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on Urban and Real Estate Economics |
| By: | Wolfgang R. Köhler |
| Abstract: | Homeownership rates in suburbs are much higher than in central cities. This paper shows that the systematic difference between homeownership rates causes suburbanization. We consider an economy with several regions: the central city, where most households rent, and the suburbs, where most own. Households migrate and vote on local policies. Renters do not consider the effect of policies on house prices. Therefore, renter dominated central cities provide public goods inefficiently and have high taxes and high debt. Since house prices are lower in the central city, few houses are built and households migrate to the suburbs as houses depreciate. The durability of houses has two effects: it provides owners with incentives to vote for efficient policies and it makes inefficient policies sustainable. |
| Keywords: | Suburbanization, homeownership, migration, local public debt, local public goods, house prices |
| JEL: | H41 H73 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:382&r=ure |
| By: | Van Butsic; Ellen Hanak; Robert G. Valletta |
| Abstract: | We use a hedonic framework to estimate and simulate the impact of global warming on real estate prices at North American ski resorts. To do so, we combine data on resort-area housing prices from two sources--data on average prices for U.S. Census tracts across a broad swath of the western U.S. and data on individual home sales for four markets in the western U.S. and Canada, each available over multiple decades--with detailed weather data and characteristics of ski resorts in those areas. Our OLS and fixed-effects models of changes in house prices with respect to medium-run changes in the share of snowfall in winter precipitation yield precise and consistent estimates of positive snowfall effects on housing values in both data sources. We use our estimates to simulate the impact of likely climate shifts on house prices in coming decades and find substantial variation across resort areas based on climatic characteristics such as longitude, elevation, and proximity to the Pacific Ocean. Resorts that are unfavorably located face likely large negative effects on home prices due to warming, unless adaptive measures are able to compensate for the deterioration of conditions in the ski industry. |
| Keywords: | Environmental protection ; Housing - Prices ; Skis and skiing |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2008-12&r=ure |
| By: | Thomas A. Garrett; Lesli S. Ott |
| Abstract: | We explore the influence of city-level business cycle fluctuations on crime in 20 large cities in the United States. Our monthly time series analysis considers seven crimes over an approximately 20-year period: murder, rape, assault, robbery, burglary, larceny, and motor vehicle theft. Short-run changes in economic conditions, as measured by changes in unemployment and wages, are found to have little effect on city crime across many cities, but property crimes were more likely to be influenced by changes in economic conditions than were more violent crimes. Contrary to the deterrence hypothesis, we find strong evidence that in many cities more arrests follow from an increase in crime rather than arrests leading to a decrease in crime. This is true especially for the more visible crimes of robbery and vehicle theft and suggests that city officials desire to remove these crimes from the public's view. |
| Keywords: | Business cycles ; Cities and towns ; Crime |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2008-026&r=ure |
| By: | Mary A. Burke; Tim R. Sass |
| Abstract: | In this paper we analyze the impact of classroom peers on individual student performance with a unique longitudinal data set covering all Florida public school students in grades 3-10 over a five-year period. Unlike many previous data sets used to study peer effects in education, our data set allow us to identify each member of a given student’s classroom peer group in elementary, middle, and high school as well as the classroom teacher responsible for instruction. As a result, we can control for individual student fixed effects simultaneously with individual teacher fixed effects, thereby alleviating biases due to endogenous assignment of both peers and teachers, including some dynamic aspects of such assignments. Our estimation strategy, which focuses on the influence of peers' fixed characteristics—both observed and unobserved—on individual test score gains, also alleviates potential biases due to error in measuring peer quality, simultaneity of peer outcomes, and mean reversion. Under linear-inmeans specifications, estimated peer effects are small to non-existent, but we find some sizable and significant peer effects within non-linear models. For example, we find that peer effects depend on an individual student’s own ability and on the ability level of the peers under consideration, results that suggest Pareto-improving redistributions of students across classrooms and/or schools. Estimated peer effects tend to be smaller when teacher fixed effects are included than when they are omitted, a result that suggests co-movement of peer and teacher quality effects within a student over time. We also find that peer effects tend to be stronger at the classroom level than at the grade level. |
| Keywords: | Education |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:08-5&r=ure |
| By: | Matthew Neidell; Jane Waldfogel |
| Abstract: | We examine peer effects in early education by estimating value added models with school fixed effects that control extensively for individual, family, peer, and teacher characteristics to account for the endogeneity of peer group formation. We find statistically significant and robust spillover effects from preschool on math and reading outcomes, but statistically insignificant effects on various behavioral and social outcomes. Of the behavioral and social effects explored, we find that peer externalizing problems, which most likely capture classroom disturbance, hinder cognitive outcomes. Our estimates imply that ignoring spillover effects significantly understates the social returns to preschool. |
| JEL: | I21 I28 J13 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14277&r=ure |
| By: | Sarah W. Carroll; Wenli Li |
| Abstract: | This paper provides the first in-depth analysis of the homeownership experience of households in bankruptcy. The authors consider households who are homeowners at the time of filing. These households are typically seriously delinquent on their mortgages at the time of filing. The authors measure how often they end up losing their houses in foreclosure, the time between bankruptcy filing and foreclosure sale, and the foreclosure sale price. In particular, they follow homeowners who filed for chapter 13 bankruptcy between 2001 and 2002 in New Castle County, Delaware, through October 2007. They present three main findings. First, close to 30 percent of the filers lost their houses in foreclosure despite filing for bankruptcy. The rate rose to over 40 percent for those who were 12 months or more behind on their mortgage payment, about the same fraction as among those who entered into foreclosure directly. Second, filing for bankruptcy allowed those who eventually lost their houses to foreclosure to remain in their houses for, on average, an additional year. Third, although the average final sale price exceeded borrowers’ own estimates at the time of filing, the majority of the lenders suffered losses. These findings are pertinent to the recent debate over the bankruptcy code on mortgage modification. Finally, the paper also reports circumstances related to the loan, borrower, and lender that make it more or less likely that a certain result will take place |
| Keywords: | Home ownership ; Bankruptcy |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:08-14&r=ure |
| By: | David Drukker (StataCorp) |
| Abstract: | In this talk, I will provide a quick introduction to estimators for the parameters of spatial-autoregressive models and a quick introduction to a suite of user-written Stata commands for managing spatial data and parameter estimation. |
| Date: | 2008–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:boc:nsug08:20&r=ure |
| By: | Kenneth P. Brevoort; John D. Wolken |
| Abstract: | Deregulation and technological change have reduced the transactions costs that led to the dominance of local financial service suppliers, leading some to question if distance still matters in banking. This debate has been particularly acute in small business banking, where transactions costs are believed to be particularly high. This paper provides a detailed review of the literature on distance in banking markets, highlighting the reasons why geographic proximity is believed to be important and examining the changes that may have affected its importance. Relying on new data from the 2003 Survey of Small Business Finances, we examine how distances between small firms and their financial service suppliers changed over the 1993-2003 decade. Our analysis reveals that distances increased, though the extent varied substantially across financial services and supplier types. Generally, increases were observed in the early half of the decade, while distances declined in the following five years. There was also a trend towards less in person interaction between small firms and their suppliers of financial services. Nevertheless, most relationships remained local, with a median distance of 5 miles in 2003. The results suggest that distance, while perhaps not as tyrannical as in the past, remains an important factor in banking. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2008-34&r=ure |
| By: | Sarai Criado (Banco de España); Adrian van Rixtel (Banco de España) |
| Abstract: | This paper provides an overview of the most important structured finance instruments in the context of the development of the financial turmoil that started in the third quarter of 2007 and continued into 2008. These financial market tensions were triggered by concerns about exposures of financial institutions to the most risky segment of the US mortgage markets -the so-called subprime mortgage market- and related financial instruments, which predominantly were related to structured finance. As structured finance has developed very fast in recent years and often involves highly complex financial instruments and techniques, which may not be understood completely beyond a small circle of financial market experts, the aim of this paper is to provide an introduction to these instruments that may serve to better understand the specific characteristics of the financial turmoil. In this context, the paper proposes a specific classification of structured finance and discusses both securitizations and credit derivatives with the aim of explaining their specific contributions to the development of the financial turmoil. To this extent, the paper differentiates between two main categories of structured finance instruments. The first one played an important role in the initiation and propagation of the turmoil and includes mortgage-backed securities (MBS), asset backed commercial paper (ABCP) and collateralized debt obligations (CDOs), both cash flow and synthetic. The second category of structured finance instruments involves those that have been more instrumental in monitoring the crisis, both for market participants and policymakers. The main instruments here are credit default swaps (CDS), of which examples are presented for both single name and index contracts. Finally, the paper provides an overview of the specific contagion channels involving various structured finance instruments. This will be conducted on the basis of examples for hypothetical financial institutions that are nevertheless representative for real world developments such as they occurred in the course of 2007 and 2008. |
| Keywords: | financial turmoil, financial markets, financial institutions, structured finance, securitization, credit derivatives |
| JEL: | G10 G15 G21 G24 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:0808&r=ure |
| By: | Niels Bosma; R. Sternberg; Zoltan Acs |
| Abstract: | De vergelijkende studie The 'Entrepreneurial Advantage of World Cities' is de eerste in zijn soort en gebaseerd op de gecombineerde data van de Global Entrepreneurship Monitor (GEM) tussen 2001 en 2006. De verscheidene indices hebben betrekking op de periode 2001-2006. Hierbij gaat het om zowel het actief bezig zijn met het oprichten van een nieuwe eigen onderneming ('nascent' ondernemers), als het runnen van een eigen onderneming die minder dan 42 maanden oud is (ondernemers van nieuwe bedrijven). |
| Date: | 2008–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h200810&r=ure |
| By: | Rajkamal Iyer; Manju Puri |
| Abstract: | We use a unique, new, database to examine micro depositor level data for a bank that faced a run. We use minute-by-minute depositor withdrawal data to understand the effectiveness of deposit insurance, the role of social networks, and the importance of bank-depositor relationships in influencing depositor propensity to run. We employ methods from the epidemiology literature which examine how diseases spread to estimate transmission probabilities of depositors running, and the significant underlying factors. We find that deposit insurance is only partially effective in preventing bank runs. Further, our results suggest that social network effects are important but are mitigated by other factors, in particular the length and depth of the bank-depositor relationship. Depositors with longer relationships and those who have availed of loans from a bank are less likely to run during a crisis, suggesting that cross-selling acts not just as a revenue generator but also as a complementary insurance mechanism for the bank. Finally, we find there are long term effects of a solvent bank run in that depositors who run do not return back to the bank. Our results help understand the underlying dynamics of bank runs and hold important policy implications. |
| JEL: | E58 G21 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14280&r=ure |
| By: | Peter Huber (WIFO); Klaus Nowotny (WIFO) |
| Abstract: | This paper analyses the willingness to commute and migrate across borders. We focus on differences in the effects of individual characteristics on the willingness to migrate and the willingness to commute. Based on a random utility model we estimate a multinomial probit regression using individual level data on migration and commuting plans in regions of the Czech Republic, Hungary, and Slovakia bordering on Austria. We find that indirect costs of mobility have a smaller impact on the probability of being willing to commute. Variables associated with potential earnings have mostly low marginal effects and no evidence of selection by education. |
| Keywords: | willingness to migrate, willingness to commute, cross-border commuting, multinomial probit regression |
| Date: | 2008–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2008:i:322&r=ure |
| By: | Thomas Nitschka |
| Abstract: | Incomplete consumption risk sharing implies that the market risk premium is high in times of lack of risk sharing and vice versa. In the time period from 1980 to 2007, this implication of incomplete consumption risk sharing for the market price of risk is not mirrored in excess returns on stocks but in returns on real estate both in the Euro Area and in the U.S. This finding thus casts doubt on the common practice to approximate the market return by a stock index return in empirical tests of the Sharpe-Lintner capital asset pricing model. However, cross-sectional asset pricing tests suggest that there are fundamental differences between the Euro Area and the U.S. in this respect. The return on real estate does not add any explanatory power for domestic or foreign asset returns in excess of a stock index return in the U.S. The opposite reasoning applies to the Euro Area. Finally, this paper shows that the distinction between rather global and country-specific pricing factors does not seem to be important for the pricing of excess returns on foreign currencies. |
| Keywords: | CAPM, market risk premium, real estate return, return predictability, foreign currency returns |
| JEL: | G10 G15 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:385&r=ure |