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on Urban and Real Estate Economics |
| By: | Lenka Gregorová (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | Local expenditures in neighbouring municipalities can be spatially interdependent due to spillovers, cooperation effects, competition effects or mimicking. In this paper, we aim to test the spatial interdependence of local public expenditures using data on 205 Czech municipalities. We found positive spatial interdependence in expenditures on housing and culture and negative spatial interdependence for expenditures on industry and infrastructure and environmental protection. Additionally, we observed that political characteristics affect the size of spending; left-wing parties tend to increase expenditures on culture and decrease expenditures on industry and infrastructure; and higher party fragmentation decreases overall capital expenditures and expenditures on housing. |
| Keywords: | spillovers, fiscal competition, local public finance |
| JEL: | C72 H77 R12 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2009_12&r=ure |
| By: | Berliant, Marcus; Watanabe, Hiroki |
| Abstract: | We criticize the theories used to explain the size distribution of cities. They take an empirical fact and work backward to obtain assumptions on primitives. The induced theoretical assumptions on consumer behavior, particularly about their inability to insure against the city-level productivity shocks in the model, are untenable. With either self insurance or insurance markets, and either an arbitrarily small cost of moving or the assumption that consumers do not perfectly observe the shocks to firms' technologies, the agents will never move. Even without these frictions, our analysis yields another equilibrium with insurance where consumers never move. Thus, insurance is a substitute for movement. We propose an alternative class of models, involving extreme risk against which consumers will not insure. Instead, they will move, generating a Fréchet distribution of city sizes that is empirically competitive with other models. |
| Keywords: | Zipf's Law; Gibrat's Law; Size Distribution of Cities; Extreme Value Theory |
| JEL: | R12 |
| Date: | 2009–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13671&r=ure |
| By: | Erdem Basci; Ismail Saglam |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:tob:wpaper:0901&r=ure |
| By: | Claudio Gontijo (Face-UFMG) |
| Abstract: | This article analyses the roots of the financial crisis caused by the devaluation of the subprime mortgage derivatives, triggered by the reversion of the last cycle of residential constructions in the USA. It describes the process of securitization of the mortgage titles and the boost of the subprime sector, showing that the crisis became systemic due to (i) the insurance net that was set up in order to ensure a degree of investment to the securitized mortgages; (ii) the economic agents’ high degree of leverage; (ii) the dense speculative relations established with other instruments of the hedge market; (iv) the liberalization and deregulation of the financial markets. Finally, it discusses, although on a preliminary approach, whether the ongoing crisis can aptly be described as a “Minsky moment”. |
| Keywords: | financial markets |
| JEL: | E44 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td342&r=ure |
| By: | Reinhart, Carmen |
| Abstract: | I appreciate the opportunity to discuss this paper by Ricardo Caballero, Emmanuel Farhi, and Pierre-Olivier Gourinchas. This paper was described to me as a mix of theoretical and empirical work that attempts a hat trick: explaining the joint combination of global imbalances, the deflation of the housing price bubble that created the subprime crisis, and volatile oil prices. |
| Keywords: | oil prices volatility saving global imbalances |
| JEL: | E2 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13679&r=ure |
| By: | Takatoshi Tabuchi (Faculty of Economics, University of Tokyo) |
| Abstract: | Dynamics of retail firms in marketplaces is analyzed, assuming that firms compete within a marketplace as well as between marketplaces under monopolistically competition. The number, size, and location of marketplaces or edge cities are analytically obtained, which is hardly done in the previous literature. Furthermore, extending the model to a two-dimensional space, Christaller-Losch system of hexagonal market areas is analytically derived. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2009cf607&r=ure |
| By: | Lall, Somik V.; Timmins, Christopher; Yu, Shouyue |
| Abstract: | How can policies improve the welfare of people in economically lagging regions of countries? Should policies help jobs follow people? Or should they enable people to follow jobs? In most countries, market forces have encouraged the geographic concentration of people and economic activities - policies that try to offset these forces to encourage balanced economic growth have largely been unsuccessful. However, policies that help people get closer to economic density have improved individual welfare. In this paper, the authors examine the migration decisions of working-age Brazilians and find that the pull of higher wages in leading regions has a strong influence on the decision to migrate. However, many people are also"pushed"to migrate, starved of access to basic public services such as clean water and sanitation in their hometowns. Although migration is welfare-improving for these individuals, the economy may end up worse off as these migrants are more likely to add to congestion costs in cities than to contribute to agglomeration benefits. Encouraging human capital formation can stimulate labor mobility for economic gain; and improving access to and quality of basic services in lagging regions will directly improve welfare as well as reduce the type of migration motivated by the search for life-supporting basic services. |
| Keywords: | Transport Economics Policy&Planning,Population Policies,Banks&Banking Reform,Labor Policies,Access to Finance |
| Date: | 2009–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4843&r=ure |
| By: | Margarita Rubio (Banco de España) |
| Abstract: | The aim of this paper is twofold. First, I study how the proportion of fixed and variable-rate mortgages in an economy can affect the way shocks are propagated. Second, I analyze optimal implementable simple monetary policy rules and the welfare implications of this proportion. I develop and solve a New Keynesian dynamic stochastic general equilibrium model that features a housing market and a group of constrained individuals who need housing collateral to obtain loans. A given proportion of constrained households borrows at a variable rate, while the rest borrows at a fixed rate. The model predicts that in an economy with mostly variable-rate mortgages, an exogenous interest rate shock has larger effects on borrowers than in a fixed-rate economy. Aggregate effects are also larger for the variable-rate economy. For plausible parametrizations, differences are muted by wealth effects on labor supply and by the presence of savers. More persistent shocks, such as inflation target and technology shocks, cause larger aggregate differences. From a normative perspective I find that, in the presence of collateral constraints, the optimal Taylor rule is less aggressive against inflation than in the standard sticky-price model. Furthermore, for given monetary policy, a high proportion of fixed-rate mortgages is welfare enhancing. |
| Keywords: | Fixed/Variable-rate mortgages, monetary policy, housing market, collateral constraint |
| JEL: | E32 E44 E52 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0903&r=ure |
| By: | Wouter den Haan; Vincent Sterk |
| Abstract: | In this paper, we analyze the business cycle behavior of home mortgages and consumer credit and investigate whether the observed changes. and in particular observed changes in the comovement between the loan variables and real activity. are likely to be caused by changes in financial markets. We find that there may have been such a role for changes in markets for consumer credit, but even before the financial crisis hit, the data do not support the hypothesis that changes in mortgage markets reduced the impact of economic shocks on real activity. |
| JEL: | C10 E44 F15 F36 F37 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:204&r=ure |
| By: | Ghazala Azmat; Nagore Iriberri |
| Abstract: | We study the effect of providing relative performance feedback information on performance under piece-rate incentives. A natural experiment that took place in a high school offers an unusual opportunity to test this effect in a real-effort setting. For one year only, students received information that allowed them to know whether they were above (below) the class average as well as the distance from this average. We exploit a rich panel data set and find that the provision of this information led to an increase of 5% in students’ grades. Moreover, the effect was significant for the whole distribution. However, once the information was removed the effect disappeared. To rule out the concern that the effect may be driven by teachers within the school, we verify our results using national level exams (externally graded) for the same students, and the effect remains. |
| Keywords: | School performance, relative performance, piece-rate, feedback, natural experiment, social comparison, self-perception, competitive preferences |
| JEL: | I21 M52 C30 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1148&r=ure |
| By: | André van Stel; Mickey Folkeringa; Sierdjan Koster |
| Abstract: | We investigate the impact of start-up rates on a measure of competition among incumbent firms called mobility. Interactions between new and incumbent firms play an important role in the process of economic growth. While recent literature suggests that competition among incumbent firms is caused by (lagged) start-up rates, this relation has not yet been tested using a direct measure of competition among incumbent firms. In the present paper we estimate a regression model, at the region-sector level for the Netherlands, where the mobility rate is explained by (lagged) startup rates and control variables. Using data for 40 regions and five sectors over the period 1993-2006 we find that the impact of start-ups on mobility varies by sector. In particular, we find a strong positive relation between start-up rates and mobility rates for industry sectors (manufacturing and construction) but a much smaller effect for services sectors. These results suggest there are differences in the types of entry between sectors and in the roles start-ups play in different sectors. |
| Date: | 2009–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h200905&r=ure |
| By: | Reinhart, Carmen; Felton, Andrew |
| Abstract: | Sadly, our previous compilation of VoxEU columns, ‘The First Global Financial Crisis of the 21st Century,’ was not the last word on the subject. Since the publication of that volume in June 2008, the global crisis has both deepened and widened. The industrial world has seen the largest bank failures in its history, and many governments have intervened in the financial system in a manner that would once have been unthinkable. Wall Street and the City of London, along with most other financial centers, have been changed forever. Many storied financial firms have failed or been merged away, and others are left with significant ownership positions of national governments. The economy of Iceland has suffered a collapse just as sizable as any of Latin America or East Asia during the last few decades. Vox authors have kept up their prolific pace of commenting on unfolding events. In keeping with the mission of Vox, columnists both applied existing economic research to understand events and pointed the way to new avenues for research. These articles, it has to be understood, were written ‘in the moment’ over the past six months and so incorporate to a varying extend the history we have lived through. To help place individual contributions within this historical sequence, an appendix updates the timeline of events from our June publication through December. |
| Keywords: | financial crisis monetary policy bank failures contagion |
| JEL: | F3 E5 E6 |
| Date: | 2009–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13607&r=ure |
| By: | Jürgen, Göbel |
| Abstract: | In certain respects, it seems expedient to describe a government as a homogeneous and self-interested entity, called ’Leviathan’. To optimize fiscal constraints, we need to know how powerful a Leviathan really is. This paper presents a new approach to measure the power of Leviathans. This new approach defines fiscal fiscal power in terms of income deviation. It supposes that there exists a positive connection between fiscal power and intergovernmental grants. To examine the approach empirically, we use data on U.S. counties in the period 1999-2002. Equations of fiscal power are estimated on the full and on stratified samples. Overall, the results support the new approach. Nonetheless, further research on the highly significant control variables would be needed to derive recommendations for more efficient fiscal constraints. |
| Keywords: | Leviathan; measurement; income deviation; grants |
| JEL: | H11 H72 |
| Date: | 2009–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13663&r=ure |
| By: | Michel Aglietta; Ludovic Moreau; Adrian Roche |
| Abstract: | The 2007/2008 global credit crisis was born out of opaque securitization transactions. Introducing structured products risk estimation techniques shows how the most basic investment analysis could not be done without detailed and updated knowledge on the assets of the pool. Access to such details was crucial for investors to perform an autonomous valuation, the lack of which led to a pervading acceptance of ratings at face value. The crisis brought numerous delusions to naïve users of these privately issued opinions. Coming back to the central role that investor played during the previous speculative episode and introducing a theoretical discussion on the dynamics of market finance, it is shown that trusting market discipline and due diligence was bound to end up being misguiding. Given that unprecedented rating volatility brought a share of the blame game to rating firms, strategies that would aim at securing an informed use of ratings are finally outlined. |
| Keywords: | financial crisis, credit risk, rating agencies |
| JEL: | G11 G12 G29 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2009-3&r=ure |
| By: | Alexander Haupt (University of Plymouth and CESifo); Tim Krieger (University of Paderborn) |
| Abstract: | In this paper, we analyse the role of mobility in tax and subsidy competition. Our primary result is that increasing ‘relocation’ mobility of firms leads to increasing ‘net’ tax revenues under fairly weak conditions. While enhanced relocation mobility intensifies tax competition, it weakens subsidy competition. The resulting fall in the governments’ subsidy payments overcompensates the decline in tax revenues, leading to a rise in net tax revenues. We derive this conclusion in a model in which two governments are first engaged in subsidy competition and thereafter in tax competition, and firms locate and potentially relocate in response to the two political choices. |
| Keywords: | Tax competition, subsidy competition, capital and firm mobility,foreign direct investment |
| JEL: | H71 H87 F21 H25 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:21&r=ure |