|
on Urban and Real Estate Economics |
| By: | Ashot Tsharakyan |
| Abstract: | This research analyzes the effects of recent housing price appreciation on aggregate welfare. It generalizes the results of Bajari et al (2005), who find that in a credit unconstrained economy with exogenous housing prices there is no effect of housing price appreciation on aggregate welfare. However, I demonstrate that if the households are credit-constrained and housing price is endogenous its appreciation implies a non-zero change in aggregate welfare. First, credit constraints are incorporated into Bajari et al’s model and it is shown that if they are binding housing price appreciation implies an improvement in aggregate welfare. I then construct a model where housing price appreciation is endogenous and is driven by demand and supplyside shocks. The supply shock results from a change in building permit cost. The demand shifts are generated based on dynamics of household income and interest rates. Both credit-constrained and unconstrained versions of this model are considered. Afterwards, using my theoretical results I calculate the aggregate welfare effects of housing price appreciation driven by the combination of demand-side and supply-side shocks observed in the US housing market from 1995 to 2004. The final result implies that housing price appreciation in 1995-2004 driven by the given combination of demand and supply-side shocks led to per household improvement of aggregate welfare by an amount equivalent to about 40% of mean household income in 2004. |
| Keywords: | Housing price appreciation, aggregate welfare, binding credit constraints, endogenous housing price, demand and supply side shocks, median household income. |
| JEL: | R2 R20 R21 R31 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp333&r=ure |
| By: | Greiber, Claus; Setzer, Ralph |
| Abstract: | This paper examines the relation between money and housing variables in the euro area and in the US. Our empirical model is based on a standard money demand relation which is augmented by housing market variables. In doing so, co-integrated money demand relationships can be established for both the euro area and the US. Furthermore, we find evidence for asset inflation channels, that is, liquidity fuels housing market developments. |
| Keywords: | money demand, asset inflation, housing, wealth |
| JEL: | E41 E52 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:6135&r=ure |
| By: | Isbasoiu, George - Marian |
| Abstract: | Today’s economic climate is dominated by inter-firms networks, which have become powerful instruments for building economic capacity for regions to compete in the global market place. Industry clusters are recognised as playing a significant role both in regional economic development and in improvements to quality of life. The aim of this paper is to investigate this influence and to tackle the issues of de-localisation, decentralisation and cluster development as strategy for urban regeneration by comparing two clusters: Montebelluna and Timisoara. Clusters are a common reality in all economies and have traditionally been equated with cities. Across all European regions and cities there is a growing specialisation and concentration or clustering of industries in response to increasing competition and outsourcing as a result of economic reforms and globalisation. Industry clusters comprise groups of firms that share common suppliers, distributors and know-how and find advantage in a specific geographic location. Based on such insights, the paper suggests a theoretical proposal, supported by practical evidence. |
| Keywords: | Industrial district; De-localisation; Urban governance; Internalisation; Regional development. |
| JEL: | F22 R11 L16 |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5037&r=ure |
| By: | Edward E. Leamer |
| Abstract: | Of the components of GDP, residential investment offers by far the best early warning sign of an oncoming recession. Since World War II we have had eight recessions preceded by substantial problems in housing and consumer durables. Housing did not give an early warning of the Department of Defense Downturn after the Korean Armistice in 1953 or the Internet Comeuppance in 2001, nor should it have. By virtue of its prominence in our recessions, it makes sense for housing to play a prominent role in the conduct of monetary policy. A modified Taylor Rule would depend on a long-term measure of inflation having little to do with the phase in the cycle, and, in place of Taylor's output gap, housing starts and the change in housing starts, which together form the best forward-looking indicator of the cycle of which I am aware. This would create pre-emptive anti-inflation policy in the middle of the expansions when housing is not so sensitive to interest rates, making it less likely that anti-inflation policies would be needed near the ends of expansions when housing is very interest rate sensitive, thus making our recessions less frequent and/or less severe. |
| JEL: | E17 E3 E32 E52 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13428&r=ure |
| By: | Wilson Sy (Australian Prudential Regulation Authority) |
| Abstract: | Most existing credit default theories do not link causes directly to the effect of default and are unable to evaluate credit risk in a rapidly changing market environment, as experienced in the recent mortgage and credit market crisis. Causal theories of credit default are needed to understand lending risk systematically and ultimately to measure and manage credit risk dynamically for financial system stability. Unlike existing theories, credit default is treated in this paper by a joint model with dual causal processes of delinquency and insolvency. A framework for developing causal credit default theories is introduced through the example of a new residential mortgage default theory. This theory overcomes many limitations of existing theories, solves several outstanding puzzles and integrates both micro and macroeconomic factors in a unified financial economic theory for mortgage default. |
| Date: | 2007–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:apr:aprewp:wp2007-01&r=ure |
| By: | Feng Xie; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota) |
| Abstract: | This paper reviews the progress that has been made over the last |
| Keywords: | Network growth, Transport economics, Incremental connection |
| JEL: | R41 R42 R48 O33 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:nex:wpaper:reviewofnetworkgrowth&r=ure |
| By: | Yannis M. Ioannides; Henry G. Overman; Esteban Rossi-Hansberg; Kurt Schmidheiny |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0708&r=ure |
| By: | Stefano Iacus (Department of Economics, Business and Statistics, University of Milan, IT); Giuseppe Porro (Department of Economics and Statistics, University of Trieste) |
| Abstract: | A new procedure to identify grading practice is proposed. In our approach, grading practice are given in terms of a categorical variable whilst usually in the literature, coefficients of the regression line which models school grades as a function of students' achievement, are taken as indicators of grading standards. The new procedure, which is essentially nonparametric, allows to identity clearly a variety of grading practices and their effect on students' performance. It also shows that ordering grading standards is not possible: hence the usual approach based on regression coefficients is unlikely to be satisfactory. The new methodology is easy to implement and widely applicable. As an example, we consider data from a survey on Italian lower secondary school students. The evidence, which essentially confirms the generic result given in the literature, suggests that higher grading standards improve students' achievement but in our case, grading standards are easily interpretable. |
| Keywords: | grading practice; students' achievement; classification, |
| Date: | 2007–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:bep:unimip:1061&r=ure |
| By: | Mario Jametti (Department of Economics, York University); Marius Brülharty (University of Lausanne) |
| Abstract: | We study the impact of tax competition on equilibrium taxes and welfare, focusing on the jurisdictional fragmentation of federations. In a representative-agent model of fiscal federalism, fragmentation among jurisdictions with benevolent tax-setting authorities unambiguously reduces welfare. If, however, tax-setting authorities pursue revenue maximization, fragmentation, by pushing down equilibrium tax rates, may under certain conditions increase citizen welfare. We exploit the highly decentralized and heterogeneous Swiss fiscal system as a laboratory for the estimation of these e¤ects. While for purely direct-democratic jurisdictions (which we associate with benevolent tax setting) we find that tax rates increase in fragmentation, fragmentation has a moderating e¤ect on the tax rates of jurisdictions with some degree of delegated government. Our results thereby support the view that tax competition can be second-best welfare enhancing by constraining the scope for public-sector revenue maximization. |
| Keywords: | tax competition,optimal taxation,government preferences,fiscal federalism,direct democracy |
| JEL: | H2 H7 D7 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:yca:wpaper:2007_7&r=ure |
| By: | Piergiuseppe Morone; Carmelo Petraglia; Giuseppina Testa (School of Economics, Mathematics & Statistics, Birkbeck) |
| Abstract: | In order to assess the relationship between internal and external innovative inputs and innovative output at firm level, a knowledge production function is estimated for a representative sample of Italian manufacturing firms over the period 1998-2003. To account for endogeneity of R&D effort in the knowledge production function, we estimate a Heckman selection model on R&D decisions. Results support the view that R&D intensity is positively linked to firm size, age and human capital endowment as well as to higher exposure to international competitive pressure. Then, the knowledge production function is estimated using a standard probit, where the probability to innovate of each firm depends upon intramural R&D effort, regional and industrial spillovers and on a vector of interaction and control variables. Our measures of external knowledge, which circulates and potentially transfers across firms belonging to the same geographical or industrial spaces, are based on predicted values for R&D effort in the region and industry respectively. Our results suggest a positive relationship between sectoral spillovers and innovation; knowledge diffusion in the regional space positively impacts on the probability to innovate of the recipient firm only if the latter has an appropriate endowment of human capital. |
| Keywords: | Innovation, knowledge, spillovers |
| JEL: | O3 L6 C25 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:0713&r=ure |
| By: | Masayuki Tanimoto (Faculty of Economics, University of Tokyo) |
| Abstract: | The argument of "labour intensive industrialization" in East Asia, which has been raised by Kaoru Sugihara and Kenneth Pomeranz, seems to rest on the "peasant economy" as a concept. In deed, the plural employment strategy of peasant household has often been regarded as the typical examples of the "industrious" behaviour that characterizes "labour-intensive industrialization". In other words, the argument has emphasized the agrarian bases of the "labour-intensive industrialization" in East Asia. The notion of industrialization, however, intrinsically implies the process of de-agriculturization. How can we extend the notion of "labour-intensive industrialization" originally based in an agrarian setting to the non-agrarian sphere? The paper explores this question by analyzing the foundation of the small scale industries in 19th and 20th century Japan, during the transformation of the economy's base from peasant economy to urban agglomeration. The weaving and the export-oriented "miscellaneous" industries, particularly toy industry, will exemplify the argument. Besides the centralized factory system, the development of the dispersed production system based on the household economy including a certain level of skill formation played the significant role in the industries. Reiterating the relatively high proportion of small and medium enterprises in the industrial organization, as well as the high self-employment rate among the working population in the contemporary Japan, the analysis is expected to show an another path of industrialization in East Asia. |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2007cf516&r=ure |