nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2009‒02‒14
35 papers chosen by
Steve Ross
University of Connecticut

  1. Mega-Events and Housing Costs: Raising the Rent while Raising the Roof? By Dennis Coates; Victor Matheson
  2. Can Multicultural Urban Schools in Sweden Survive Freedom of Choice Policy? By Bunar, Nihad
  3. "Ripple Effects” and Forecasting Home Prices in Los Angeles, Las Vegas, and Phoenix By Rangan Gupta; Stephen M. Miller
  4. Segregation and the Attainment of Minority Ethnic Pupils in England By Simon Burgess; Deborah Wilson; Adam Briggs; Anete Piebalga
  5. A Reconsideration of the NAS Rule from an Industrial Agglomeration Perspective By Tomoya Mori; Tony E. Smith
  6. Youth Redeveloping Derelict and Underused Historical City Areas: Evidence from a Survey of Real Estate Developers By Paolo Rosato; Anna Alberini; Valentina Zanatta; Margaretha Breil
  7. The Italian mortgage market: characteristics, evolution and regional differences. Evidence from a bank survey By Paola Rossi
  8. Valuing Homeownership By Khalid Sekkat; Ariane Szafarz
  9. Spatial Filtering and Eigenvector Stability: Space-Time Models for German Unemployment Data By Roberto Patuelli; Daniel A. Griffith; Michael Tiefelsdorf; Peter Nijkamp
  10. Public Participation, Teacher Accountability, and School Outcomes:Findings from Baseline Surveys in Three Indian States By Pandey, Priyanka; Goya, Sangeeta; Sundararaman, Venkatesh
  11. Geographic Proximity and Firm-University Innovation Linkages: evidence from Great Britain By Laura Abramovsky; Helen Simpson
  12. Learning divides across the Italian regions: Some evidence from national and international surveys By Pasqualino Montanaro
  13. The Changing Role of Family Income and Ability in Determining Educational Achievement By Belley, Phillippe; Lochner, Lance
  14. Prices of residential property in Italy: constructing a new indicator By Salvatore Muzzicato; Roberto Sabbatini; Francesco Zollino
  15. To Leave or Not to Leave? A Regression Discontinuity Analysis of the Impact of Failing the High School Exit Exam By Dongshu Ou
  16. A Quantitative Analysis of Suburbanization and the Diffusion of the Automobile By Kopecky, Karen A.; Suen, Richard M. H.
  17. Metropolitan Regions and Product Innovation By Bjerke, Lina; Karlsson, Charlie
  18. The Limitations of Using School League Tables to Inform School Choice By George Leckie; Harvey Goldstein
  19. The Location of Japanese MNCs Affiliates: Agglomeration Spillovers and Firm Heterogeneity By Tomohiko Inui; Toshiyuki Matsuura; Sandra Pocet
  20. Global Banking and Local Markets By Pietro Alessandrini; Andrea Filippo Presbitero; Alberto Zazzaro
  21. Agglomeration and population aging in a two region model of exogenous growth By Theresa Grafeneder-Weissteiner; Klaus Prettner
  22. Community Participation in Public Schools: The Impact of Information Campaigns in Three Indian States By Pandey, Priyanka; Goya, Sangeeta; Sundararaman, Venkatesh
  23. The first global financial crisis of the 21st century: Introduction By Reinhart, Carmen
  24. Regulation and efficiency in Italian local public transport: the regional differences By Chiara Bentivogli; Roberto Cullino; Diana Marina Del Colle
  25. Contagion and the beginning of the crisis – pre-Lehman period By Júlia Király; Márton Nagy; Viktor E. Szabó
  26. Economic Geography: A Review of the Theoretical and Empirical Literature By Stephen J. Redding
  27. Financial Crises, Safety Nets and Regulation By Michele Fratianni
  28. Car Driving and Public Transit Use in Canadian Metropolitan Areas: Focus on Elderly and Role of Health and Social Network Factors By Ruben G. Mercado; K. Bruce Newbold
  29. An evaluation of the impact of funding and school specialisation on student performance using matching models By Steve Bradley; Jim Taylor; Giuseppe Migali
  30. Distribution of Local Government Revenue Sources and Citizen Well-Being By Amanor-Boadu, Vincent; Zereyesus, Yacob A.; Ross, Kara
  31. Effects of unobserved defaults on correlation between probability of default and loss given default on mortgage loans By Palmroos, Peter
  32. Diversity and Popularity in Social Networks By Yann Bramoullé; Brian W. Rogers
  33. The Consumption-Wealth Ratio, Real Estate Wealth, and the Japanese Stock Market By Kohei Aono; Tokuo Iwaisako
  34. The urban waste sector 11 years after the Ronchi decree By Paolo Chiades; Roberto Torrini
  35. Geographical Organization of Banking Systems and Innovation Diffusion By Pietro Alessandrini; Andrea Filippo Presbitero; Alberto Zazzaro

  1. By: Dennis Coates (Department of Economics, University of Maryland, Baltimore County); Victor Matheson (Department of Economics, College of the Holy Cross)
    Abstract: This paper examines the relationship between hosting mega-events such as the Super Bowl, Olympics, and World Cup and rental housing prices in host cities. If mega-events are amenities for local residents, then rental housing prices can serve as a proxy for estimating residents’ willingness to pay for these amenities. An analysis of rental prices in a panel of American cities from 1993-2005 fails to find a consistent impact of mega-events on rental prices. When controls are placed on the regression models to account for nationwide annual fluctuations in rental prices, mega-events generally exhibit little impact on rental prices in cities as a whole and are as likely to reduce rental prices as increase them. Somewhat stronger evidence exists, however, that mega-events affect rental prices outside of the center city in a fundamentally different manner than in the city core.
    Keywords: sports, stadiums, franchises, impact analysis, mega-event, housing
    JEL: L83 O18 R53
    Date: 2009–02
  2. By: Bunar, Nihad (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: The aim of this article is to describe and analyze how a number of multicultural urban schools in the Swedish cities of Stockholm and Malmö identify, understand and respond to the competition they have been exposed to on the emerging educational quasi-market. Based on interviews with school leaders and research on a wide range of secondary literature it is possible to identify three types of competitors: “white” schools, ordinary and religious/ethnic free schools and neighboring multicultural schools. The responding strategies vary from the logic of resignation and condemnation of parents for making “wrong” choices to a critical redefinition of pedagogical practices towards minority students and the equivocal alliances. I argue that the competition as an exclusive incentive for school development, as proposed by the neoliberal educationalists, only partly has proven its aptitude. If the education system is to maintain its transformative capacity then interventions are needed in the very basis of the structure of inequality that generates social differences; in the way the educational market is organized as well as; in the multicultural urban schools’ daily operations and communications with their local communities.
    Keywords: school choice; multicultural urban schools; competition; resignation
    JEL: I21
    Date: 2009–02–04
  3. By: Rangan Gupta (Department of Economics, University of Pretoria); Stephen M. Miller (Department of Economics, University of Nevada, Las Vegas)
    Abstract: We examine the time-series relationship between housing prices in Los Angeles, Las Vegas, and Phoenix. First, temporal Granger causality tests reveal that Los Angeles housing prices cause housing prices in Las Vegas (directly) and Phoenix (indirectly). In addition, Las Vegas housing prices cause housing prices in Phoenix. Los Angeles housing prices prove exogenous in a temporal sense and Phoenix housing prices do not cause prices in the other two markets. Second, we calculate out-of-sample forecasts in each market, using various vector autoregessive (VAR) and vector error-correction (VEC) models, as well as Bayesian, spatial, and causality versions of these models with various priors. Different specifications provide superior forecasts in the different cities. Finally, we consider the ability of theses time-series models to provide accurate out-of-sample predictions of turning points in housing prices that occurred in 2006:Q4. Recursive forecasts, where the sample is updated each quarter, provide reasonably good forecasts of turning points.
    Keywords: Ripple effect, Housing prices, Forecasting
    JEL: C32 R31
    Date: 2009–01
  4. By: Simon Burgess; Deborah Wilson; Adam Briggs; Anete Piebalga
    Abstract: In this paper we ask whether ethnic segregation in schools and in neighbourhoods has a causal effect on differential school attainment. We ask two related but different questions. First, we look at the test score gap between White and minority ethnic students, separately for Black Caribbean, Indian and Pakistani ethnic groups. Second, we consider the absolute performance of students in each of these minority ethnic groups across cities with varying levels of segregation. We show that, in strong contrast to similar studies in the US, the test score gap is largely unaffected by segregation for any of the three groups we study, and we find no evidence of a negative impact of ethnic segregation on absolute attainment levels.
    Keywords: ethnic segregation, schools
    JEL: I20
    Date: 2008–10
  5. By: Tomoya Mori (Institute of Economic Research, Kyoto University); Tony E. Smith (Department of Electrical and Systems Engineering, University of Pennsylvania)
    Abstract: An empirical regularity designated as the Number-Average Size (NAS) Rule was first identified for the case of Japan by Mori, Nishikimi and Smith [71], and has since been extended to the US by Hsu [50]. This rule asserts a negative log-linear relation between the number and average population size of cities where a given industry is present, i.e., of industry-choice cities. Hence one of its key features is to focus on the presence or absence of industries in each city, rather than the percentage distribution of industries across cities. But despite the strong empirical regularity of this rule, there still remains the statistical question of whether such location patterns could simply have occurred by chance. Indeed, chance occurrences of certain industry-choice cities may be quite likely if, for example, one includes cities where only a single industrial establishment happens to appear. An alternative approach to industry-choice cities is proposed in a companion paper, Mori and Smith [73], which is based on industrial clustering. More specifically, this approach utilizes the statistical procedure developed in Mori and Smith [72] to identify spatially explicit patterns of agglomeration for each industry. In this context, the desired industry-choice cities are taken to be those (economic) cities that constitute at least part of a significant spatial agglomeration for the industry. With respect to these cluster-based industry-choice cities, the central objective of the present paper is to reconfirm the persistence of the NAS Rule between the years 1981 and 2001, as first observed in Mori et al. [71]. Indeed the NAS Rule is in some ways stronger under this new definition of industry-choice cities in that none of outlier industries in the original analysis show any significant agglomeration, and hence can be excluded from the present analysis. A second objective is to show that there has been a substantial churning of the industry mix in individual cities between these two time periods, and hence that persistence of the NAS Rule is even more remarkable in this light. Finally, these persistence results are extended to both the Rank Size Rule and the Hierarchy Principle of Christaller [13], which were shown in Mori et al. [71] to be intimately connected to the NAS Rule.
    Date: 2009–02
  6. By: Paolo Rosato (University of Trieste); Anna Alberini (University of Maryland); Valentina Zanatta (Ca’ Foscari University of Venice); Margaretha Breil (Ca’ Foscari University of Venice, FEEM)
    Abstract: Infill redevelopment—the transformation of previously used urban sites—is generally regarded as an important way to attain environmental and urban sustainability goals. At many locales, however, such urban renewal, community development, and tax revenue goals must be reconciled with historic preservation objectives. Are economic incentives and regulatory relief useful tools for encouraging reuse of abandoned or underutilized urban sites with historic buildings? Answering this question is of key importance for many European cities and for older US cities, and has important implications in terms of urban sustainability and “smart growth” initiatives. We use conjoint choice experiments to explore the relative importance of economic incentives, regulatory relief, land use and property regime offerings at underutilized historical sites in Venice, Italy. We survey real estate developers and investors, and ask them to choose between pairs of hypothetical projects in three Venice locations, as well as between one of these projects and the alternative to do a development project elsewhere. Statistical models of the responses to these choice questions indicate that respondents are sensitive to the price of acquiring the land (and hence to any policies that influence prices), and especially sensitive to the property regime that would be granted to developers and investors and to the allowable land use. Contrary to expectations, our respondents were insensitive to tightening or relaxing the stringency of building conservation restrictions. Our findings sound a common theme with Howland (2004), who warns that redevelopment of previously used sites in Baltimore is impaired by obsolete land uses, zoning and infrastructure (but not by suspected or actual contamination). We conclude that the City should focus on offering land uses and property regimes that are more in tune with developer demand.
    Keywords: conjoint choice experiments, real estate developers, building conservation restrictions, redevelopment incentives, brownfields, infill redevelopment
    JEL: Z1 R52
    Date: 2009
  7. By: Paola Rossi (Banca d'Italia)
    Abstract: The paper reviews the supply of different mortgage instruments to Italian households by means of data obtained from a survey conducted in 2007 by the Bank of Italy over more than 300 banks. The results document significant innovations in housing finance in the last five years: a greater variety of mortgage products is supplied, along with a widespread easing of borrowing constraints facing households. The supply of new products is already routinely provided by large and medium banks, while it is spreading among local cooperative banks. It is significantly higher among banks which have adopted credit scoring techniques to select clients.
    Keywords: mortgages, financial innovation, credit scoring
    JEL: G21 D14 R21
    Date: 2008–06
  8. By: Khalid Sekkat (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.); Ariane Szafarz (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.)
    Abstract: Housing tenure decision combines financial, economic and socio-psychological factors. This paper considers the global premium associated to homeownership. On the one hand, homeownership is associated to private benefits of being a landlord. On the other hand, overinvestment in housing is harmful to diversification and distorts portfolio management. This trade-off, similar to the one associated to corporate private benefits of control, is the cornerstone of our theoretical model. Furthermore, the empirical implementation of the model exhibits a homeownership premium for houses in the Brussels Region reaching at least 9% of the housing price. The findings are robust to several methodological refinements.
    Keywords: Homeownership, tenure choice, housing, real-estate.
    JEL: R21 E21 G11
    Date: 2009–02
  9. By: Roberto Patuelli (Institute for Economic Research (IRE), University of Lugano, Switzerland; The Rimini Centre for Economic Analysis (RCEA), Italy); Daniel A. Griffith (School of Economic, Political and Policy Sciences, University of Texas at Dallas, USA); Michael Tiefelsdorf (School of Economic, Political and Policy Sciences, University of Texas at Dallas, USA); Peter Nijkamp (Department of Spatial Economics, VU University Amsterdam, The Netherlands)
    Abstract: Regions, independent of their geographic level of aggregation, are known to be interrelated partly due to their relative locations. Similar economic performance among regions can be attributed to proximity. Consequently, a proper understanding, and accounting, of spatial liaisons is needed in order to effectively forecast regional economic variables. Several spatial econometric techniques are available in the literature, which deal with the spatial autocorrelation in geographically-referenced data. The experiments carried out in this paper are concerned with the analysis of the spatial autocorrelation observed for unemployment rates in 439 NUTS-3 German districts. We employ a semi-parametric approach – spatial filtering – in order to uncover spatial patterns that are consistently significant over time. We first provide a brief overview of the spatial filtering method and illustrate the data set. Subsequently, we describe the empirical application carried out: that is, the spatial filtering analysis of regional unemployment rates in Germany. Furthermore, we exploit the resulting spatial filter as an explanatory variable in a panel modelling framework. Additional explanatory variables, such as average daily wages, are used in concurrence with the spatial filter. Our experiments show that the computed spatial filters account for most of the residual spatial autocorrelation in the data.
    Keywords: spatial filtering, eigenvectors, Germany, unemployment
    JEL: C33 E24 R12
    Date: 2009–01
  10. By: Pandey, Priyanka (The World Bank); Goya, Sangeeta (The World Bank); Sundararaman, Venkatesh (The World Bank)
    Abstract: This paper presents findings from baseline surveys on student learning achievement, teacher effort and community participation in three Indian states, Karnataka, Madhya Pradesh and Uttar Pradesh. Results indicate low teacher attendance and poor student learning. Parents and school committees are neither aware of their oversight roles nor participating in school management. However, there is substantial heterogeneity in outcomes across states. Karnataka has better student and teacher outcomes as well as higher levels of community awareness and participation than the other two states. We find substantial variation in teacher effort within schools, but most observable teacher characteristics are not associated with teacher effort. One reason for low teacher effort may be lack of accountability. Regression analysis suggests low rates of teacher attendance are only part of the problem of low student achievement. The gains in test scores associated with higher rates of attendance and engagement in teaching are small in the states of Madhya Pradesh and Uttar Pradesh, suggesting teachers themselves may not be effective. Ineffective teaching may result from lack of accountability as well as poor professional development of teachers. Further research is needed to examine not only issues of accountability but also professional development of teachers.
    Keywords: Academic Achievement; annual grants; average class size; basic competencies; basic education; basic services; blackboards; call; civil service; civil service teachers; class size; class sizes
    Date: 2008–11–01
  11. By: Laura Abramovsky; Helen Simpson
    Abstract: We investigate evidence for spatially mediated knowledge transfer from university research. We examine whether firms locate their R&D labs in proximity to university research departments, and whether those that do are more likely to co-operate with, or source information from universities in the course of their innovative activities. We find evidence that pharmaceutical firms locate their R&D facilities near to frontier chemistry research departments, consistent with accessing localised knowledge spillovers, but also linked to the presence of science parks. In industries such as chemicals and vehicles there is less evidence of immediate co-location with universities, but those innovative firms that do locate near to relevant research departments are more likely to engage with universities.
    Keywords: Innovation, Geography, spillovers, public research
    JEL: O3 R11 R13 I23
    Date: 2008–06
  12. By: Pasqualino Montanaro (Banca d'Italia)
    Abstract: Student performance has been tested by various surveys at the international level in recent years, using different aims and methodologies. On the basis of a comparative analysis, this paper aims to describe the differences in performance between Italian regions, subjects and ages or grades. All the surveys revealed significant gaps in performance across the Italian regions, with students in the South being far behind those in the North in all the subjects surveyed (reading, mathematics, science). This gap is particularly marked in technical (“istituti tecnici”) and vocational (“istituti professionali”) schools. Also the degree of disparity in scores is higher in the South. The geographical divides increase with grade: the gaps between North and South are more mitigated at the earlier grades and concentrated among students with a low parental background. Student achievement is strongly correlated with the socio-cultural and economic conditions of the family. However, this relationship seems to be sharper at the earlier grades, while it vanishes at the upper secondary school level, when the type-of-program and school effects have much greater impact. Finally, this paper also suggests that marks (or final grades) given internally by schools do not reflect the real levels of proficiency, and do not, therefore, distinguish good students from bad ones.
    Keywords: quality of education, international assessments, regional disparities
    JEL: I20 I21
    Date: 2008–06
  13. By: Belley, Phillippe; Lochner, Lance
    Abstract: This paper uses data from the 1979 and 1997 National Longitudinal Survey of Youth cohorts(NLSY79 and NLSY97) to estimate changes in the effects of ability and family income on educational attainment for youth in their late teens during the early 1980s and early 2000s. Cognitive ability plays an important role in determining educational outcomes for both NLSY cohorts, while family income plays little role in determining high school completion in either cohort. Most interestingly, we document a dramatic increase in the effects of family income on college attendance (particularly among the least able) from the NLSY79 to the NLSY97. Family income has also become a much more important determinant of college `quality' and hours/weeks worked during the academic year (the latter among the most able) in the NLSY97. Family income has little effect on college delay in either sample. To interpret our empirical findings on college attendance, we develop an educational choice model that incorporates both borrowing constraints and a `consumption' value of schooling – two of the most commonly invoked explanations for a positive family income - schooling relationship. Without borrowing constraints, the model cannot explain the rising effects of family income on college attendance in response to the sharply rising costs and returns to college experienced from the early 1980s to early 2000s: the incentives created by a 'consumption' value of schooling imply that income should have become less important over time (or even negatively related to attendance). Instead, the data are more broadly consistent with the hypothesis that more youth are borrowing constrained today than were in the early 1980s.
    Keywords: Ability, Achievement, Borrowing Constraints, College, Credit Constraints, Family Income, High School
    JEL: I21 I22 I28 J24
    Date: 2009–02–02
  14. By: Salvatore Muzzicato (Banca d'Italia); Roberto Sabbatini (Banca d'Italia); Francesco Zollino (Banca d'Italia)
    Abstract: We present a new indicator of house prices in Italy, with more extensive geographical and time coverage. The new indicator now makes it possible to analyze medium- and long-term trends with satisfactory representation of the Italian housing market. It also allows for timely updating, for prompt assessment of housing input both to the business cycle and to inflationary pressures. We offer a preliminary identification, based solely on graphical inspection, of four different property price cycles since the late 1960s; the latest began at the end of the 1990s and signaled a slowdown since 2006. Finally, we tentatively assess the effect of including transactions in dwellings in the Italian HICP basket according to the net acquisition approach, which apparently results in about a quarter point of additional inflation each year since 2000.
    Keywords: business cycle, housing market, property prices, inflation measures
    JEL: E31 E32 R21 R31
    Date: 2008–08
  15. By: Dongshu Ou
    Abstract: The high school exit exam (HSEE) is rapidly becoming a standardized assessment procedure foreducational accountability in the United States. I use a unique state-specific dataset to identify theeffect of failing the HSEE on the likelihood that a student drops out early based on a RegressionDiscontinuity design. It shows that students who barely fail the exam are more likely to exit thanthose who barely pass despite being offered retest opportunities. The discontinuity amounts to a largeproportion of the dropout probability of barely-failers, particularly for minority and low-incomestudents, suggesting that the potential benefit of raising educational standards might come at the costof increasing inequalities in the educational system.
    Keywords: high school exit exam, student dropout, regression discontinuity
    JEL: I21 I28 J24
    Date: 2009–01
  16. By: Kopecky, Karen A.; Suen, Richard M. H.
    Abstract: Suburbanization in the U.S. between 1910 and 1970 was concurrent with the rapid diffusion of the automobile. A circular city model is developed in order to access quantitatively the contribution of automobiles and rising incomes to suburbanization. The model incorporates a number of driving forces of suburbanization and car adoption, including falling automobile prices, rising real incomes, changing costs of traveling by car and with public transportation, and urban population growth. According to the model, 60 percent of postwar (1940-1970) suburbanization can be explained by these factors. Rising real incomes and falling automobile prices are shown to be the key drivers of suburbanization.
    Keywords: automobile; suburbanization; population density gradients; technological progress
    JEL: O11 N12 R12 E10
    Date: 2009–01–05
  17. By: Bjerke, Lina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: In smaller countries, the non-metropolitan regions are to a substantial degree linked together with the metropolitan regions through various networks. The national infrastructure and transport networks are often organised with the metropolitan region as the central hub. This creates a number of dependencies between the metropolitan region and the non-metropolitan regions in a small country. In this paper we focus on the role that metropolitan regions play for the renewal of the export base in the non-metropolitan regions in a small country. The analytical part can be divided into three main parts: i) the role of the Stockholm metropolitan region for the renewal of the export base in the rest of Sweden between 1997 and 2003; ii) which non-metropolitan regions gain renewal of their export base; and iii) what factors can explain the spatial distribution of these gains. The results show that distance has little to do with the potential success of an export products diffused from Stockholm. Instead, regional characteristics such as a large manufacturing sector, educational level, size of public and/or agricultural sector, and access to producer services have a larger influential potential.
    Keywords: metropolitan regions; exports; product innovation; networks; diffusion
    JEL: D85 F10 R10 R11 R12
    Date: 2009–01–28
  18. By: George Leckie; Harvey Goldstein
    Abstract: In England, so-called ‘league tables’ based upon examination results and test scores are published annually, ostensibly to inform parental choice of secondary schools. A crucial limitation of these tables is that the most recent published information is based on the current performance of a cohort of pupils who entered secondary schools several years earlier, whereas for choosing a school it is the future performance of the current cohort that is of interest. We show that there is substantial uncertainty in predicting such future performance and that incorporating this uncertainty leads to a situation where only a handful of schools’ future performances can be separated from both the overall mean and from one another with an acceptable degree of precision. This suggests that school league tables, including value-added ones, have very little to offer as guides to school choice.
    Keywords: Examination results, Institutional comparisons, League tables, Multilevel modelling, Performance indicators, Ranking, School choice, School effectiveness, Value-added
    JEL: I2
    Date: 2009–01
  19. By: Tomohiko Inui; Toshiyuki Matsuura; Sandra Pocet
    Abstract: This study examines the determinants of location choices of foreign affiliates by manufacturing Japanese firms, using a new data set that matches parents and their affiliates created over the years 1995-2003. The analysis is based on new economic geography theory and thus focuses on the effect of market and supplier access, as well as production and trade costs. Our interest is twofold. First, we investigate the importance of agglomeration and spillover effects on the firmsf decision through the use of proxies relating to the presence of Japanese affiliates in the host countries as well as to that of Japanese multinational firms at home. Overall, our results confirm the economic importance of information sharing and network effects both at home and in the host country beside traditional determinants pertaining to production and transaction costs and access and supply access. Second, we explore whether the effects of key determinants of locational choice vary substantially depending on the characteristics of the investing firm and the plant. We find less productive and smaller parents to be more likely to create an affiliate in China rather than in Western Europe or an OECD country. Moreover less productive firms appear to be more sensitive to distance-related costs and low institutional quality while being more responsive to the presence of Japanese firms and JETRO presence in the host country.
    Date: 2008–08
  20. By: Pietro Alessandrini (Universit… Politecnica delle Marche, Department of Economics, MoFiR); Andrea Filippo Presbitero (Universit… Politecnica delle Marche, Department of Economics, MoFiR); Alberto Zazzaro (Universit… Politecnica delle Marche, Department of Economics, MoFiR)
    Abstract: In the early 1990s, a widely-shared opinion among scholars and practitioners was that the importance of physical proximity between banks and borrowers would be doomed to drastically decrease over time and, put in extreme terms, the end of banking geography would become a real possibility. However, the empirical evidence show an unrelenting importance of local credit markets for small borrowers and local economic development. In the paper, we selectively review the literature on the real effects of bank consolidation and produce new evidence on the role of headquarter-to-branch functional distance on relationship lending.
    Keywords: Functinal distance, Global banking development, Local banking
    JEL: G21 G34 R12 R51
    Date: 2008–10
  21. By: Theresa Grafeneder-Weissteiner (Department of Economics, Vienna University of Economics & B.A.); Klaus Prettner (Vienna Institute of Demography, Austrian Academy of Sciences)
    Abstract: This article investigates the effects of introducing demography into the New Economic Geography. We generalize the constructed capital approach, which relies on infinite individual planning horizons, by introducing mortality. The resulting overlapping generation framework with heterogeneous individuals allows us to study the effects of aging on agglomeration processes by analytically identifying the level of trade costs that triggers catastrophic agglomeration. Interestingly, this threshold value is rather sensitive to changes in mortality. In particular, the introduction of a positive mortality rate makes the symmetric equilibrium more stable and therefore counteracts agglomeration tendencies. In sharp contrast to other New Economic Geography approaches, this implies that deeper integration is not necessarily associated with higher interregional inequality.
    JEL: C61 F12 F15
    Date: 2009–02
  22. By: Pandey, Priyanka (The World Bank); Goya, Sangeeta (The World Bank); Sundararaman, Venkatesh (The World Bank)
    Abstract: This study evaluates the impact of a community-based information campaign on school performance from a cluster randomized control trial. The campaign consisted of eight to nine public meetings in each of 340 treatment villages across three Indian states to disseminate information to the community about its state mandated roles and responsibilities in school management. The findings from the first follow-up 2-4 months after the campaign show that providing information through a structured campaign to communities had a positive impact in all three states. In two states there was a significant and positive impact on reading (14-27 percent) in one of the three grades tested; in the third state there was a significant impact on writing in one grade (15 percent) and on mathematics in the other grade tested (27 percent). The intervention is associated with improvement in teacher effort in two states. Some improvements occurred in the delivery of certain benefits entitled to students (stipend, uniform, and mid day meal) and in process variables such as community participation in each of the three states. Follow-up research needs to examine whether there is a systematic increase in learning when the impact is measured over a longer time period and whether a campaign sustained over a longer time is able to generate greater impact on school outcomes.
    Keywords: annual grants; attendance requirements; average treatment effect; basic education; blackboards; call; civil service; civil service teachers; classroom; Community Participation; competencies
    Date: 2008–11–01
  23. By: Reinhart, Carmen
    Abstract: Global financial markets are showing strains on a scale and scope not witnessed in the past three-quarters of a century. What started with elevated losses on U.S.-subprime mortgages has spread beyond the borders of the United States and the confines of the mortgage market. Many risk spreads have ballooned, liquidity in some market segments has dried up, and large complex financial institutions have admitted significant losses. Bank runs are no longer the subject exclusively of history.These events have challenged policymakers, and the responses have varied across region. The European Central Bank has injected reserves in unprecedented volumes. The Bank of England participated in the bail-out and, ultimately, the nationalization of a depository, Northern Rock. The U.S. Federal Reserve has introduced a variety of new facilities and extended its support beyond the depository sector. These events have also challenged economists to explain why the crisis developed, how it is unfolding, and what can be done. This volume compiles contributions by leading economists in VoxEU over the past year that attempt to answer these questions. We have grouped these contributions into three sections corresponding to those three critical questions.
    Keywords: financial crisis subprime mortgages monetary policy
    JEL: E0 F3
    Date: 2008–07
  24. By: Chiara Bentivogli (Banca d'Italia); Roberto Cullino (Banca d'Italia); Diana Marina Del Colle (Banca d'Italia)
    Abstract: This paper studies the effects on local public transport of the reform begun in the late nineties, using data from a recent Bank of Italy survey. There are still substantial differences across Italy’s regions, and the level of efficiency is far from the original aims of the reform. Although almost all Italian regional councils formally aligned the local legislation to the new national rules, actual compliance with the deeper logic of the reform has been limited so far. Competitive tendering for the selection of local service providers have seldom been used, while auctions have usually been won by local public incumbents. Albeit limited, efficiency gains are larger wherever the reform has been implemented more thoroughly and the variables influencing public transport demand more carefully taken into account. The share of the population that uses public transport has not increased even in major cities, and the low share of users (by international standards) has gone hand in hand with a negative overall evaluation of service quality. Fares are still much lower than unit costs.
    Keywords: Regulation, Local Public Transport
    JEL: H40 K23 L33 L43 L92
    Date: 2008–09
  25. By: Júlia Király (Magyar Nemzeti Bank); Márton Nagy (Magyar Nemzeti Bank); Viktor E. Szabó (CSAM)
    Abstract: This paper provides an overview of the antecedents, main drivers and spillover mechanisms of the turbulence emanating from the US sub-prime credit market in the summer of 2007. Its primary goal is to discuss the facts and interrelationships featured in the various analyses and statistics in a uniform, non-standard approach, to separate the ‘centre’ from the ‘periphery’ in terms of the impact of contagion, and to understand the causes and consequences in the pre-Lehman period. The paper concludes that the primary causes of the turmoil were a persistently low international interest rate environment and financial imbalances engendered by globalisation. The combination of accelerating house price inflation and rapid financial asset price rises due to sub-prime mortgage credit securitisations (the originate-and-distribute model) as well as the bursting of asset price bubbles collectively were responsible for the magnitude of the distress. The spillover from the turmoil, in turn, was the consequence of increased international financial integration. One innovation of the paper is a detailed analysis of the channel of contagion within financial integration: a confidence crisis, coupled with turbulence in the interbank markets, played a major role in the centre, while on the periphery the triggers were internal vulnerability, rises in risk premia and reduced access to credit.
    Keywords: sub-prime, turmoil, turbulence, mortgage credit.
    JEL: G20 G30
    Date: 2008
  26. By: Stephen J. Redding
    Abstract: This paper reviews the new economic geography literature, which accounts for the unevendistribution of economic activity across space in terms of a combination of love of varietypreferences, increasing returns to scale and transport costs. After outlining the canonical coreand periphery model, the paper examines the empirical evidence on three of its centralpredictions: the role of market access in deter- mining factor prices, the related home marketeffect in which demand has a more than proportionate effect on production, and the potentialexistence of multiple equilibria. In reviewing the evidence, we highlight issues ofmeasurement and identification, alternative potential explanations, and remaining areas forfurther research.
    Keywords: New economic geography, market access, home market effect, multiple equilibria
    JEL: F12 F14 O10
    Date: 2009–01
  27. By: Michele Fratianni (Indiana University, Kelly School of Business, Bloomington US, Univ. Plitecnica Marche - Dept of Economics, MoFiR)
    Abstract: The historical record shows that financial crises are far from being a rare a phenomenon; they occur often enough to be considered part of the workings of finance capitalism. While there is no single hypothesis that can best explain all crises, the implications of the credit boom-and-bust hypothesis, supplemented with asymmetric information, are consistent with the onset and development of many crises, including the current subprime crisis. Governments have reacted to crises by erecting a vast and growing safety net. In turn, to minimize their risk exposure, they have also put in place expansive systems of regulation and supervision. The unwinding of the current crisis will mark a big enlargement of the safety net and moral hazard, as well as a predictable flurry of policy proposals aimed at closing past regulatory loopholes. The maintained hypothesis is that regulatory and market failures are inexorably intertwined.
    Keywords: Bailout, Credit, Crisis, Money, Moral hazard, Regulation, Safety net, Subprime
    JEL: E58 F30 G21 N20
    Date: 2008–10
  28. By: Ruben G. Mercado; K. Bruce Newbold
    Abstract: Most studies analyzed the impact of decreased mobility on health and social network status, but only a few have provided evidence to understand how these latter factors could affect travel decisions or outcomes. This paper examined the linkage between people’s car driving and public transit use in Canada and their personal, health and social network characteristics, with a focus on the elderly population. The study exploits Statistics Canada’s General Social Survey (GSS-19), a unique survey with a nationally representative sample that contains questions on health, social network and transportation situation. Multilevel binary logistic regression models were estimated for the two travel modes. Results showed that regardless of age, poor health discourages both car driving and public transit use. Physical limitations that constrain mobility were found to decrease the likelihood of using public transit, a finding that was expected. However, a very interesting finding of this study is that even in the presence of physical or mental situations, mobility is still made possible through car driving. Relatedly, the study showed how important license possession and car ownership are to personal mobility and to be less dependent on other modes of transport including public transit. <p>Findings from this study have also underlined that family network could play an important role in influencing both mobility decisions and provision. Car driving was found to be more likely when a person lives alone versus with one or more people in the household, a tendency that is stronger among the elderly than the non-elderly group. However, in the event of voluntary driving cessation, suspension of driving license, or when other means of transport would not be a convenient or feasible option, support from family members or caregivers could be critical given that, and as this study finding showed, elderly people are likely to continue to strive to maintain their driving skills even with a health condition, rather than prepare to stop driving. The size of close family networks did not show a considerable influence, but the quality of these ties (i.e. being close to family) was found relevant in public transit use. Results underlined implications to road safety, the development of alternative transport strategies and strengthening social support to help maintain mobility necessary for health and quality of life in later years.
    Keywords: elderly, transport, mode choice, Canada, health, social network
    JEL: I19 J14 O20 R42 R48
    Date: 2009–01
  29. By: Steve Bradley; Jim Taylor; Giuseppe Migali
    Abstract: We evaluate the effectiveness of a resource-based policy on im- proving school quality measured in terms of pupils’ test scores. Using several data sets, we present a set of empirical tests to control for pupil’s prior attainment, policy-off policy-on, duration of the funding and subjects of specialisation. We apply matching methods to con- front issues of the choice of an appropriate control group and selection bias. After matching we find a positive and statistically significant policy effect on test score levels, but this is approximately 50% lower than our ‘naive’ estimates. Difference-in-differences estimates show a significant and positive effect on the change in test scores.
    Keywords: School Quality, Subject Specialisation, Matching models.
    Date: 2009
  30. By: Amanor-Boadu, Vincent; Zereyesus, Yacob A.; Ross, Kara
    Abstract: The paper aims at examining how sources and distribution of revenue at the local government level influence the economic well-being of citizens. The results of this study help to illuminate the effect of revenue sources on local government efforts on economic development and their capacity to influence the well-being of their citizens. We hypothesized that the distribution of local government revenue influenced the wealth status of its citizens. Three empirical proxy measures for citizen well-being were used in the estimation of three different panel data models. Results from the estimations suggest that local government revenue generated from its citizens (e.g., taxes, insurance and charges) have more influence on citizen well-being than non-citizen generated revenue sources (e.g., inter-governmental transfers). The analysis provides insights into how economic development policies may be conceived in local governments, especially small communities, to ensure sustained economic prosperity of its citizens.
    Keywords: Local government, revenues, tax, citizen well-being, Community/Rural/Urban Development,
    Date: 2009
  31. By: Palmroos, Peter (Bank of Finland Research)
    Abstract: This paper demonstrates how the observed correlation between probability of default and loss given default depends on the fact that defaults in which collateral provides 100% recovery are not observed. Creditors see only the defaults of mortgagors who suffer from a fall in collateral value to less than the remaining loan principal. Consequently, the default data available to creditors amounts to a mere truncated sample from the underlying population of defaults. Correlation estimates based on such truncated samples are biased and differ substantially from estimates derived from representative non-truncated samples. Moreover, the observed correlation between default probability and loss given default is sensitive to the truncation point, which may explain the differences in correlation estimates found in the literature. This may also explain why correlation estimates seem to be specific to cycle phase.
    Keywords: credit risks; mortgage loans; truncated distributions; sample selection; log-normal distribution
    JEL: C46 E32 G21 G28
    Date: 2009–01–21
  32. By: Yann Bramoullé; Brian W. Rogers
    Abstract: Homophily, the tendency of linked agents to have similar characteristics, is an important feature of social networks. We present a new model of network formation that allows the linking process to depend on individuals types and study the impact of such a bias on the network structure. Our main results fall into three categories: (i) we compare the distributions of intra- and inter-group links in terms of stochastic dominance, (ii) we show how, at the group level, homophily depends on the groups size and the details of the formation process, and (iii) we understand precisely the determinants of local homophily at the individual level. Especially, we find that popular individuals have more diverse networks. Our results are supported empirically in the AddHealth data looking at networks of social connections between boys and girls.
    Keywords: Social networks, Network formation, Homophily, Diversity
    JEL: A14 D85 I21
    Date: 2009
  33. By: Kohei Aono; Tokuo Iwaisako
    Abstract: The first contribution of this paper, following the works of Lettau and Ludvigson (2001a,b), is construction of the Japanese consumption-wealth ratio data series and to examine whether it explains Japanese stock market data. We find that the consumption- wealth ratio does not predict future stock returns, but it does help to explain the cross-section of Japanese stock returns. The second contribution of the paper is that we propose new consumption-wealth ratios in terms of which we more explicitly deal with household real estate wealth utilizing Japanese aggregate level data. Such ``real estate augmented'' consumption-wealth ratios work in a similar way, but perform bet- ter than, the consumption-wealth ratio calculated with only financial wealth data. While the scaled factor model with the consumption-wealth ratio proposed by Let- tau and Ludvigson performs relatively well with Japanese data, the book-to-market related anomaly pointed out by Jagannathan et al. (1998) remains strong.
    Keywords: consumption-wealth ratio; cointegration; cross-section of stock returns
    JEL: E21 G12
    Date: 2008–06
  34. By: Paolo Chiades (Banca d'Italia); Roberto Torrini (Banca d'Italia)
    Abstract: The modernization of the solid waste management sector prompted by the Ronchi decree of 1997 has proceeded slowly and is far from being completed. Regional differentials in the effectiveness of local policies and in the efficiency of waste collection and disposal firms are still large. Southern regions are lagging behind while northern regions on the whole have achieved the environmental objectives and modernized the waste management system. Local differences in service methods and quality have affected operating costs, which are higher on average in the South. Significant problems of economic regulation have yet to be solved. The self-sufficiency principle for the treatment and disposal phases and their high level of integration with the collection phase hamper competition and make it desirable for there to be regulation of the terms and condition for access to disposal facilities. Moreover, should the Government decide to adopt a vertically integrated legal monopoly model, with compulsory competitive tendering, some doubts could arise concerning the ability of local authorities to perform this task, given the complexity of the underlying contracts. Assigning responsibility for the economic regulation of the sector to a national authority could prove to be helpful.
    Keywords: Public utilities, Solid waste management, Economic regulation
    JEL: L32 L51 Q53
    Date: 2008–09
  35. By: Pietro Alessandrini (Universit… Politecnica delle Marche, Department of Economics, MoFiR); Andrea Filippo Presbitero (Universit… Politecnica delle Marche, Department of Economics, MoFiR); Alberto Zazzaro (Universit… Politecnica delle Marche, Department of Economics, MoFiR)
    Date: 2008–09

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