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on Urban and Real Estate Economics |
| By: | Jordi Jofre (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)); Alberto Sole (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)) |
| Abstract: | This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs? economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments. |
| Keywords: | Agglomeration economies, Firm location, Local taxes |
| JEL: | R3 H32 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2007/4/doc2007-2&r=ure |
| By: | Victor Matheson (Department of Economics, College of the Holy Cross); Robert Baade (Department of Economics and Business, Lake Forest College); Mimi Nikolova (Department of Economics and Business, Lake Forest College) |
| Abstract: | Supporters of sports stadium construction often defend taxpayer subsidies for stadiums by suggesting that sports infrastructure can serve as an anchor for local economic redevelopment. Have such promises of economic rejuvenation been realized? The City of Chicago provides an interesting case study on how a new stadium, U. S. Cellular Field, has been integrated into its southside neighborhood in a way that may well have limited local economic activity. This economic outcome stands in stark contrast to Wrigley Field in northern Chicago which continues to experience a synergistic commercial relationship with its neighborhood. |
| Keywords: | sports, stadiums, development, baseball, Chicago, economic impact |
| JEL: | L83 O18 R53 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:cpaper:0705&r=ure |
| By: | Erling Røed Larsen and Steffen Weum (Statistics Norway) |
| Abstract: | The question of whether the housing market is efficient or not is posed by an increasing number of economists, policymakers, current homeowners and prospective homebuyers. This article tests the efficiency hypothesis on data from the Norwegian housing market in its capital, Oslo. We employ the Case-Shiller time-persistence-test on a repeated-sales model of a house price index and returns to housing. Our data cover the period 1991-2002 and comprise 20 752 transactions of same-object-repeated-sales. We explain why certain features, sometimes suppressed in earlier tests, of the data set are of importance in efficiency tests, and argue that ours is particularly well-suited for the purpose. We demonstrate that the repeated-sales house price index contains inertia and time-persistence. In addition, we investigate how the price history of returns; which consist of capital gains, dividends, and interest payments; can be exploited to predict future returns. Both the house price index and housing returns contain forecastable elements, so we reject the null hypothesis of martingale processes, a finding that is indicative of Case-Shiller inefficiency. This discovery is supplemented with an exploration of trading and timing rules by examinations of intra-market and inter-market returns. We show that the housing market consistently yield higher return at lower risk than does the stock market over the period, which is inconsistent with inter-market efficiency. |
| Keywords: | efficient market hypothesis; excess returns; house prices; housing market; martingale process; risk; time persistency; trading rules |
| JEL: | C22 C43 D12 E37 G14 R21 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:506&r=ure |
| By: | Yusuf, Shahid |
| Abstract: | Mega urban regions are not a passing phenomenon. They are likely to persist and to enlarge their economic footprints because they benefit from the advantages of market scale, agglomeration economies, location, and the increasing concentration of talented workers. Metropolitan regions which are polycentric, relatively well managed, and have invested heavily in transport infrastructure are able to contain some of the problems attendant upon a concentration of people and industry. Moreover, with energy and water resources becoming relatively scarce and many countries anxious to pre serve arable land for farming, the economic advantages of densely populated urban areas are on the rise because they have a lower resource utilization quotient. During the next 15 years, mega urban economies could coalesce in three Southeast Asian locations: Bangkok, Jakarta, and the Singapore-Iskander Development Region (IDR, South Johor). The Bangkok and Jakarta (Jabotabek) metropolitan regions have passed the threshold at least in terms of population size but they have yet to approach the industrial diversity, dynamism, and growth rates of a Shanghai or a Shenzhen-Hong Kong region. Singapore, if coupled with IDR, has the potential but it is still far from being an integrated urban region. This paper examines the gains from closer economic integration and the issues to be settled before it could occur. The paper notes that a tightening of localized economic links between two sovereign nations through the formation of an urban region would involve a readiness to make long-term political commitments based on a widely perceived sense of substantial spillovers and equitably shared benefits. Delineating these benefits convincingly will be essential to winning political support and a precondition for a successful economic flowering. |
| Keywords: | Transport Economics Policy & Planning,ICT Policy and Strategies,Population Policies,Tertiary Education,Agricultural Knowledge & Information Systems |
| Date: | 2007–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4252&r=ure |
| By: | Carolyn A. Dehring (Department of Insurance, Legal Studies and Real Estate, The University of Georgia); Craig A. Depken, II (Department of Economics, University of Texas at Arlington); Michael R. Ward (Department of Economics, University of Texas at Arlington) |
| Abstract: | We propose a methodology that facilitates a direct test of the homevoter hypothesis, which posits that homeowner/voter support for a public good project is positively related to the project’s expected effect on property values. First, we estimate how events that indicate an increasing probability that the public good project will be undertaken impact local residential property values before the referendum is held. These pre-vote impacts are considered noisy signals to homeowners about the market’s assessment of the net marginal benefits of the project. Second, we aggregate these market signals to the precinct level and relate them to precinct-level voting results concerning the proposed project. We apply this method to the 2004 referendum in Arlington, Texas, concerning a publicly subsidized stadium to host the NFL Dallas Cowboys. The analysis supports the homevoter hypothesis and establishes a possible methodology for future evaluations in this small but growing empirical literature. |
| Keywords: | economic impact, event studies, sports, property values, stadiums |
| JEL: | R58 H71 L83 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0719&r=ure |
| By: | Martin Gregor (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Lenka Gregorová (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | If local public goods exhibit spillovers and regions are sufficiently symmetric, decentralization implies underprovision, whereas cooperative centralization is associated with strict Pareto-improvement. This classic inference rests on two assumptions: local politicians are delegated sincerely and never provide voluntary transfers to the other regions. We abandon these assumptions in a setup of two symmetric regions with imperfect complementarity between local public goods. For this particular aggregation, non-cooperative decentralization can achieve the social optimum, whereas cooperative centralization cannot. |
| Keywords: | centralization; public goods; strategic delegation; weakest-link; voluntary transfers |
| JEL: | C72 D72 H40 H70 H73 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2007_19&r=ure |
| By: | Jesús Saurina (Banco de España); Carlos Trucharte (Banco de España) |
| Abstract: | In this paper we develop a probability of default (PD) model for mortgage loans, taking advantage of the Spanish Credit Register, a comprehensive database on loan characteristics and credit quality. From that model, we calculate different types of PDs: point in time, PIT, through the cycle, TTC, average across the cycle and acyclical. Then, we compare capital requirements coming from the different Basel II approaches. We show that minimum regulatory capital under Basel II can be very sensitive to the risk measurement methodology employed. Thus, the procyclicality of regulatory capital requirements under Basel II is an open question, depending on the way internal rating systems are implemented and their output is utilised. We focus on the mortgage portfolio since it is one of the most under researched areas regarding the impact of Basel II and because it is one of the most important banks’ portfolios. |
| Keywords: | procyclicality, basel ii, rating systems, mortgages |
| JEL: | E32 G18 G21 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0712&r=ure |
| By: | Florian Hagn; Wolfgang Maennig (University of Hamburg) |
| Abstract: | Olympic Games may have impacts on income and employment in the host city, but no ex post study has been carried out for European Olympic host cities to date. The present study closes this gap using the 1972 Munich Olympic Games. The data period examined in this study allows for analysis of long-term effects. In addition, the methodology avoids overestimating the significance of the effects. Finally, we report results for all possible combinations of pre- and post-Olympic periods. The results: income in Olympic regions grew significantly faster than in other German regions. In contrast, no employment effects were identified. |
| Keywords: | Labour market, regional economics, sports economics, World Cup, Stadium Impact |
| JEL: | L83 R53 R58 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0716&r=ure |
| By: | Stephanie Jasmand; Wolfgang Maennig (University of Hamburg) |
| Abstract: | Olympic Games may have impacts on income and employment in the host city, but no ex post study has been carried out for European Olympic host cities to date. The present study closes this gap using the 1972 Munich Olympic Games. The data period examined in this study allows for analysis of long-term effects. In addition, the methodology avoids overestimating the significance of the effects. Finally, we report results for all possible combinations of pre- and post-Olympic periods. The results: income in Olympic regions grew significantly faster than in other German regions. In contrast, no employment effects were identified. |
| Keywords: | Olympic Games, mega events, income, employment |
| JEL: | L83 O18 R11 R53 R58 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0712&r=ure |
| By: | David Caubel (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]) |
| Abstract: | Transportation policy issues are important in urban areas since they try to answer growing preoccupations. Nevertheless, do assessment tools enable the evaluation of social equity? In the French case, assessment methodologies - cost-benefit analysis - have been developed to make allowance for more elements. Even if economic and environment aspects could be evaluated for each urban transport system user, analysis does not linger over individual impacts. The question of social equity is either in the background or is not analysed, in both transportation policies and methodologies assessment. However, literature review and decision-maker's speeches on equality show us a re-emergence of the social field in transportation policies. This appears with values of individual “rights” and “chance”. By consequence, we interpret the equal opportunity between individuals by the accessibility concept. Accessibility is one of the basic approaches to the question of the social aspects in transportation policies. In order to take into account for social field and to answer accessibility to what, for whom and how?” indicators based on a “differentiated accessibility” could be established. These indicators would propose a tool that would make it possible to light the decision makers and to account for individual inequalities, considered in terms of chances to profit from the amenities of an urban area that they need to achieve their goals. |
| Keywords: | Accessibility ; Assessment ; Equity ; Methods ; Social field |
| Date: | 2007–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00079690_v1&r=ure |
| By: | Derek Bond (University of Ulster); Michael J. Harrison (Trinity College Dublin); Edward J. O'Brien (European Central Bank) |
| Abstract: | This paper takes a fresh look at the estimation of economic base multipliers. It uses recent developments in both nonstationary and nonlinear inference to consider issues surrounding the derivation of such multipliers for Northern Ireland. It highlights the problem of distinguishing between nonstationarity and nonlinearity in empirical work. The results of standard unit root and cointegration analysis call into question the adequacy of that framework for estimating employment multipliers. There is strong evidence of nonlinearity; and modelling using random field regression supports the findings of Harrison and Bond (1992) that there is substantial parameter instability or nonlinearity in the data. |
| JEL: | C22 C52 R12 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep0807&r=ure |
| By: | Jeffrey R. Brown; Zoran Ivkovich; Paul A. Smith; Scott Weisbenner |
| Abstract: | This paper establishes a causal relation between an individual's decision of whether to own stocks and average stock market participation decision of the individual's community. We instrument for the average ownership of an individual's community with lagged average ownership of the states in which one's non-native neighbors were born. Combining this instrumental variables approach with controls for individual and community fixed effects, a broad set of time-varying individual and community controls, and state-by-year effects, rules out alternative explanations. To further establish that word-of-mouth communication drives this causal effect, we show that the results are stronger in more sociable communities. |
| JEL: | G11 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13168&r=ure |
| By: | Løchte, Peter (Department of Business Studies, Aarhus School of Business) |
| Abstract: | This paper introduces, prices, and analyzes traffic light options. The traffic light <p> option is an innovative structured OTC derivative developed independently by several <p> London-based investment banks to suit the needs of Danish life and pension (L&P) <p> companies, which must comply with the traffic light solvency stress test system introduced by the Danish Financial Supervisory Authority (DFSA) in June 2001. This monitoring system requires L&P companies to submit regular reports documenting the sensitivity of the companies’ base capital to certain pre-defined market shocks – the red and yellow light scenarios. These stress scenarios entail drops in interest rates as well as in stock prices, and traffic light options are thus designed to pay off and preserve sufficient capital when interest rates and stock prices fall simultaneously. Sweden’s FSA implemented a traffic light system in January 2006, and supervisory authorities in many other European countries have implemented similar regulation. Traffic light options are therefore likely to attract the attention of a wider audience of pension fund managers in the future. Focusing on the valuation of the traffic light option we set up a Black-Scholes/Hull-White model to describe stock market and interest rate dynamics, and analyze the traffic light option <p> in this framework. |
| Keywords: | Traffic light solvency tests; regulatory solvency requirements; asset-liability management in pension funds; hedging interest rate and stock price risk; derivatives pricing; Black-Scholes/Hull-White model |
| Date: | 2006–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aarbfi:2006-08&r=ure |
| By: | Jan Schnellenbach (University of Heidelberg, Department of Economics); Lars Feld (University of Heidelberg, Department of Economics); Christoph schaltegger (Eidgenössisches Finanzdepartement, Bern, Switzerland) |
| Abstract: | The paper compares decision-making on the centralisation of public goods provision in the presence of regional externalities under representative and direct democratic institutions. A model with two regions, two public goods and regional spillovers is developed in which uncertainty over the true preferences of candidates makes strategic delegation impossible. Instead, it is shown that the existence of rent extraction by delegates alone suffices to make cooperative centralisation more likely through representative democracy. In the non-cooperative case, the more extensive possibilities for institutional design under representative democracy increase the likelihood of centralisation. Direct democracy may thus be interpreted as a federalism-preserving institution. |
| Keywords: | centralisation; direct democracy; representative democracy; public good provision. |
| JEL: | H11 H77 H72 H73 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0440&r=ure |