|
on Urban and Real Estate Economics |
| By: | Loriana Pelizzon (University of Venice); Guglielmo Weber (University of Padua) |
| Abstract: | We address the issue of the efficiency of household portfolios in the presence of housing risk. We treat housing stock as an asset and rents as a stochastic liability stream: over the life-cycle, households can be short or long in their net housing position. Efficient financial portfolios are the sum of a standard Markowitz portfolio and a housing risk hedge term that multiplies net housing wealth. Our empirical results show that net housing plays a key role in determining which household portfolios are inefficient. The largest proportion of inefficient portfolios obtains among those with positive net housing, who should invest more in stocks. |
| Keywords: | Housing and portfolio choice, Portfolio efficiency, Rental risk, Life-cycle |
| JEL: | D91 G11 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0037&r=ure |
| By: | Mion, Giordano; Naticchioni, Paolo |
| Abstract: | Using a matched employer-employee database for Italy we look at the spatial distribution of wages across provinces. This rich database allows us to contribute at opening the black box of agglomeration economies exploiting the micro dimension of the interaction among economic agents, both individuals and firms. We provide evidence that firm size and particularly skills are sorted across space, and explain a large portion of the spatial wage variation that could otherwise be attributed to aggregate proxies of agglomeration externalities. Our data further support the assortative matching hypothesis, that we show not to be driven by co-location of "good" workers and firms. Finally, we point out that this assortative matching is negatively related to local market size. |
| Keywords: | Spatial Externalities; Panel-Data; Skills; Firms' Heterogeneity; Sorting; Matching. |
| JEL: | J31 R30 J61 R23 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1721&r=ure |
| By: | Govori, Fadil |
| Abstract: | Asset-backed securities are securities which are based on pools of underlying assets. These assets are usually illiquid and private in nature. Usually, asset-backed securities (ABS) are bonds that represent pools of loans of similar types, duration and interest rates. By selling their loans to ABS packagers, the original lenders recover cash quickly, enabling them to make more loans. Asset securitization is the structured process whereby interests in loans and other receivables are packaged, underwritten, and sold in the form of “asset-backed” securities. In effect, securitization is the open market selling of financial instruments backed by asset cash flow or asset value. When the Securitization is "closed," funds flow from the purchasers of the securities to the Issuer and from the Issuer to the originator. All of these transactions occur virtually simultaneously. Residential mortgage loans were the first type of loan to be securitized. They still account for the bulk of asset-backed securities. A mortgage is a pledge of property to secure payment of a debt. For residential mortgages, the property is usually a house and the land on which it is built, and the debt is a loan to purchase the house and land. Also commercial mortgage loans have been securitized along the lines of residential mortgage loans. The second half of the 1980s has witnessed several new structures for mortgage loans. The impetuses for new structures are twofold. First, lower interest rates called attention to the prepayment option embodied in mortgage loans. Second, investors in mortgage securities became more sophisticated and better able to understand new structures that would better manage prepayment risk. Next to residential mortgage loans, automobile loans are the most securitized. Automobile loans are made to individuals to finance the purchase of a car or light duty truck. They are generally level-pay, fixed-rate, self-amortizing loans that require monthly payments over a two-to five-year period. The actual life of an auto loan depends, however, on involuntary prepayment upon default and voluntary prepayments in the event of accelerated payment by the borrower or the sale or trade-in of the collateral. The first securities backed by credit card receivables were sold in March 1986. The first securities backed by credit card debt were issued by commercial banks and savings and loan associations and were collateralized by bank card (Visa and MasterCard) receivables. Securities backed by credit card accounts are not risk-free. Investors face credit risk, interest-rate risk, and repayment risk. Assets that have reasonably predictable cash flows and are easily understood are ripe for securitization. Residential mortgage loans, automobile loans, and credit card receivables fit this description. But the list does not end there. There are also securities backed by installment-type loans, including leases, loans for manufactured housing, and other consumer debt. |
| Keywords: | Asset-Backed Securities; Securities Backed by Homes; Cars; and Credit Cards; Securitization |
| JEL: | G24 G23 G21 G11 G22 G12 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1674&r=ure |
| By: | Marcus Tamm (RWI Essen and Ruhr-University Bochum) |
| Abstract: | The German schooling system selects children into different secondary school tracks already at a very early stage in life. School track choice heavily influences choices and opportunities later in life. It has often been observed that secondary schooling achievements display a strong correlation with parental income. We use sibling fixed effects models and information on a natural experiment in order to analyze whether this correlation is due to a causal effect of income or due to unobservable factors that themselves might be correlated across generations. Our main findings suggest that income has no positive causal effect on school choice and that differences between high- and low-income households are driven by unobserved heterogeneity, e.g. differences in motivation. |
| Keywords: | Child poverty, educational attainment, secondary schools, sibling differences, natural experiment. |
| JEL: | D31 I21 J13 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2007-58&r=ure |
| By: | Manos Matsaganis (Athens University of Economics and Business); Maria Flevotomou (Athens University of Economics and Business) |
| Abstract: | Fiscal welfare, i.e. the use of the tax system to achieve social policy goals, is assuming ever greater importance throughout Europe and beyond. In housing, the favourable tax treatment of mortgage interest repayments has often coexisted alongside public programmes of housing benefit or social housing. Although the distributional effects of tax expenditure are known to be regressive, the issue has remained relatively under-researched. The paper uses the European tax-benefit model EUROMOD to quantify the distributional impact of mortgage interest tax relief in five European countries: the Netherlands, Sweden, Finland, Italy and Greece. The analysis reveals that higher-income groups capture a disproportionate share of total expenditure on mortgage interest tax relief in all countries, and that this effect is most regressive in the Netherlands and least regressive in Sweden. The paper concludes with a discussion of results and their policy implications. |
| Keywords: | tax relief, mortgage repayments, inequality, microsimulation |
| JEL: | H23 I38 R21 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em2/07&r=ure |
| By: | Eva Sierminska; Yelena Takhtamanova |
| Abstract: | To explore the link between household consumption and wealth, we use a new source of harmonized microdata (Luxembourg Wealth Study). We investigate whether there are differences in wealth effects from different types of wealth and across age groups. We consider three countries: Canada, Italy and Finland. We find that the overall wealth effect from housing is stronger than the effect from financial wealth for the three countries in the sample. Additionally, in accordance with the life-cycle theory of consumption, we find the housing wealth effect to be significantly lower for younger households. We also find between-country differences in the wealth effect. |
| Keywords: | Consumption (Economics) ; Wealth ; Households - Economic aspects |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2007-01&r=ure |
| By: | Erik Hjalmarsson; Randi Hjalmarsson |
| Abstract: | We test for efficiency in the market for Swedish co-ops by examining the negative relationship between the sales price and the present value of future rents. If the co-op housing market is efficient, the present value of co-op rental payments due to underlying debt obligations of the cooperative should be fully reflected in the sales price. However, we find that, on average, a one hundred kronor increase in the present value of future rents only leads to a 45 to 65 kronor reduction in the sales price; co-ops with higher rents are thus relatively overpriced compared to those with lower rents. Our analysis indicates that pricing tends to be more efficient in areas with higher educated and wealthier buyers. By relying on cross-sectional relationships in the data, our results are less sensitive to transaction costs and other frictions than time-series tests of housing market efficiency. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:879&r=ure |
| By: | Darcy Rollins Saas |
| Abstract: | An education finance system that is constitutional under the Brigham ruling mandates sacrifices on the part of taxpayers for a public good—educated citizens. It remains to be seen if current proposals can make that sacrifice more palatable or ensure that those bearing the burden have the most stake in the outcomes of the system. |
| Keywords: | Public schools - Vermont ; Local finance - Vermont ; Taxation - Vermont ; Education - Vermont |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbce:07-1&r=ure |
| By: | Christelle Viauroux |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:cin:ucecwp:2007-01&r=ure |
| By: | Diewert, Erwin |
| Abstract: | The paper summarizes the main ideas suggested in OECD-IMF Workshop on Real Estate Price Indexes which was held in Paris, November 6-7, 2006. The paper discusses possible uses and target indexes for real estate price indexes and notes that a major problem is that it is not possible to exactly match the quality of dwelling units over time due to the fact that the housing stock changes in quality due to renovations and depreciation. Four alternative methods for constructing real estate price indexes are discussed: the repeat sales model; the use of assessment information along with property sale information; stratification methods and hedonic methods. The paper notes that the typical hedonic regression method may suffer from specification bias and suggests a way forward. Problems with the user cost method for pricing the services of owner occupied housing are also discussed. |
| JEL: | C43 E31 R21 |
| Date: | 2007–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:bricol:diewert-07-01-03-08-12-12&r=ure |
| By: | Michael Daugherty (West Virginia University, Extension Service); Odd Stalebrink (West Virginia University, Division of Public Administration); Mehmet Tosun (Department of Economics, University of Nevada, Reno) |
| Abstract: | This research focuses on enhancing the understanding of the use of “rainy day funds” to deal with municipal fiscal shortfalls. It is a pilot study, examining the largest 15 cities in West Virginia. Analysis of data from state reports and interviews with finance directors are used to determine whether, how, and to the degree the cities studied use various reserve fund mechanisms. While almost every city was found to have fiscal reserves, there was great variation in the methods used and amounts in how it was done – some cities followed predictable patterns found elsewhere while others did not. |
| Keywords: | Rainy day funds, municipal governments, West Virginia |
| JEL: | H72 H77 H83 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:unr:wpaper:06-012&r=ure |
| By: | Martin Gustafsson (Research Triangle Insitute, Department of Education (Tswane)) |
| Abstract: | The emphasis placed in the existing South African school production function literature on better skilled teachers and better school management is discussed. Ordinary least squares and hierarchical linear production function models, using 2000 SACMEQ data, for the country and for a sub-set of historically disadvantaged schools, are constructed. Ways of making the results more readable for policymakers are explored. The importance of physical infrastructure, textbook and nutrition budgets is highlighted by the models. Correct allocation of teaching and management time in schools, less learner repetition, and better teaching methodologies stand out as important school and classroom management imperatives. |
| Keywords: | Educational quality, Education policy, Education resources, SACMEQ, South Africa |
| JEL: | I21 H52 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers32&r=ure |
| By: | Oyebola Olabisi |
| Abstract: | A September 8, 2006, ruling by the New Hampshire Supreme Court that the Granite State’s current education financing system is unconstitutional was the latest in a long string of court decisions, legislative responses, and subsequent court opinions that have made school funding one of the state’s most contentious issues. In its opinion, the Supreme Court gave New Hampshire lawmakers until July 2007 to define a constitutionally adequate education, implying that legislative failure could lead to a court-mandated system. This report summarizes how the issue of defining and funding an adequate public education reached this point in New Hampshire. It describes key legal findings and other background behind the string of court decisions defining a constitutional educational system. It examines major education funding bills proposed since the 1997 landmark Claremont ruling, assessing whether they would likely meet the state’s constitutional requirements. |
| Keywords: | Public schools - New Hampshire ; Education - New Hampshire ; State finance - New Hampshire |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbce:06-2&r=ure |
| By: | Rafael Di Tella (Harvard Business School); Sebastian Galiani (Washington University in St. Louis -- Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata); Ernesto Schargrodsky (Universidad Torcuato Di Tella) |
| Abstract: | The study of how crime affects different income groups faces several difficulties. The first is that crime-avoiding activities vary across income groups. Thus, a lower victimization rate in one group may not reflect a lower burden of crime, but rather a higher investment in avoiding crime. A second difficulty is that, typically, only a small fraction of the population is victimized so that empirical tests often lack the statistical power to detect differences across groups. We take advantage of a dramatic increase in crime rates in Argentina during the late 1990s to document several interesting patterns. First, the increase in victimization experienced by the poor is larger than the increase endured by the rich. The difference appears large: low-income people have experienced increases in victimization rates that are almost 50 percent higher than those suffered by high-income people. Second, for home robberies, where the rich can protect themselves (by hiring private security, for example), we find significantly larger increases in victimization rates amongst the poor. In contrast, for robberies on the street, where the rich can only mimic the poor, we find similar increases in victimization for both income groups. Third, we document direct evidence on pecuniary and non-pecuniary protection activities by both the rich and poor, ranging from the avoidance of dark places to the hiring of private security. Fourth, we show the correlations between changes in protection and mimicking and changes in crime victimization. Fifth, we offer one possible way of using these estimates to explain the incidence of crime across income groups. |
| Keywords: | Victimization, income distribution, private security, victim adaptation. |
| JEL: | K42 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:dls:wpaper:0044&r=ure |
| By: | Zoltan J. Acs; Catherine Armington; Ting Zhang |
| Abstract: | Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labor Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993-1995, but is not as strong for the recession period 1990-1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialization and positively related to all industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods. |
| Keywords: | New-Firm Survival, Human Capital, Knowledge Spillovers, Entrepreneurship, Labor Market Area |
| JEL: | J24 L80 M13 O3 R1 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2007-04&r=ure |
| By: | Olivier Parent; James P. Lesage |
| Abstract: | We extend the literature on Bayesian model comparison for ordinary least-squares regression models to include spatial autoregressive and spatial error models. Our focus is on comparing models that consist of different matrices of explanatory variables. A Markov Chain Monte Carlo model composition methodology labelled MC to the third by Madigan and York (1995) is developed for two types of spatial econometric models that are frequently used in the literature. The methodology deals with cases where the number of possible models based on different combinations of candidate explanatory variables is large enough that calculation of posterior probabilities for all models is difficult or infeasible. Estimates and inferences are produced by averaging over models using the posterior model probabilities as weights, a procedure known as Bayesian model averaging. We illustrate the methods using a spatial econometric model of origin-destination population migration flows between the 48 US States and District of Columbia during the 1990 to 2000 period. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:cin:ucecwp:2007-02&r=ure |
| By: | Amihai Glazer (Department of Economics, University of California-Irvine); Stef Proost (Faculty of Economics and Applied Economics, Catholic University of Leuven) |
| Abstract: | We consider a congestible road, where the cost of travel increases with the number of users on the road and decreases with capacity. Those persons who do not use the road favor a toll which would maximize revenue, and they oppose spending on road capacity. Users of the road prefer a low toll and a large capacity financed by general revenues. We describe conditions that make majority voting lead to a toll and capacity level that equals the socially optimal toll and capacity, that is smaller, or that is larger. This model can also explain the decrease over time of user fees for road use. |
| Keywords: | Positive qnalysis of policy-paking and implementation; Externalities; Government policy on transportation |
| JEL: | D78 H23 L98 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:060712&r=ure |
| By: | Luigi Guiso; Fabiano Schivardi |
| Abstract: | We contrast two potential explanations of the substantial differences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and firm level TFP: with different entry costs, in areas with more entrepreneurs firms’ average productivity should be lower and vice versa. We test these implications on a sample of Italian firms and unambiguously reject the entry costs explanation in favor of the externalities one. We also investigate the sources of external effects, finding robust evidence that learning externalities are an important determinant of cross-sectional differences in entrepreneurial activity |
| Keywords: | Entrepreneurship, clustering, agglomeration economies |
| JEL: | D24 D62 J23 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200616&r=ure |
| By: | Singh, Nirvikar |
| Abstract: | This paper provides a comparative assessment of fiscal decentralization in China and India, including the standard components of expenditure and revenue assignments and institutions for intergovernmental transfers, as well as the nature of subnational authorities over general economic activity. In particular, the case of China, where town and village enterprises have been very active, is contrasted with that of India, where local governments remain circumscribed in their authority, despite decentralizing reforms. The implications of differences in decentralization for fiscal outcomes and economic growth are discussed. The characterization of each country in terms of concepts of federalism, i.e., competitive, cooperative and market preserving federalism, is discussed, in attempting to abstract from the two cases to more general lessons for fiscal decentralization. |
| Keywords: | cooperative federalism; competitive federalism; market-preserving federalism; decentralization; economic development |
| JEL: | P35 O10 P26 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1705&r=ure |
| By: | Martellosio, Federico |
| Abstract: | This paper studies the correlation structure of spatial autoregressions defined over arbitrary configurations of observational units. We derive a number of new properties of the models and provide new interpretations of some of their known properties. A little graph theory helps to clarify how the correlation between two random variables observed at two units depends on the walks connecting the two units, and allows to discuss the statistical consequences of the presence (or, more importantly in econometrics, the absence) of symmetries or regularities in the configuration of the observational units. The analysis is centered upon one-parameter models, but extensions to multi-parameter models are also considered. |
| Keywords: | exponential families; graphs; quadratic subspace; spatial autoregressions; spatial weights matrices |
| JEL: | C21 C50 |
| Date: | 2006–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1695&r=ure |
| By: | Calin Arcalean (Indiana University); Gerhard Glomm (Indiana University); Ioana Schiopu (Indiana University) |
| Abstract: | We develop a two-region, two sector model with migration and public investment in infrastructure and education. In a numerical example calibrated to Portugal, we find that the structural funds can improve the growth rate of the lagging region and slightly reduce the regional inequality, without necessarily producing convergence. When the mix of national public investment departs from optimum, the allocation of supra-national funds across infrastructure and public education can partially offset this national sub-optimality. We also find that the short-run growth-maximizing mix is different from the long-run mix. Moreover, the rich region has an incentive to bias the allocation of structural funds towards human capital formation. |
| Keywords: | endogenous growth, spatial redistribution, regional policy, European Union |
| JEL: | H7 R12 R58 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2007002&r=ure |