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on Urban and Real Estate Economics |
| By: | Benito Arruñada; Amnon Lehavi |
| Abstract: | This paper breaks new ground toward contractual and institutional innovation in models of homeownership, equity building, and mortgage enforcement. Inspired by recent developments in the affordable housing sector and in other types of public financing schemes, this paper suggests extending institutional and financial strategies such as timeand place-based division of property rights, conditional subsidies, and credit mediation to alleviate the systemic risks of mortgage foreclosure. Alongside a for-profit shared equity scheme that would be led by local governments, we also outline a private market shared equity model, one of bootstrapping home buying with purchase options. |
| Keywords: | property, homeownership, mortgage, finance, local government, subsidy, tax. |
| JEL: | D23 E62 H31 H71 K11 R31 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1217&r=ure |
| By: | Makoto Nakajima |
| Abstract: | This paper quantitatively investigates the optimal capital income taxation in the general equilibrium overlapping generations model, which incorporates characteristics of housing and the U.S. preferential tax treatment for owner-occupied housing. Housing tax policy is found to have a substantial effect on how capital income should be taxed. Given the U.S. preferential tax treatment for owner-occupied housing, the optimal capital income tax rate is close to zero, contrary to the high optimal capital income tax rate implied by models without housing. A lower capital income tax rate implies a narrowed tax wedge between housing and non-housing capital, which indirectly nullifies the subsidies (taxes) for homeowners (renters) and corrects the over-investment to housing. |
| Keywords: | Taxation ; Housing |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:10-11&r=ure |
| By: | Carl Gaigné (INRA, UMR1302, 4 Allée Bobierre, F-35000 Rennes, France); Stéphane Riou (UMR CNRS 5824 GATE Lyon-Saint-Etienne, Université de Saint-Etienne; Department of Econometrics and Tinbergen Institute, Free University, The Netherlands); Jacques-François Thisse (CORE, Université Catholique de Louvain (Belgium), Université du Luxembourg, and CEPR) |
| Abstract: | There is a large consensus among international institutions and national governments to favor urban-containment policies - the compact city - as a way to reduce the ecological footprint of cities. This approach overlooks the following basic trade-off : the concentration of activities decreases the ecological footprint stemming from commodity shipping between cities, but it increases emissions of greenhouse gas by inducing longer worktrips. What matters for the ecological footprint of cities is the mix between urban density and the global pattern of activities. As expected, when both the intercity and intraurban distributions of activities are given, a higher urban density makes cities more environmentally friendly and raises global welfare. However, once we account for the fact that cities may be either monocentric or polycentric as well as for the relocation of activities between cities, the relationship between density and the ecological footprints appears to be much more involved. Indeed, because changes in urban density affect land rents and wages, firms are incited to relocate, thus leading to new commuting patterns. We show policies that favor the decentralization of jobs in big cities may reduce global pollution and improve global welfare. |
| Keywords: | greenhouse gas, commuting costs, transport costs, cities; urban-containment policy |
| JEL: | D61 F12 Q54 Q58 R12 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1001&r=ure |
| By: | Stefano Corradin; José L. Fillat; Carles Vergara-Alert |
| Abstract: | We study a model of portfolio choice, in which housing prices are predictable and adjustment costs must be paid when there is a housing transaction. We show that two state variables affect the agent's decisions: (i) his wealth-house ratio; and (ii) the time-varying expected growth rate of housing prices. The agent buys (sells) his housing assets only when the wealth-house ratio reaches an optimal upper (lower) boundary. These boundaries are time-varying and depend on the expected growth rate of housing prices. Finally, we use household level data from the PSID and SIPP surveys to test and support the main implications of the model, as well as portfolio rules and holdings of housing asset. |
| Keywords: | Housing - Prices |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbqu:qau10-2&r=ure |
| By: | Olof Åslund (IFAU & Uppsala University); Per-Anders Edin (IFAU & Uppsala University); Peter Fredriksson (Stockholm University); Hans Grönqvist (SOFI, Stockholm University) |
| Abstract: | We examine to what extent immigrant school performance is affected by the characteristics of the neighborhoods that they grow up in. We address this issue using a refugee placement policy which provides exogenous variation in the initial place of residence in Sweden. The main result is that school performance is increasing in the number of highly educated adults sharing the subject’s ethnicity. A standard deviation increase in the fraction of high-educated in the assigned neighborhood raises compulsory school GPA by 0.9 percentile ranks. This magnitude corresponds to a tenth of the performance gap between refugee immigrant and native-born children. |
| Keywords: | Peer effects, ethnic enclaves, immigration, school performance |
| JEL: | J15 I20 Z13 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/5/doc2010-19&r=ure |
| By: | Berliant, Marcus; Yu, Chia-Ming |
| Abstract: | Canonical analysis of the classical general equilibrium model demonstrates the existence of an open and dense subset of standard economies that possess fully-revealing rational expectations equilibria. This paper shows that the analogous result is not true in urban economies under reasonable modifications for this field. An open subset of economies where none of the modified rational expectations equilibria fully reveals private information is found. There are two important pieces. First, there can be information about a location known by a consumer who does not live in that location in equilibrium, and thus the equilibrium rent does not reflect this information. Second, if a consumer's utility depends only on information about their (endogenous) location of residence, perturbations of utility naturally do not incorporate information about other locations conditional on their location of residence. Existence of equilibrium is proved. Space can prevent housing prices from transmitting information from informed to uninformed households, resulting in an inefficient outcome. |
| Keywords: | Urban Economics; General Equilibrium; Private Information; Rational Expectations |
| JEL: | R13 D82 D51 |
| Date: | 2010–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22562&r=ure |
| By: | Putkuri, Hanna (Bank of Finland Research) |
| Abstract: | This paper examines how housing loan rates are determined, using data on new housing loans in Finland. Finland is an example of a bank-based euro area country where the majority of loans are granted at variable rates. The paper extends the earlier interest rate pass-through literature by taking explicitly into account the changing of lending rate margins. A standard lending rate pass-through model, empirically specified as an error-correction model, is extended with variables predicted by a theoretical bank interest rate setting model. The results show that, since the mid-1990s, short-run movements in housing loan rates can be largely explained by changes in money market rates, and that long-run developments have also been affected by less volatile cost and credit risk factors. The roles of loan competition and capital regulation are also considered, but these effects are more difficult to identify empirically. |
| Keywords: | housing loan; lending rate; lending rate margin; error-correction model |
| JEL: | E43 G21 |
| Date: | 2010–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2010_010&r=ure |
| By: | F.R. Liedorp; L. Medema; M. Koetter; R.H. Koning; I. van Lelyveld |
| Abstract: | We test if interconnectedness in the interbank market is a channel through which banks affect each others riskiness. The evidence is based on quarterly bilateral exposures of all banks active in the Dutch interbank market between 1998 and 2008. A spatial lag model, borrowed from regional science, is used to test if z -scores of other banks affect individual bank’s z -scores through the network of the interbank market. Larger dependence on interbank borrowing and lending increases bank risk. But only interbank funding exposures to other banks in the system exhibit significant spill-over coefficients. Spatial lags for lending are insignificant while borrowing from other banks reduces individual bank risk if neighbors are stable, too. Vice versa, stability shocks at interbank counterparties in the system spill over through the liability side of banks balance sheets. |
| Keywords: | Interbank market; bank risk; spatial lag model |
| JEL: | G21 L1 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:248&r=ure |
| By: | James Albrecht (Georgetown University); Pieter A. Gautier (VU University Amsterdam); Susan Vroman (Georgetown University) |
| Abstract: | In this paper, we present a directed search model of the housing market. The pricing mechanism we analyze reflects the way houses are bought and sold in the United States. Our model is consistent with the observation that houses are sometimes sold above, sometimes below and sometimes at the asking price. We consider two versions of our model. In the first version, all sellers have the same reservation value. In the second version, there are two seller types, and type is private information. For both versions, we characterize the equilibrium of the game played by buyers and sellers, and we prove efficiency. Our model offers a new way to look at the housing market from a search-theoretic perspective. In addition, we contribute to the directed search literature by considering a model in which the asking price (i) entails only limited commitment and (ii) has the potential to signal seller type. |
| Keywords: | Directed Search; Housing |
| JEL: | D83 R31 |
| Date: | 2010–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20100005&r=ure |
| By: | Tristan-Pierre Maury (EDHEC - EDHEC Business School - Edhec); Fabien Tripier (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272) |
| Abstract: | When an household needs to change its home, a new house must be bought and the old one must be sold. In order to complete these two transactions, the household can adopt either a sequential or a simultaneous search strategy. In sequential strategies, it first buys (or sells) and only after tries to sell (or buy), to avoid either being homeless or holding two houses, respectively. In the simultaneous strategy, the household tries to buy and sell simultaneously. If the household adopts the simultaneous strategy, it can reduce its search costs, but becomes exposed to the risk of becoming a homeless renter or the owner of two houses. The literature generally considers only the sequential search strategy. However, we show in this article that the simultaneous strategy is (i) generally welfare improving for households, (ii) sometimes the sole equilibrium strategy, and (iii) at the origin of price dispersion on the housing market. |
| Date: | 2010–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00480484_v1&r=ure |
| By: | Ronel Elul; Nicholas S. Souleles; Souphala Chomsisengphet; Dennis; Glennon; Robert Hunt |
| Abstract: | This paper assesses the relative importance of two key drivers of mortgage default: negative equity and illiquidity. To do so, the authors combine loan-level mortgage data with detailed credit bureau information about the borrower's broader balance sheet. This gives them a direct way to measure illiquid borrowers: those with high credit card utilization rates. The authors find that both negative equity and illiquidity are significantly associated with mortgage default, with comparably sized marginal effects. Moreover, these two factors interact with each other: The effect of illiquidity on default generally increases with high combined loan-to-value ratios (CLTV), though it is significant even for low CLTV. County-level unemployment shocks are also associated with higher default risk (though less so than high utilization) and strongly interact with CLTV. In addition, having a second mortgage implies significantly higher default risk, particularly for borrowers who have a first-mortgage LTV approaching 100 percent. |
| Keywords: | Mortgages ; Default (Finance) |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:10-13&r=ure |
| By: | Bettina Büttner (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Stephan Thomsen (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | This paper analyzes the impact of shortening the duration of secondary schooling on the accumulation of human capital. In 2003, an educational policy reform was enacted in Saxony-Anhalt, a German state, providing a natural experimental setting. The thirteenth year of schooling was eliminated for those students currently attending the ninth grade. Tenth grade students were unaffected. The academic curriculum remained almost unaltered. Primary data collected from the double cohort of 2007 Abitur graduates reveals signficantly negative effects for both genders in mathematics. Only females were negatively effected in English and the results obtained in German literature were statistically insignificant. |
| Keywords: | student performance, school duration, learning intensity, natural experiment |
| JEL: | I21 J18 C21 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:100008&r=ure |
| By: | Walentin, Karl (Research Department, Central Bank of Sweden); Sellin, Peter (Monetary Policy Department, Central Bank of Sweden) |
| Abstract: | In this paper our main aim is to quantify the role that housing collateral plays for the monetary transmission mechanism. Furthermore, we want to explore the implications of the increase in household indebtedness, and specifically the loan-to-value ratio, in the last two decades. We set up a two sector DSGE model with production of goods and housing. Households can only borrow by using their houses as collateral. The structure of the model closely follows Iacoviello and Neri (2010). To be able to do quantitatively relevant exercises we estimate the model using Bayesian methods on Swedish data for 1986q1-2008q3. We quantify the reinforcement of the monetary transmission mechanism that housing used as collateral implies in the presence of nominal loan contracts. This mechanism functions through the effects of the interest rate on house prices as well as on inflation and thereby the real value of nominal debt. This component of the monetary transmission mechanism becomes stronger the higher the loan-to-value ratio is. A change in the maximum loan-to-value ratio from 85% to 95%, all else being equal, implies that the effect of a monetary policy shock is increased by 4% for inflation, 8% for GDP and 24% for consumption. We conclude that to properly understand the monetary transmission mechanism and its changing nature over time, we need to take into account the effects of housing related collateral constraints. |
| Keywords: | House prices; residential investment; monetary policy; monetary transmis- sion mechanism; collateral constraints; Bayesian estimation |
| JEL: | E21 E32 E44 E52 R21 R31 |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0239&r=ure |
| By: | Ricardo M. Sousa (Universidade do Minho - NIPE) |
| Abstract: | In this work, I analyze the response of consumption and asset returns to unexpected wealth variation. Using data at quarterly frequency for the U.S. and the U.K., I show that: (i) while housing wealth shocks have a very persistent effect on consumption, financial wealth shocks only have transitory effects; and (ii) similarly, unexpected variation in housing wealth delivers a reasonably persistent response of real returns while financial wealth shocks have just a temporary effect. |
| Keywords: | financial wealth, housing wealth, consumption, asset returns. |
| JEL: | E21 E44 D12 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:14/2010&r=ure |
| By: | Elbert Dijkgraaf (Erasmus University Rotterdam); Raymond H.J.M. Gradus (VU University Amsterdam, and Erasmus University Rotterdam); Matthijs de Jong (Erasmus University Rotterdam) |
| Abstract: | Ample evidence is available for the effect of competition on educational quality as only a few countries allow large scale competition. In the Netherlands free parental choice is present since the beginning of the 20th century, which can be characterized as a full voucher program with 100% funding. Based on panel data for the Netherlands we show that there is a relation between competition and educational outcomes in secondary education, but that it is negative and small. This effect is larger for small and medium sized schools and for schools which do not have a Protestant or Catholic denomination. |
| Keywords: | Competition; Private Schools; Scale; Quality; Secondary Education |
| JEL: | H70 I20 |
| Date: | 2009–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20090100&r=ure |
| By: | Alan Mallach |
| Abstract: | Reviews and assesses the existing literature on the potential economic impact of introducing casino gambling into a community or region, first by discussing the casinos? effect on economic activity and growth within a community or region, and then by exploring their effect on government revenues. Also discusses the literature related to the economic impact of social costs widely associated with gambling, such as increases in crime, bankruptcy, and problem gambling. |
| Keywords: | Gambling industry |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpcd:10-01&r=ure |
| By: | Volodymyr Bilotkach (University of California-Irvine); Yuriy Gorodnichenko (University of California-Berkeley); Oleksandr Talavera (School of Economics, University of East Anglia) |
| Abstract: | We analyze the impact of a freeway interchange collapse in the San Francisco Bay area on the difference in airfare quotes for travel into the area's main airports. The incident temporarily made Oakland airport a less attractive choice for traveling to San Francisco. Using a sample of fare quotes collected on-line we find that fares for travel into Oakland were 6-7 percent lower while the interchange was out of service. Our results imply that the demand-side shock was well absorbed by the supply side, and adjustment of prices and return to the status quo once the shock vanished was swift. |
| Keywords: | natural experiment, price stability, demand shocks, congestion |
| JEL: | D40 L10 |
| Date: | 2010–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:uea:aepppr:2010_04&r=ure |
| By: | Núria Rodríquez-Planas |
| Abstract: | This paper is the first to use a randomized trial in the US to analyze the short- and long-term educational and employment impacts of an afterschool program that offered disadvantaged high-school youth: mentoring, educational services, and financial rewards with the objective to improve high-school graduation and postsecondary schooling enrollment. The short-term hefty beneficial average impacts quickly faded away. Heterogeneity matters. While encouraging results are found for younger youth, and when the program is implemented in relatively small communities of 9th graders; detrimental long- lived outcomes are found for males, and when case managers are partially compensated by incentive payments and students receive more regular reminders of incentives. |
| Keywords: | short-, medium- and long-term effects, after-school programs, intrinsic and extrinsic motivation, and educational and employment outcomes. |
| JEL: | C93 I21 I22 I28 J24 |
| Date: | 2010–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:821.10&r=ure |
| By: | Sam Bucovetsky (Department of Economics, York University); Amihai Glazer (Department of Economics, University of California-Irvine) |
| Abstract: | Suppose that, other things equal, an individual's utility increases with the fraction of residents in his community who are rich. Suppose further that the rich are more willing to pay for a local public than are the poor Then the rich may over-provide a local public good, with the aim of dissuading the poor from moving into a community inhabited by the rich. We describe conditions under which the equilibrium will have mixed or homogeneous communities, and conditions under which the rich or the poor benefit from central government rules which constrain local decision making. |
| Keywords: | Status; Migration |
| JEL: | H73 R13 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:091006&r=ure |
| By: | Atila Abdulkadiroğlu; Yeon-Koo Che; Yosuke Yasuda |
| Date: | 2010–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:661465000000000062&r=ure |
| By: | Cameron A. Shelton (Robert Day School of Economics and Finance, Claremont McKenna College) |
| Abstract: | This paper reviews the literature on the effects of fiscal decentralization on the magnitude and composition of expenditures. There is consistent evidence that vertical imbalance leads to larger general government. The evidence on the effects of balanced decentralization is mixed, depending a great deal on the sample and the fiscal federal margin in question. Theory and case studies suggest such heterogeneity in the comparative effectiveness of fiscal decentralization is due to heterogeneity in the institutional environment by which citizens gather information, register preferences, and monitor officials. Unfortunately, quantifying this institutional heterogeneity remains elusive. More troubling, there is sufficient distance between recorded expenditure and the quality of service delivery that using the former to assess the efficacy of fiscal decentralization is surely inadequate. We then review those studies which progress beyond measures of expenditures to measures of outcomes. Here too, the results of fiscal decentralization vary a great deal and the determinants of that variation remain elusive. There is thus room for clever work highlighting the conditions delivering effective monitoring thereby enabling successful fiscal decentralization. |
| Keywords: | Fiscal Federalism, fiscal decentralization, decentralization |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper1008&r=ure |
| By: | Aiello, Francesco; Cardamone, Paola |
| Abstract: | This paper assesses the impact of R&D efforts on production in the North and Centre-South of Italy by using a panel of 1203 manufacturing firms over the period 1998-2003. The estimations are based on a nonlinear translog production function augmented by a measure of R&D spillovers. This measure combines the geographical distance between firms, the technological similarity within each pair of firms and the technical efficiency of each firm. The estimation method takes into account the endogeneity of regressors and the potential sample selection issue regarding firms’ decision to invest in R&D. Results show that the external stock of technology exerts a higher impact in the Centre-South of Italy. Finally, it emerges that R&D capital and R&D spillovers are substitutes for Northern firms and complements for Centre-Southern firms. |
| Keywords: | R&D spillovers; Italian economic divide; translog production function; technical efficiency |
| JEL: | C23 O33 L29 |
| Date: | 2010–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22572&r=ure |
| By: | Guha-Khasnobis, Basudeb; James, K. S. |
| Abstract: | South Asia has the highest rate of child malnutrition in the world, despite rapid economic growth compared to other regions such as sub-Saharan Africa. Known as the ‘South Asian enigma’ this feature is partly attributed to the low status of women in South Asian societies. This paper examines this tenet in the context of India, with particular emphasis on possible differences between rural and urban scenarios. The empirical evidence reveals some important differences, which are relevant for policies relating to women’s empowerment against a backdrop of rapid urbanization. |
| Keywords: | urbanization, women, malnutrition, slums, India |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2010-37&r=ure |
| By: | Raouf BOUCEKKINE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics and Core, Univerity of Glasgow, Department of Economics); Carmen CAMACHO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS); Giorgio FABBRI (Dipartimento di Studi Economici S.Vinci, Universita di Napoli Parthenope,Naples and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | We study the optimal dynamics of an AK economy where population is uniformly distributed along the unit circle. Locations only differ in initial capital endowments. Despite constant returns to capital, we prove that transition dynamics will set in. In particular, we prove that the spatio-temporal dynamics, induced by the willingness of the planner to give the same (detrended) consumption over space and time, lead to convergence in the level of capital across locations in the long-run. |
| Keywords: | Economic Growth, Inequality, Spatial Dynamics, Convergence |
| JEL: | C60 O11 R11 R12 R13 |
| Date: | 2010–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2010009&r=ure |
| By: | Carvalho, João; Cruz, Nuno; Cunha Marques, Rui |
| Abstract: | The Portuguese government recently launched a new program to refurbish the secondary schools all over the country. Along with this process more responsibilities are being transferred to local governments concerning pre and elementary schools. This is seen as the main motivation for the settlement of new local public private partnerships (PPP) within this sector. This paper discusses the public private partnerships (PPP) contracts in the Portuguese schools sector. Four national cases and a foreign experience are analysed. In this study, some of the sound practices presented in the literature are highlighted; we argue that some of these practices are not being applied in this sector in Portugal. A risk analysis for the schools sector was developed, hoping to contribute towards an increasing number of partnerships reaching the best possible value for money (VfM). Furthermore, we suggest several contract management guidelines and draw up some improvement proposals. We conclude that there is a need to enhance the transparency of the procurement phase, to normalise the contractual documents, and to assure a better risk allocation as well as an improved monitoring of the contract. |
| Keywords: | contract management; public-private partnerships (PPP); public tender; risk allocation; schools |
| JEL: | D86 D81 G38 H52 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22558&r=ure |
| By: | Maciej Jakubowski (Faculty of Economic Sciences, University of Warsaw; Organisation for Economic Co-operation and Development (OECD)); Harry Anthony Patrinos (World Bank); Emilio Ernesto Porta (World Bank); Jerzy Wiśniewski (Center for Social and Economic Research (CASE), Poland) |
| Abstract: | Increasing the share of vocational secondary schooling has been a mainstay of development policy for decades, perhaps nowhere more so than in formerly socialist countries. The transition, however, led to significant restructuring of school systems, including a declining share of vocational students. Exposing more students to a general curriculum could improve academic abilities. This paper analyzes Poland’s significant improvement in international achievement tests and the restructuring of the education system that expanded general schooling to test the hypothesis that delayed vocational streaming improves outcomes. Using propensity score matching and differences-in-differences estimates, the authors show that delayed vocationalization had a positive and significant impact on student performance on the order of one standard deviation. |
| Keywords: | education, streaming, tracking, curriculum |
| JEL: | I21 I28 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2010-04&r=ure |
| By: | Robert B. Avery; Kenneth P. Brevoort; Glenn B. Canner |
| Abstract: | An "authorized user" is a person who is permitted by a revolving account holder to use an account without being legally liable for any charges incurred. The Federal Reserve's Regulation B, which implements the 1974 Equal Credit Opportunity Act, requires that information on spousal authorized user accounts be reported to the credit bureaus and considered when lenders evaluate credit history. Since creditors generally furnish to the credit bureaus information on all authorized user accounts, without indicating which are spouses and which are not, credit scoring modelers cannot distinguish spousal from non-spousal authorized user accounts. This effectively requires that all authorized user accounts receive similar treatment. Consequently, becoming an authorized user on an old account with a good payment history, may improve an individual's credit score, potentially increasing access to credit or reducing borrowing costs. As a result, the practice of "piggybacking credit" has developed. In a piggybacking arrangement, an individual pays a fee to be added as an authorized user on an account to "rent" the account's credit history. This paper provides the first comprehensive look at authorized user accounts in individual credit records and how their importance differs across demographic groups. Our analysis suggests that piggybacking credit can materially improve credit scores, particularly for individuals with thin or short credit histories. We also evaluate the effect that eliminating authorized user accounts from credit scoring models would have on individual credit scores. Our results suggest that removing this information has relatively little effect on credit scores, but may reduce model predictiveness. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2010-23&r=ure |
| By: | Basher, Syed Abul; Carrion-i-Silvestre, Josep Lluis |
| Abstract: | This paper revisits the empirical analysis in Cecchetti, Mark and Sonora (2002) involving long-span U.S. city prices, who estimated the persistence of U.S. price differentials to be around nine years. After controlling for the structural breaks in the data, we find that U.S. city price level differentials are I(0) stationary processes with the median half-life of convergence ranged between 1.5 and 2.6 years, estimates that are in accordance with what should be expected from a highly integrated economy as the United States. Our results are also robust to a pairwise tests of price level convergence. |
| Keywords: | Purchasing power parity; Price level convergence; Half-life; Multiple structural breaks; Pairwise convergence. |
| JEL: | E31 C23 F41 C33 |
| Date: | 2010–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22482&r=ure |