolacos, Sotiris |
| Abstract: | The recent financial crisis demonstrated once again the importance of the housing market to macro-economic performance and financial stability highlighting the need to understand better the determinants of house prices in different jurisdictions. But similarly the economic swing caused by the financial crisis has had an impact on residential values calling for empirical evidence on the specific factors behind residential price adjustments in this characteristic macroeconomic environment. The objective of this paper is to establish the most important determinants of residential property values in Greece focusing on residential prices in twenty-five major cities in the country. For this purpose, alternative hedonic models have been estimated using a large database of appraisal-based values provided by commercial banks for the period 2006-2013. This particular sample period makes the study of residential prices of greater interest. The determinants of property values across cities are examined in a period of an unprecedented swing in the Greek economy, the result of the sovereign debt crisis, with positive growth rates giving way to a cumulative contraction of the economy of over 20%. Indeed, residential property values in Greece have shown a significant cross section variation.This analysis controls for the impact of macroeconomic conditions across cities and examines the cross city variation in house prices with reference to four categories of influences: (i)socio-economic influences in particular the prefecture’s population density and GDP(ii)location characteristics (eg accessibility) (iii)Infrastructure (eg airport) and amenities(ii) physical characteristics and property specification, primarily age, property type, surface, floor-level, construction quality, storage area, parking space, etc. We find that the location characteristics variables carry significant power for the observed differences in house prices in key cities in Greece. The empirical investigation also offers support to the role of physical characteristics in determining the value of the property. On the other hand amenities like the existence of an airport, university or hospital seem to have a limited effect. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_193&r=eur |
| By: | Culley, James; Bailey, Liam; Postila, Mikael |
| Abstract: | The prime housing market is an area of research in which there has been limited attention given in recent academic studies. In this paper we try to identify drivers behind the formation of prime residential property submarkets. We argue that as well as relying on prior knowledge and assumptions of property agents and market participants, the submarkets can and, to an extent, should be derived empirically. As an example we compare our empirically defined submarkets with boundaries defined by experts and analyse differences. We recognise the differing motivations between defining a submarket through prior knowledge versus empirical means and try and evaluate the benefits of combining both methods. London is one of the largest prime residential property markets with a significant amount of foreign ownership, and thus it was chosen as a pilot for our prime submarket research. Drivers for prime residential real estate differ from the ones for the rest of the residential markets. We compile the appropriate dataset for London markets by using Knight Frank’s own transaction data supplemented with information from Land Registry in addition to relevant socio-economic and economic data sources. Spatial and locational effects are accounted for both in the methodology and variables within the models. In this study we utilise a combination of hedonic modelling, principal component analysis and cluster analysis. We will build upon previous studies into defining housing submarkets by assessing the suitability of incorporating local spatial econometric principals into the methodology. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2014_81&r=eur |
| By: | Gabriel M. Ahfeldt; Pantelis Koutroumpis; Tommaso Valletti |
| Abstract: | This paper shows that having access to a fast Internet connection is an important determinant of capitalization effects in property markets. We combine microdata on property prices in England between 1995 and 2010 with local availability of Internet broadband connections. Rich variation in Internet speed over space and time allows us to estimate the causal effect of broadband speed on property prices. We find a significantly positive effect, but diminishing returns to speed. Our results imply that an upgrade from narrowband to a high-speed first generation broadband connection (offering Internet speed up to 8 Mbit/s) could increase the price of an average property by as much as 2.8%. A further increase to a faster connection (offering speeds up to 24 Mbit/s) leads to an incremental price effect of an additional 1%. We decompose this effect by income and urbanization, finding considerable heterogeneity. These estimates are used to evaluate proposed plans to deliver fast broadband universally. We find that increasing speed and connecting unserved households passes a cost-benefit test in urban and some suburban areas, while the case for universal delivery in rural areas is not as strong. |
| Keywords: | Internet, property prices, capitalization, digital speed, universal access to broadband |
| JEL: | L1 H4 R2 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0161&r=eur |
| By: | Francesco Porcelli (University of Exeter, Business School); Riccardo Trezzi (University of Cambridge, Faculty of Economics) |
| Abstract: | During a natural disaster, the negative supply shock due to the destruction of productive capacity is counteracted by a positive demand shock due to public grants for assistance and reconstruction, positing an identification issue in empirical work. Focusing on the 2009 ’Aquilano’ earthquake in Italy as a case study, we take advantage of quantified measure of damages for 75,424 buildings to estimate the negative supply shock and of a law issued to allocate reconstruction grants, which resulted in a sharp, exogenous discontinuity in transfers and output behavior across neighboring municipalities to estimate the positive demand shock. Diff-in-diff analysis suggests that local output multipliers of reconstruction grants (net of marginal tax rebates) are below unity. Yet the size of the grants act as a public insurance scheme, preventing a fall in output. |
| Keywords: | Natural disasters, Fiscal multipliers, Mercalli scale |
| JEL: | C36 E62 H70 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1418&r=eur |