nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2008‒07‒20
fourteen papers chosen by
Steve Ross
University of Connecticut

  1. The Train has Left the Station: Real Estate Price Effects of Mainline Realignment in Berlin By Gabriel Ahlfeldt
  2. Markets and Housing Finance By Veronica Cacdac Warnock; Francis E. Warnock
  3. A Study of Closing Costs for FHA Mortgages By HUD - PD&R
  4. On Roots of Housing Bubbles By Erdem Basci; Ismail Saglam
  5. Monument Protection: Internal and External Price Effects By Gabriel Ahlfeldt; Wolfgang Maennig
  6. The Long-Run Impact of New Zealand's Structural Reform on Local Communities By Steven Stillman; Malathi Velamuri
  7. The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates By Rolf Aaberge, Audun Langørgen, Magne Mogstad and Marit Østensen
  8. Inflation and the Measurement of Saving and Housing Affordability By Andrew Coleman
  9. Health status, Neighbourhood effects and Public choice: Evidence from France By Thierry Debrand; Aurélie Pierre; Caroline Allonier; Veronique Lucas-Gabrielli
  10. Taxation, infrastructure, and endogenous trade costs in New Economic Geography By Gruber, Stefan; Marattin, Luigi
  11. Rural and Urban Establishment Births and Deaths Using the U.S. Census Bureau’s Business Information Tracking Series By Lawrence A. Plummer; Brian Headd
  12. ARE FINANCIAL CRISES ALIKE? By MArdi Dungey; Renee Fry; Brenda Gonzales-Hermosillo; Vance L. Martin; Chrismin Tang
  13. Regional unemployment forecasts with spatial interdependencies By Schanne, Norbert; Wapler, Rüdiger; Weyh, Antje
  14. How to Determine whether Regional Markets are Integrated? Theory and Evidence from European Electricity Markets By Janos Feidler; Klaas Staal

  1. By: Gabriel Ahlfeldt (Chair for Economic Policy, University of Hamburg)
    Abstract: While there is an increasing body of literature testing for a correlation between access to regional markets and economic activity, little evidence is available for market access being of causal importance for economic development. This paper investigates the impact of exogenous variation to cities and regions on an urban scale. We study the case of Berlin where the western central business district unexpectedly became disconnected from long-distance railway connections. A combined hedonic and difference-in-difference approach is employed to show that property transaction prices within areas identified to experience a particularly strong decline in accessibility are reduced by approximately 22% after announcement of a new transport plan. We show that this treatment effect is not attributable to effects other than variation of access to cities and regions.
    Keywords: Market access variation, hedonic model, difference-in-difference, railway system, Berlin
    JEL: R11 R12 R21 R40 R53 R58
    Date: 2008
  2. By: Veronica Cacdac Warnock (University of Virginia, Hong Kong Institute for Monetary Research); Francis E. Warnock (University of Virginia, Institute for International Integration Studies, National Bureau of Economic Research, Hong Kong Institute for Monetary Research)
    Abstract: We examine the extent to which markets enable the provision of housing finance across a wide range of countries. Housing is a major purchase requiring long-term financing, and the factors that are associated with well functioning housing finance systems are those that enable the provision of long-term finance. Across all countries, controlling for country size, we find that countries with stronger legal rights for borrowers and lenders (through collateral and bankruptcy laws), deeper credit information systems, and a more stable macroeconomic environment have deeper housing finance systems. These same factors also help explain the variation in housing finance across emerging market economies. Across developed countries, which tend to have low macroeconomic volatility and relatively extensive credit information systems, variation in the strength of legal rights helps explain the extent of housing finance. We also examine another potential factor ¨C the existence of sizeable government securities markets ¨C that might enable the development of emerging markets' housing finance systems, but we find no evidence supporting that.
    Keywords: mortgage, housing finance, emerging markets
    JEL: G10 G18 G28 O16
    Date: 2008–03
  3. By: HUD - PD&R
    Abstract: This study presents findings on how much borrowers pay in closing costs when they buy a house, how much these costs vary, and factors to which the variation is related. The analysis uses data from a national sample of 7,560 FHA-insured, 30-year fixed-rate home purchase loans. Data were collected on how much borrowers paid for lender or broker services, title services, and real estate agent's services, and linked to information on borrower and loan characteristics, including loan amounts, interest rates, credit history, income, borrowers' race and ethnicity, and the racial composition and educational attainment in the borrower's neighborhood. The analysis focuses in turn on fees paid to lenders and mortgage brokers, to title companies, and to real estate agents.
    JEL: G21
    Date: 2008–05
  4. By: Erdem Basci; Ismail Saglam
    Date: 2008–07
  5. By: Gabriel Ahlfeldt (Chair for Economic Policy, University of Hamburg); Wolfgang Maennig (Chair for Economic Policy, University of Hamburg)
    Abstract: This paper analyses the impact of heritage-listed buildings on condominium transaction prices in Berlin, Germany. We use transaction data to test for price differentials between listed and non-listed properties and to study their impact on surrounding property prices. Proximity to built heritage is captured by distance to listed houses and indicators capturing neighborhoods with built heritage. Impact is assessed by applying a hedonic model to micro-level data and a non-parametric approach to location. While our findings suggest that listed properties do not sell at a premium or discount, heritage-listed buildings are found to have positive external effects on surrounding property prices.
    Keywords: Cultural economics, built heritage, heritage significance, real estate economics, Berlin
    JEL: R21 R52 Z19
    Date: 2008
  6. By: Steven Stillman (Motu Economic and Public Policy Research); Malathi Velamuri (Victoria University of Wellington)
    Abstract: New Zealand underwent a period of comprehensive market-oriented economic reforms from 1984-93. In this paper, we use data from the 1986, 1991, 1996 and 2001 Censuses to examine the long-run impact that these reforms had on local communities. We analyse the adjustment process in 140 local labour market areas (LMAs) by creating three measures of the impact of structural reform on local communities - an employment-based measure, a population measure and a housing price measure - and examine the persistence of these shocks over time. We find that communities which experienced smaller employment shocks have higher employment rates, higher average incomes and a more skilled workforce in the medium and long-term. Population shocks also have positive, sizeable and persistent effect on average incomes and population in the future. Overall, the initial impacts of the reforms undertaken in New Zealand on local communities appear to still endure more than a decade later.
    Keywords: Structural Reform, New Zealand, Communities, Local Labour Markets
    JEL: R23 R11 J68
    Date: 2008–06
  7. By: Rolf Aaberge, Audun Langørgen, Magne Mogstad and Marit Østensen (Statistics Norway)
    Abstract: Despite a broad consensus on the need to account for the value of public services and geographical cost of living differences on the measurement of poverty, there is little reliable evidence on how these factors actually affect poverty estimates. Unlike the standard approach in studies of the distribution of public services, this paper employs a method for valuing sector-specific local public services that accounts for differences between municipalities in the costs and capacity to produce public services. Furthermore, recipient frequencies in various demographic groups are used as the basis for determining the allocation of the value of these services on citizens of the municipalities. Geographical differences in living costs are accounted for by using municipal housing price indices or by replacing the country-specific poverty line with municipal-specific poverty lines. Applying Norwegian register data for the period 1993-2001, we find that disregarding the value of local public services and geographic cost of living differences yields a misleading picture of poverty.
    Keywords: Poverty; public services; in-kind transfers; geographical cost of living differences; housing price indices; municipal-specific poverty lines
    JEL: D31 H72 I30
    Date: 2008–07
  8. By: Andrew Coleman (Motu Economic and Public Policy Research)
    Abstract: This paper analyses the effect of inflation on the measurement of saving and housing affordability in New Zealand. When the inflation rate is positive, the income and saving of lenders is overstated and the saving of borrowers is understated because a portion of the interest earnings on capital are not true earnings but merely compensation for inflation. Because New Zealand has a large international debt position, this distortion means aggregate saving is understated, possibly by 2 percent of gross domestic product per year. In addition, a standard measure of the cost of financing the purchase of a house is overstated by approximately fifty percent, as a large part of mortgage payments are actually saving. Nevertheless, at the end of 2007 the cost of financing house purchase in New Zealand was at a cyclical high, approximately 40 percent higher than its average level since 1990.
    Keywords: inflation, real interest rates, housing affordability
    JEL: E01 E40
    Date: 2008–06
  9. By: Thierry Debrand (IRDES institut for research and information in health economics); Aurélie Pierre (IRDES institut for research and information in health economics); Caroline Allonier (IRDES institut for research and information in health economics); Veronique Lucas-Gabrielli (IRDES institut for research and information in health economics)
    Abstract: Observation of socioeconomic statistics between different neighbourhoods highlights significant differences for economic indicators, social indicators and health indicators. The issue faced here is determining the origins of health inequalities: individual effects and neighbourhood effects. Using National Health Survey and French census data from the period 2002-2003, we attempt to measure the individual and collective determinants of Self-Reported Health Status (SRH). By using a principal component analysis of aggregated census data, we obtain three synthetic factors called: "economic and social condition", "mobility" and "generational" and show that these contextual factors are correlated with individual SRHs. Since the 80s, different French governments have formulated public policies in order to take into account the specific problems of disadvantaged and deprived neighbourhoods. In view to concentrating national assistance, the French government has created "zones urbaines sensibles" (ZUS) [Critical Urban Areas, CUA]. Our research shows that in spite of implementing public policy in France to combat health inequalities, by only taking into account the CUA criterion (the fact of being in a CUA or not), many inequalities remain ignored and thus hidden.
    Keywords: Health, Neighbourhood Effect, Housing policy
    JEL: I10 I30 R2
    Date: 2008–06
  10. By: Gruber, Stefan; Marattin, Luigi
    Abstract: This paper presents a New Economic Geography model with distortionary taxation and endogenized trade costs. Tax revenues finance a public good, infrastructure. We show that the introduction of costly public investment in infrastructure increases agglomerative tendencies. With respect to the regions' sizes, in the periphery, the price-index for manufacturing goods decreases, whereas for the core, the price-index is rather high since the distortionary effect of taxes dominates. 'Free riding' - or, in terms of regional policy, externally funded infrastructure investment - is beneficial for the periphery, which can devote all its tax revenue to local demand support, generating a positive home market effect and driving the catch-up process.
    Keywords: New Economic Geography; Taxation; Endogenous Trade Costs; Infrastructure; Regional Policy
    JEL: H54 F12 H25 R12
    Date: 2008–07–09
  11. By: Lawrence A. Plummer; Brian Headd
    Abstract: This paper serves two related purposes. First, we conduct a preliminary descriptive analysis of the establishment birth and death rates by rural and urban counties. This analysis gives a surprising result: when measured by the ecological and labor force method, the rural versus urban differences in the average rates of establishment births and deaths are extremely small. While the difference is statistically significant, on average, the general dynamic of economic activities is not a function of rural versus urban conditions. It is expected, though, that such a dynamic specific to a particular industry will show strong urban versus rural effects. This result has implications for the setting and study of economic development policy for both rural and urban areas, especially where such policies hinge on stimulating and supporting local entrepreneurial activity (i.e., “economic gardening”). Note that the ecological and labor force methods provided similar results, so the choice of method for analyzing birth rates has no significant impact on the results. Second, it documents a set of establishment birth and death (EBD) tabulations now available from the U.S. Census’ Company Statistics Division. In particular, we provide an overview of the Census database from which the tabulated data were extracted, summarize the information and variables in the data, and discuss several practical issues with using the EBD tabulations. Among these issues are the reliability of the data, the industry and county classifications used in reporting the data, and issues concerning statistical analysis in a spatial context. We also discuss how the EBD tabulations and other custom data orders can be obtained.
    Date: 2008
  12. By: MArdi Dungey; Renee Fry; Brenda Gonzales-Hermosillo; Vance L. Martin; Chrismin Tang
    Abstract: This paper investigates whether fi?nancial crises are alike by considering whether a single modelling framework can fi?t multiple distinct crises in which contagion effects link markets across national borders and asset classes. The crises con- sidered are Russia and LTCM in the second half of 1998, Brazil in early 1999, dot-com in 2000, Argentina in 2001-2005, and the recent U.S. subprime mortgage and credit crisis in 2007. Using daily stock and bond returns on emerging and developed markets from 1998 to 2007, the empirical results show that fi?nancial crises are indeed alike, as all linkages are statistically important across all crises. However, the strength of these linkages does vary across crises. Contagion chan- nels are widespread during the Russian/LTCM crisis, are less important during subsequent crises until the subprime crisis, where again the transmission of con- tagion becomes rampant.
    JEL: C51 G15
    Date: 2008–06
  13. By: Schanne, Norbert (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wapler, Rüdiger (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Weyh, Antje (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "We forecast unemployment for the 176 German labour-market districts on a monthly basis. Because of their small size, strong spatial interdependencies exist between these regional units. To account for these as well as for the heterogeneity in the regional development over time, we apply different versions of an univariate spatial GVAR model. When comparing the forecast precision with univariate time-series methods, we find that the spatial model does indeed perform better or at least as well. Hence, the GVAR model provides an alternative or complementary approach to commonly used methods in regional forecasting which do not consider regional interdependencies." (author's abstract, IAB-Doku) ((en))
    JEL: C31 C53 E24 O18
    Date: 2008–07–10
  14. By: Janos Feidler; Klaas Staal (University of Bonn; University Bonn and IIW. Address: IIW, Lennestr.37, 53113Bonn, Germany.)
    Abstract: We model the trade-off between centralized and decentralized decision making over the provision of local public goods. Centralized decisions are made in a legislature of locally elected representatives, and this creates a conflict of interest between citizens in different jurisdictions. The legis lature can be self-interested or benevolent and this can result in either efficient, excessive or misallocative provision of public goods. Decisions are influenced by spill over effects and differences in jurisdictional size. Furthermore, we look at the incentives for centralization.
    Keywords: Decentralization, Local public goods
    JEL: H40 H70 P51
    Date: 2008–05

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