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on Urban and Real Estate Economics |
| By: | Katherine A. Kiel (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross); Christopher Sullivan (Boston College) |
| Abstract: | This paper estimates the public benefits to homeowners in cities with NFL franchises by examining housing prices rather than housing rents. In contrast to Carlino and Coulson (2004) we find that the presence of an NFL franchise has no effect on housing prices in a city. Furthermore, we also test whether the presence and size of the subsidy to the team affects values and find that higher subsidies for NFL stadium construction lead to lower house prices. This suggests that the benefits that homeowners receive from the presence of a team are negated by the increased tax burden due to the subsidies paid to the franchises. |
| Keywords: | impact analysis, stadiums, football, mega-event, tourism |
| JEL: | L83 O18 R53 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:1001&r=ure |
| By: | Eliana Balla; Robert E. Carpenter; Breck Robinson |
| Abstract: | How did investors holding assets backed by subprime residential mortgages react when Treasury Secretary Paulson announced the so-called "teaser freezer" plan to modify mortgages in December 2007? We apply event-study methodology to the ABX index, the only source of daily securities prices in subprime mortgage markets. Our results show that investors initially perceived that the Paulson Plan would improve conditions in subprime housing markets. Specifically, those investors who held the riskiest securities backed by subprime residential housing benefited the most from the Paulson Plan. These findings do not extend to the longer term, suggesting that any positive effects from Paulson Plan loan modifications were overwhelmed by the continued deterioration in housing markets. ; WP 10-06 replaces an earlier version listed as WP 09-7 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:10-06&r=ure |
| By: | Stephen Machin; Kjell Salvanes |
| Abstract: | Among policymakers, educators and economists there remains a strong, sometimes heated, debate on the extent to which good schools matter. This is seen, for instance, in the strong trend towards establishing accountability systems in education in many countries across the world. In this paper, in line with some recent studies, we value school quality using house prices. We, however, adopt a rather different approach to other work, using a policy experiment regarding pupils' choice to attend high schools to identify the relationship between house prices and school performance. We exploit a change in school choice policy that took place in Oslo county in 1997, where the school authorities opened up the possibility for every pupil to apply to any of the high schools in the county without having to live in the school's catchment area (the rule that applied before 1997). Our estimates show evidence that parents substantially value better performing schools since the sensitivity of housing valuations to school performance falls significantly by over 50% following the school choice reform. |
| Keywords: | School choice, school performance, house prices, |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:ceedps:0113&r=ure |
| By: | Stephen Calabrese (Carnegie Mellon University); Dennis Epple (Carnegie Mellon University) |
| Abstract: | We study the political economy of state limitations on the taxing powers of local governments, investigating the effects of such restriction on housing markets, community composition, and types of taxes and expenditures undertaken by local governments. We characterize equilibrium when voters choose values of multiple policy (tax and expenditure) instruments, finding that tax limitations have very substantial effects on housing prices and the composition of communities. Political support for tax limits comes from suburban voters and from a subset of central-city voters. Support for tax limits come even from residents of communities that are not constrained by the limits. |
| Keywords: | Tax limits, redistribution, public goods, property tax, income tax, head tax |
| JEL: | D72 D78 H30 H42 H72 H73 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/4/doc2010-14&r=ure |
| By: | Sandra Eickmeier (Deutsche Bundesbank, Economic Research Center, Wilhelm-Epstein-Straße 14, 60431 Frankfurt am Main, Germany.); Boris Hofmann (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper uses a factor-augmented vector autoregressive model (FAVAR) estimated on U.S. data in order to analyze monetary transmission via private sector balance sheets, credit risk spreads and asset markets in an integrated setup and to explore the role of monetary policy in the three imbalances that were observed prior to the global financial crisis: high house price inflation, strong private debt growth and low credit risk spreads. The results suggest that (i) monetary policy shocks have a highly significant and persistent effect on house prices, real estate wealth and private sector debt as well as a strong short-lived effect on risk spreads in the money and mortgage markets; (ii) monetary policy shocks have contributed discernibly, but at a late stage to the unsustainable developments in house and credit markets that were observable between 2001 and 2006; (iii) financial shocks have influenced the path of policy rates prior to the crisis, and the feedback effects of financial shocks via lower policy rates on property and credit markets are found to have probably been considerable. JEL Classification: E52, E44, C3, E3, E43. |
| Keywords: | Monetary policy, asset prices, housing, private sector balance sheets, financial crisis, factor model. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20101178&r=ure |
| By: | Jordi Jofre-Monseny (University of Barcelona & IEB) |
| Abstract: | Several theoretical papers that examine tax competition with agglomeration effects have stressed the possibility that the governments of jurisdictions in which economic activity is concentrated may tax firms more heavily (taxable agglomeration rents). In this paper, we examine the tax rate setting decisions taken with regard to the Spanish municipal business tax (Impuesto sobre Actividades Económicas). The analysis, carried out with a sample of 2,772 municipalities, focuses on the effect that urbanization economies, localization economies and the market potential of municipalities have on their business tax rates. High urbanization economies and high localization economies are found to increase the business tax rate. Although the evidence is weaker, the results also indicate that municipalities with better access to demand (of consumers) set higher tax rates |
| Keywords: | Local taxes, agglomeration economies, tax competition |
| JEL: | H3 H7 R |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/4/doc2010-15&r=ure |
| By: | Pedro Martins |
| Keywords: | Teacher incentives, pupil attainment |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:ceedps:0112&r=ure |
| By: | Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020); Alain Pirotte (ERMES (CNRS) and TEPP (CNRS), Université Panthéon-Assas Paris II, France INRETS-DEST, National Institute of Research on Transports and Safety, France) |
| Abstract: | This paper focuses on inference based on the usual panel data estimators of a one-way error component regression model when the true specification is a spatial error component model. Among the estimators considered, are pooled OLS, random and fixed effects, maximum likelihood under normality, etc. The spatial effects capture the cross-section dependence, and the usual panel data estimators ignore this dependence. Two popular forms of spatial autocorrelation are considered, namely, spatial auto-regressive random effects (SAR-RE) and spatial moving average random effects (SMA-RE). We show that when the spatial coefficients are large, test of hypothesis based on the usual panel data estimators that ignore spatial dependence can lead to misleading inference. |
| Keywords: | Panel data; Hausman test; Random effect; Spatial autocorrelation; Maximum Likelihood. |
| JEL: | C33 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:123&r=ure |
| By: | Eric BROUILLAT (GREThA UMR CNRS 5113); Yannick LUNG (GREThA UMR CNRS 5113) |
| Abstract: | The paper identifies 5 stylized facts to characterize the geographic distribution of innovative activities in France (mainly its high concentration in the region Ile-de-France). It proposes an original model of regional growth in a knowledge-based economy considering the density of RD activities and the connectivity to the other regions. The model is computed and run into 2 different configurations: equidistribution and overconcentration. The simulations’ results lead to the conclusion that the equidistribution configuration is Pareto-efficient (higher growth rate of the national economy, lower income spatial inequalities) compared to the overconcentration. Policy implications are discussed in conclusion. |
| Keywords: | France; Geography of innovation; Knowledge spillover; Regional growth; Simulation |
| JEL: | O33 R11 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2010-11&r=ure |
| By: | Kristopher Gerardi; Lorenz Goette; Stephan Meier |
| Abstract: | The exact cause of the massive defaults and foreclosures in the U.S. subprime mortgage market is still unclear. This paper investigates whether a particular aspect of borrowers' financial literacy—their numerical ability—may have played a role. We measure several aspects of financial literacy and cognitive ability in a survey of subprime mortgage borrowers who took out mortgages in 2006 or 2007 and match these measures to objective data on mortgage characteristics and repayment performance. We find a large and statistically significant negative correlation between numerical ability and various measures of delinquency and default. Foreclosure starts are approximately two-thirds lower in the group with the highest measured level of numerical ability compared with the group with the lowest measured level. The result is robust to controlling for a broad set of sociodemographic variables and not driven by other aspects of cognitive ability or the characteristics of the mortgage contracts. Our results raise the possibility that limitations in certain aspects of financial literacy played an important role in the subprime mortgage crisis. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2010-10&r=ure |
| By: | Burke, Sandy C.; Edelman, Mark |
| Abstract: | This study highlights the experiences of people who have recently moved to or from 19 selected nonmetropolitan counties of Iowa. This report examines housing factors as reasons for moving. The purpose is to increase understanding about why people move so community leaders and citizens can develop actionable strategies for attracting and retaining population. |
| Keywords: | population; migration; net migration; housing |
| Date: | 2009–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:31440&r=ure |
| By: | Joseph B. Nichols; Stephen D. Oliner; Michael R. Mulhall |
| Abstract: | We use a national dataset of land sales to construct land price indexes for 23 MSAs in the United States and for the aggregate of those MSAs. We construct the price indexes by estimating hedonic regressions with a large sample of land transactions dating back to the mid-1990s. The regressions feature a flexible method of controlling for spatial price patterns within an MSA. The resulting price indexes show a dramatic increase in both commercial and residential land prices over several years prior to their peak in 2006-07 and a steep descent since then. These fluctuations in land prices are considerably larger than those in well-known indexes of commercial real estate and house prices. Because those existing indexes price a bundle of land and structures, this comparison implies that land prices have been more volatile than structures prices over this period. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2010-16&r=ure |
| By: | Neffke, F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University); Henning, M. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | This article studies path dependent regional structural change using a quantitative framework. Based on an inter-industry skill-relatedness indicator, the degree to which local skill-bases exist and force local economies onto a path-dependent development trajectory is studied. The main question is into which local industries new plants enter, while distinguishing between the plants of entrepreneurs and firms. Using a dataset on Swedish individuals and municipalities, it is found that entrepreneurs tend to reinforce established local industrial specializations, whereas new plants of already existing firms do less so. Moreover, outside actors deepen local economy’s core specialization more than do local actors. |
| Keywords: | structural change;region;path dependence;entrepreneurship;skill-relatedness;human capital |
| Date: | 2010–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:1765019207&r=ure |
| By: | Martijn I. Dröes; Wolter H.J. Hassink |
| Abstract: | The uncertainty with regard to the sale price of a home may be one of the most risky aspects of owning a home. This uncertainty can be measured by the volatility of house price returns. This paper investigates the extent and development of this volatility across market segments, time, and municipalities in the Netherlands. The empirical results are based on the administrative transaction prices of all existing homes sold in the Netherlands over the period 1995-2008. The results in this paper indicate that the uncertainty in house prices can be substantial. Nevertheless, types of houses that are sold frequently have the lowest return volatility. In addition, the risk per unit of return is especially high during an economic bust. Moreover, (the volatility of) returns show a clear core-periphery pattern. Finally, a homeowner who moves has a cross-location hedging opportunity against sale price risk if he buys a new home at another location. Instead, a homeowner who moves to a rental house may only have been intertemporally hedged against price changes. This paper investigates the quality of both hedging opportunities. |
| Keywords: | sale price risk, house price risk, house price volatility, hedge |
| JEL: | E22 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:1010&r=ure |
| By: | Polasek, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Schwarzbauer, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Sellner, Richard (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria) |
| Abstract: | This paper develops a regional production function model for Swiss cantons that incorporates human capital together with spatial effects. Within a spatial panel framework we find that controlling for time effects the spatial spillover effect becomes insignificant. Our results are sensitive with respect to the human capital proxy. We find that the share of academics in the workforce is the main component of human capital driving productivity growth in Swiss cantons. This is in line with findings of previous studies suggesting that mostly highly skilled workers matter for productivity growth in technologically advanced economies. |
| Keywords: | Production function with human capital, spatial panel, regional growth |
| JEL: | C21 C23 I22 J23 R11 R12 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:250&r=ure |
| By: | Sigrid Roehrs (University of Zurich); David Stadelmann (University of Fribourg) |
| Abstract: | Mobility may undermine local income redistribution in federal systems,because rich taxpayers can evade high taxes by moving to low tax jurisdictions. By analyzing a model of local income redistribution with endogenous voting, income heterogeneity and an exogenously given degree of mobility we focus explicitly on the link between redistribution and mobility. Our findings suggest a nonlinear relationship between redistribution and mobility: high and low degrees of mobility permit major income redistribution as income sorting is absent, while a medium degree of mobility leads to high differences in tax rates between jurisdictions and thus to income sorting and less redistribution. |
| Keywords: | Redistribution, political economy, locational equilibrium, taxes, tax havens |
| JEL: | H23 H71 H73 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/4/doc2010-4&r=ure |
| By: | Edward Miguel (Center of Evaluation for Global Action, University of California, Berkeley); Joan Hamory (Centre of Evaluation for Global Action, University of California) |
| Abstract: | This study exploits a new longitudinal dataset to examine selective migration among 1,500 Kenyan youth originally living in rural areas. We examine whether migration rates are related to individual “ability”, broadly defined to include cognitive aptitude as well as health, and then use these estimates to determine how much of the urban-rural wage gap in Kenya is due to selection versus actual productivity differences. Whereas previous empirical work has focused on schooling attainment as a proxy for cognitive ability, we employ an arguably preferable measure, a pre-migration primary school academic test score. Pre-migration randomized assignment to a deworming treatment program provides variation in health status. We find a positive relationship between both measures of human capital (cognitive ability and deworming) and subsequent migration, though only the former is robust at standard statistical significance levels. Specifically, an increase of two standard deviations in academic test score increases the likelihood of rural-urban migration by 17%. Accounting for migration selection due to both cognitive ability and schooling attainment does not explain more than a small fraction of the sizeable urban-rural wage gap in Kenya, suggesting that productivity differences across sectors remain large. |
| Keywords: | Migration, selection, human capital, ability, urban-rural wage gap, productivity |
| JEL: | O1 O15 C3 C33 F22 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:hdr:papers:hdrp-2009-45&r=ure |
| By: | Toke S. Aidt (University of Cambridge); Jayasri Dutta (University of Birmingham) |
| Abstract: | We study the efficient allocation of spending and taxation authority in a federation in which federal politicians are exposed to electoral uncertainty. We show that centralization may, but need not, result in a loss of electoral accountability. We identify an important asymmetry between positive and negative externalities and show that centralization may not be efficient in economies with positive externalities even when regions are identical and centralization does not entail a loss of accountability. We also show that decentralization can only Pareto dominate centralization in economies with negative externalities. |
| Keywords: | Fiscal federalism, local public goods, externalities, performance voting,turnout uncertainty, electoral accountability |
| JEL: | D72 D78 H41 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/4/doc2010-11&r=ure |
| By: | Bruno De Borger (University of Antwerp); Wilfried Pauwels (University of Antwerp) |
| Abstract: | The purpose of this paper is to study toll and investment competition along a serial transport corridor competition allowing for partial cooperation between regional governments. Partial cooperation is modeled as a Nash bargaining problem with endogenous disagreement points. We show that the bargaining approach to partial cooperation implies lower tolls and higher quality and capacity investment than fully non-cooperative behavior. Moreover, under bargaining, strategic behavior at the investment stage induces regions to offer lower quality and invest less in capacity as compared to full cooperation. Finally, Nash bargaining partially resolves the problem of welfare losses due to toll and capacity competition pointed out in the recent literature. |
| Keywords: | Nash bargaining, tax competition, congestion pricing |
| JEL: | H71 H77 R48 R42 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/4/doc2010-1&r=ure |
| By: | Mark Smith (Reserve Bank of New Zealand) |
| Abstract: | Over much of the past 40 years, cycles of house price and consumption growth have been closely synchronised in New Zealand. Three main hypotheses for this co-movement have been proposed in the literature. Firstly, an increase in house prices increase homeowners wealth, which increases their desired level of expenditure. Secondly, rising house prices may also facilitate additional consumption by reducing credit constraints to homeowners. Finally, house prices and consumption have been influenced by common factors, including expectations of future income growth. This paper uses repeated cross sectional analysis of household level data over the 1984 to 2007 period to ascertain which of these hypotheses is more valid for the New Zealand case. A positive correlation between real house prices and real household expenditures is evident for most tenure and age groupings. However, findings from this paper suggest that the house price and consumption relation is predominantly driven by wealth effects. |
| JEL: | C23 D10 R20 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:nzb:nzbdps:2010/01&r=ure |
| By: | Flip Klijn (Harvard Business School); Joana Pais (Technical University of Lisbon; UECE–Research Unit on Complexity and Economics); Marc Vorsatz (Fundacion de Estudios de Economia Aplicada (FEDEA)) |
| Abstract: | We experimentally investigate in the laboratory two prominent mechanisms that are employed in school choice programs to assign students to public schools. We study how individual behavior is influenced by preference intensities and risk aversion. Our main results show that (a) the Gale-Shapley mechanism is more robust to changes in cardinal preferences than the Boston mechanism independently of whether individuals can submit a complete or only a restricted ranking of the schools and (b) subjects with a higher degree of risk aversion are more likely to play "safer" strategies under the Gale-Shapley but not under the Boston mechanism. Both results have important implications for the efficiency and the stability of the mechanisms. |
| Keywords: | school choice, risk aversion, preference intensities, laboratory experiment, Gale-Shapley mechanism, Boston mechanism, efficiency, stability, constrained choice |
| JEL: | C78 C91 C92 D78 I20 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:10-093&r=ure |
| By: | Dustmann, Christian (University College London); Fabbri, Francesca (University of Munich); Preston, Ian (University College London) |
| Abstract: | In this paper, we analyse the association between spatial concentration of ethnic minorities, and racial harassment. Ethnic concentration relates to racial harassment through at least three channels: hostility in attitudes of majority individuals that find expression in harassment behaviour, the probability of minority individuals meeting majority individuals, and the cost of expressing hostility aggressively. Harassment can thus not simply be modeled as a stronger form of hostility. Using unique data for Britain, we show that, in area of higher local ethnic concentration, experience of harassment is lower, even though hostility on the side of the majority population is not. |
| Keywords: | economics of minorities, interracial relations |
| JEL: | J15 R23 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4885&r=ure |
| By: | Christopher-Johannes Schild (University of Marburg); Matthias Wrede (University of Marburg and CESifo) |
| Abstract: | Regional cultural identity increases trust and facilitates interaction between native citizens ("social capital"). At the same time, it also affects non-native's migration decisions and their utility as it excludes non-native mobile workers from economic interaction within the region. Policies to increase regional cultural identity thus exert an externality that is negative for a basic model where future local productivity is exogenous and random, leading to the result of oversupply of regional culture under decentralization. If migration affects productivity, the basic result of oversupply may be reversed, depending on production technology and the government's objective function. Some positive and normative conclusions for cultural policy are derived. |
| Keywords: | Decentralization, Labor Mobility, Cultural Policy, Cultural Identity, Social Capital |
| JEL: | H72 H73 J61 Z13 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201016&r=ure |
| By: | Robert S. Chirinko (University of Illinois at Chicago); Daniel J. Wilson (Federal Reserve Bank of San Francisco) |
| Abstract: | The standard model of strategic tax competition assumes that government policymakers are perfectly benevolent. We depart from this assumption by allowing policymakers to be influenced by the rent-seeking behavior of businesses. Campaign contributions may affect tax competition and enhance or retard the mobility of capital across jurisdictions. Based on a panel of 48 U.S. states and unique data on business campaign contributions, we find that contributions have a significant direct effect on tax policy, the economic value of a $1 business campaign contribution is nearly $4, the slope of the tax reaction function is negative, and the empirical results are sensitive to state effects. |
| Keywords: | Campaign contributions, business taxation, state tax competition |
| JEL: | H71 H73 H25 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/4/doc2010-2&r=ure |
| By: | Jaromír Beneš; Kirdan Lees (Reserve Bank of New Zealand) |
| Abstract: | We investigate the implications of the existence of multi-period fixed-rate loans for the behaviour of a small open economy exposed to finance shocks and housing boom-and-bust cycles. To this end, we propose a simple and analytically tractable method of incorporating multi-period debt into an otherwise standard consumer problem. Our simulations show that multi-period fixed-rate contracts can help insulate the economy from the adverse effects of particular shocks. This insulating mechanism is particularly effective for countries with high debt positions exposed to foreign exchange fluctuations, or countries operating a fixed exchange rate regime. |
| JEL: | E5 E44 E52 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:nzb:nzbdps:2010/03&r=ure |
| By: | Kevin Lang |
| Abstract: | From the perspective of someone who is both an economist and a former school board member, this paper assesses the use of test-score data by policy-makers and academic researchers. The absence of interval scales often makes the interpretation of test-scores and the indicators derived from them highly problematic. Economists have both been deficient in alerting policy-makers to the inherent difficulties in using such data and cavalier in their own treatment of them. Test score data often merely confirm what administrators already know. Nevertheless they can be useful if used as a trigger for further investigation, and, in particular, as a lever for encouraging principals and other administrators to act on information about teacher (or school) quality. |
| Keywords: | NCLB; No Child Left Behind; value-added-measurement in education; accountability; high-stakes testing |
| JEL: | I21 I28 H75 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:143&r=ure |
| By: | Petra Posedel (Graduate School of Economics and Business, Zagreb); Maruska Vizek (The Institute of Economics, Zagreb) |
| Abstract: | We use a nonlinear framework in order to explore house price determinants and their adjustment properties. We test for threshold cointegration using a sample of four developed countries (the United States, the United Kingdom, Spain, and Ireland) and four transition countries (Bulgaria, Croatia, the Czech Republic, and Estonia). All eight countries experienced an intensive increase in house prices during the 1990s and the first half of this decade. In addition to testing for nonlinearities, we focus on house price determinants in these four transition countries of Central and Eastern Europe. An asymmetric house price adjustment is present in all transition countries and the U.S., while no threshold effects are detected in developed European countries. In a threshold error correction framework, house prices are aligned with the fundamentals; but house price persistence coupled with a slow and asymmetric house price adjustment process might have facilitated the house price boom in transition countries and the U.S. |
| Keywords: | house prices, threshold cointegration, asymmetric adjustment, transition |
| JEL: | C22 R21 R31 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iez:wpaper:1001&r=ure |
| By: | Steven B. Kamin; Laurie Pounder DeMarco |
| Abstract: | The global financial crisis clearly started with problems in the U.S. subprime sector and spread across the world from there. But was the direct exposure of foreigners to the U.S. financial system a key driver of the crisis, or did other factors account for its rapid contagion across the world? To answer this question, we assessed whether countries that held large amounts of U.S. mortgage-backed securities (MBS) and were highly dependent on dollar funding experienced a greater degree of financial distress during the crisis. We found little evidence of such "direct contagion" from the United States to abroad. Although CDS spreads generally rose higher and bank stocks generally fell lower in countries with more exposure to U.S. MBS and greater dollar funding needs, these correlations were not robust, and they fail to explain the lion's share of the deterioration in asset prices that took place during the crisis. Accordingly, channels of "indirect contagion" may have played a more important role in the global spread of the crisis: a generalized run on global financial institutions, given the opacity of their balance sheets; excessive dependence on short-term funding; vicious cycles of mark-to-market losses driving fire sales of MBS; the realization that financial firms around the world were pursuing similar (flawed) business models; and global swings in risk aversion. The U.S. subprime crisis, rather than being a fundamental driver of the global crisis, may have been merely a trigger for a global bank run and for disillusionment with a risky business model that already had spread around the world. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:994&r=ure |
| By: | Juan González Alegre (Universidad Pablo de Olavide) |
| Abstract: | Most of the Structural Actions are designed as an incentive to increase public investment in less-developed areas. However, we suspect that the efficiency of the policy is related to the level of fiscal autonomy of the subsidized government. In this paper we construct a paned data model in order to estimate the role of fiscal federalism on the effectiveness of the EU Structural Actions in enhancing public investment. We use data from the seventeen Spanish regions for the period 1993-2007. The estimation is run upon three alternative strategies: firstly we break the sample according to the level of fiscal autonomy of the units; secondly, we insert an interaction term capturing the join effect of both variables, fiscal decentralization and EU Structural Actions; finally, we estimate a simultaneous equation model in which public investment and the EU transfers are decided simultaneously. Results unambiguously support the hypothesis that the effectiveness of the Structural Funds decreases with larger decentralization. Our results suggest also that this could be due to the fact that regions find it more difficult to be eligible for additional EUSF as they gain fiscal autonomy. The general conclusions include the recommendation that the future design of the European Cohesion policy should take into account the heterogeneity of Fiscal Federalism across the Member States in order to the get the most out of it. |
| Keywords: | fiscal federalism, intergovernmental grants, European Union, regional policy, panel data, simultaneous equations for panels |
| JEL: | H72 H77 C33 C23 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/4/doc2010-6&r=ure |
| By: | Massimiliano Piacenza (Department of Economics and Public Finance "G. Prato", University of Torino); Gilberto Turati (Department of Economics and Public Finance "G. Prato", University of Torino) |
| Abstract: | This paper aims at assessing the impact of fiscal discipline towards sub-national governments on citizens’ well-being. We model fiscal discipline by considering the expectations of deficit bailouts by Central Government, and focus on a particular dimension of well-being, namely health outcomes at the regional level. We study then how bailout expectations affect the expenditure for health care policies carried out by Regional Governments: in the presence of opportunistic behaviours by local governments – induced by soft budget constraints – bailout expectations should affect only spending inefficiency, and should not have any real effects on citizens’ health. To investigate this issue, we model the efficient use of public resources for health care delivery as an input requirement frontier, and assess the effects of bailout expectations on both the structural component of health spending and its deviations from the best practice. The evidence from a sample of 15 Italian Regions observed from 1993 to 2006 highlights that bailout expectations do not significantly influence the position of the frontier, thus do not affect citizens’ health. However, they appear to exert a remarkable impact on excess spending. |
| Keywords: | Intergovernmental relationships, Soft budget constraint, Bailout expectations, Health care policy, Spending efficiency |
| JEL: | H51 H77 I12 I18 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpaper:12&r=ure |
| By: | Burke, Sandy C.; Edelman, Mark |
| Abstract: | This study highlights the experiences of people who have recently moved to or from six southwest counties in Iowa. This report summarizes details about reasons for moving, community satisfaction, sources of information, age, education, housing, and income of the respondents. The purpose is to increase understanding about why people move so community leaders and citizens can develop actionable strategies for attracting and retaining population. |
| Keywords: | population; migration; labor migration; net migration |
| Date: | 2009–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:31433&r=ure |
| By: | Bruno Merlevede; Koen Schoors; Mariana Spatareanu |
| Abstract: | We analyze how foreign presence affects local ?firm productivity. We relax the standard implicit assumption that spillovers are immediate and permanent. We ?find that spillovers are dynamic. Foreign entry of a majority foreign owned fi?rm has a short run negative effect on the productivity of local competitors, which is more than offset by a longer run positive effect. The entry of minority foreign owned fi?rms has an immediate, though short-lived, positive effect on local suppliers. The entry of majority foreign owned fi?rms also improves the productivity of local suppliers, but the effect materializes later and lasts longer. |
| Keywords: | FDI, spillovers, dynamics, timing |
| JEL: | F2 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:run:wpaper:2010-001&r=ure |
| By: | John M. Nunley; Mark F. Owens; R. Stephen Howard |
| Abstract: | We conduct a field experiment to determine whether racial discrimination can be identified in product-market auctions and, if so, under what conditions it is more likely to emerge. We compare the prices paid for perfectly substitutable products sold on eBay between sellers with distinctively white and distinctively black names. Price differences arise in favor of sellers whose names match the expected racial characteristics of buyers. However, the price differences only emerge in markets characterized by low levels of competition, and eBay's feedback system, which reduces asymmetric information between buyer and seller, is successful at mitigating these differences. The results suggest, rather strongly, that competitive forces and market mechanisms designed to reduce informational asymmetries both can aid in promoting non-discriminatory outcomes in markets. |
| Keywords: | Racial Discrimination; Statistical Discrimination; Asymmetric Information; Competition; eBay |
| JEL: | C93 J15 D82 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:mts:wpaper:201007&r=ure |
| By: | Kenji Fujiwara (Kwansei Gakuin University) |
| Abstract: | This paper formulates a reciprocal market model of international duopoly with network externalities to reconsider welfare effects of reductions in transport costs and tariffs. Depending on the magnitude of network externalities, we show two possibilities. One of them, which emerges under strong network externalities, illustrates that freer trade unambiguously improves welfare for any initial level of trade barriers. This finding provides an affirmative evaluation of freer trade. |
| Keywords: | network externality, duopoly, transport costs, tariffs |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:53&r=ure |
| By: | Gustafsson, Björn (Göteborg University); Österberg, Torun (University of Gothenburg) |
| Abstract: | This paper takes a fresh look at child poverty at the neighbourhood level in the three metropolitan regions of Sweden using unique data for 1990, 1996 and 2002. We find that the number of neighbourhoods with high child poverty rates is much larger in 2002 than in 1990, but also that most poor children in the three regions live outside poor neighbourhoods. A disproportionally large fraction of children with backgrounds from low- and middle-income countries live in poor neighbourhoods. Regression analysis shows that high neighbourhood poverty rates are mainly due to parents’ low employment and to low parental education. |
| Keywords: | child poverty, neighbourhood, Sweden |
| JEL: | I32 J13 R23 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4881&r=ure |