nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒05‒14
34 papers chosen by
Steve Ross
University of Connecticut

  1. The price of decentralisation. By Norman, Eva Benedicte Danielsen
  2. Moving to Segregation: Evidence from 8 Italian cities By Tito Boeri; Marta De Philippis; Eleonora Patacchini; Michele Pellizzari
  3. Construction of a Spatial Housing Price Index by Estimating an Almost Ideal Demand System By Iturra, Victor; Paredes - Araya, Dusan
  4. Discordant city employment cycles By Owyang, Michael T.; Piger, Jeremy; Wall, Howard J.
  5. Geographical economics : a historical perspective By THISSE, Jean - François
  6. Immigration and Innovation in European Regions By Ozgen, Ceren; Nijkamp, Peter; Poot, Jacques
  7. Does the housing market reflect cultural heritage? A case study of Greater Dublin By Lyons, Seán; Mayor, Karen; Moro, Mirko; Tol, Richard S. J.
  8. Neighborhood preferences of house buyers: the case of klang valley, malaysia By Tan, teck hong
  9. Continuous Workout Mortgages By Robert J. Shiller; Rafal M. Wojakowski; M. Shahid Ebrahim; Mark B. Shackleton
  10. A Spatial Cost of Living Index for Colombia using a Microeconomic Approach and Censored Data By Atuesta, Laura; Paredes, Araya
  11. Agglomeration, tax competition and local public goods supply. By Norman, Eva Benedicte Danielsen; Norman, Victor Danielsen
  12. How Do Business and Financial Cycles Interact? By M. Ayhan Kose; Stijn Claessens; Marco Terrones
  13. Financial Cycles: What? How? When? By M. Ayhan Kose; Stijn Claessens; Marco Terrones
  14. Environmental Innovations, Local Networks and Internationalization By Giulio Cainelli; Massimiliano Mazzanti; Sandro Montresor
  15. Models of Spatial Competition: a Critical Review By Ricardo Biscaia; Isabel Mota
  16. An urban icon? The case of the Iceman Ötzi By JG. Brida; Marta Meleddu; Manuela Pulina
  17. Which Globalization Matter? On the Nexus Between Fiscal Decentralization and Many Dimensions of Integration By Ermini, Barbara; Santolinib , Raffaella
  18. Education and Migration Choices in Hierarchical Societies: The Case of Matam, Senegal By Auriol, Emmanuelle; Demonsant, Jean-Luc
  19. Incentive Schemes for Local Government : Theory and Evidence from Comprehensive Performance Assessment in England By Lockwood, Ben; Porcelli, Francesco
  20. The Impact of 'Equal Educational Opportunity' Funds: A Regression Discontinuity Design By Ooghe, Erwin
  21. What drives economic specialization in Italian Regions? By Eleonora Cutrini, Enzo Valentini
  22. How to Deal with Real Estate Booms: Lessons from Country Experiences By Pau Rabanal; Christopher W. Crowe; Deniz Igan; Giovanni Dell'Ariccia
  23. Nonlinear Pricing in Transportation: An application to transit system of Santiago de Chile By Batarce, Marco; Ivaldi, Marc
  24. Who invests in home equity to exempt wealth from bankruptcy? By Stefano Corradin; Reint Gropp; Harry Huizinga; Luc Laeven
  25. Immigration and Innovation By Maré, David C.; Fabling, Richard; Stillman, Steven
  26. Local Universities as Engines for Innovation and Regional Development in Southern Economies with Reference to MOROCCO By Driouchi, Ahmed; Zouag, Nada
  27. Climate Change, Employment and Local Development in Extremadura, Spain By Gabriela Miranda; Hyoung-Woo Chung; David Gibbs; Richard Howard; Lisa Rustico
  28. Your Place or Mine? On the Residence Choice of Young Couples in Norway By Loken, Katrine V.; Lommerud, Kjell Erik; Lundberg, Shelly
  29. To assemble to resemble? A study of tax disparities among French municipalities By Marie-Laure Breuille; Pascale Duran-Vigneron; Anne-Laure Samson
  30. Gun For Hire: Does Delegated Enforcement Crowd out Peer Punishment in Giving to Public Goods? By James Andreoni; Laura K. Gee
  31. Crime, Prosecutors, and the Certainty of Conviction By Entorf, Horst
  32. The impact of science and technology parks on firms´ product innovation: empirical evidence from Spain By Vásquez Urriago, Ángela Rocio; Barge-Gil, Andrés; Modrego Rico, Aurelia; Paraskevopoulou, Evita
  33. The Demographic Dividend: Effects of Population Change on School Education in Pakistan By Naushin Mahmood
  34. An Analysis of the Impact of Public Infrastructure Spending in Quebec By David Bahan; Alexandre Montelpare; Luc Savard

  1. By: Norman, Eva Benedicte Danielsen (Samfunns- og Nærlingslivsforskning)
    Abstract: This paper develops a model for analysing problems related to centralisation and decentralisation. The model is of the new economic geography type, in which there are agglomeration gains in cities but not in rural areas. These gains are counteracted by residential preferences. We show that, even though people have preferences for rural living, an unregulated market economy gives too little centralisation. This result holds even when city governments actively pursue policies to attract economic activities in order to make their city bigger. When allowing for cities of unequal size, a likely outcome is that big cities and rural areas will be overpopulated whereas smaller cities will be too few and too small.
    Keywords: Number of cities; size of cities; external economies; local public inputs; regional competition; agglomeration; welfare.
    JEL: H32 H41 R12 R13 R50
    Date: 2010–08–17
  2. By: Tito Boeri; Marta De Philippis; Eleonora Patacchini; Michele Pellizzari
    Abstract: We use a new dataset and a novel identification strategy to analyze the effects on labor market outcomes of residential segregation of migrants in 8 Italian cities. Our data are representative of the population of both legal and illegal migrants, allow us to measure segregation at the very local level (the block) and include measures of housing prices, commuting costs and migrants’ linguistic ability. We find evidence that migrants who reside in areas with a high concentration of non-Italians are less likely to be employed compared to similar migrants who reside in less segregated areas. In our preferred specification, a 10 percentage points increase in residential segregation reduces the probability of being employed by 7 percentage points or about 8% over the average. Additionally, we also show that this effect emerges only above a critical threshold of 15-20% of migrants over the total local population, below which there is no statistically detectable effect. Contrary to common wisdom, in our data migrants seem to be positively selected into segregated areas. A simple matching model with heterogeneous workers and endogenous sorting into heterogeneous locations rationalizes our findings and is supported by additional empirical results.
    Date: 2011
  3. By: Iturra, Victor; Paredes - Araya, Dusan
    Abstract: The aim of this article is to build a spatial housing price index for the Chilean communes (the commune political body similar to a municipality or county). The first step is to recover hedonic prices of three housing attributes by estimating a mixed index model (Bowden, 1992) using a generalized method of moments procedure. Secondly, a censored almost ideal demand system (Deaton and Muellbauer, 1980) is estimated to build expenditures for every commune and to compare them among different spatial units, while maintaining a constant utility level. Using micro data from the 2009 CASEN survey, we show that there are important differences in housing prices among Chilean communes and the axiomatic approach tends to understate spatial index compared to economic approach.
    Keywords: spatial housing price index; mixed index; demand system with censored data; economic approach
    JEL: C34 R21
    Date: 2011–04–29
  4. By: Owyang, Michael T.; Piger, Jeremy; Wall, Howard J.
    Abstract: This paper estimates city-level employment cycles for 58 large U.S. cities and documents the substantial cross-city variation in the timing, lengths, and frequencies of their employment contractions. It also shows how the spread of city-level contractions associated with U.S. recessions has tended to follow recession-specific geographic patterns. In addition, cities within the same state or region have tended to have similar employment cycles. We find no evidence, that similarities in employment cycles are related to similarities in industry mix, although cities with more-similar high school attainment and mean establishment size have tended to have more-similar employment cycles.
    Keywords: City Employment Cycles
    JEL: E32 R12
    Date: 2010–08–12
  5. By: THISSE, Jean - François (Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium; Paris School of Economics and CEPR)
    Abstract: This paper provides a bird-eye overview of the history of spatial economic theory. It is organized around three main ideas (and authors): (i) land use and urban economics (Thünen), (ii) the nature of competition across space (Hotelling), and (iii) new economic geography and the emergence of economic agglomerations (Krugman).
    Date: 2011–02–01
  6. By: Ozgen, Ceren (VU University Amsterdam); Nijkamp, Peter (VU University Amsterdam); Poot, Jacques (University of Waikato)
    Abstract: The concentration of people with diverse socio-cultural backgrounds in particular geographic areas may boost the creation of new ideas, knowledge spillovers, entrepreneurship, and economic growth. In this paper we measure the impact of the size, skills, and diversity of immigration on the innovativeness of host regions. For this purpose we construct a panel of data on 170 regions in Europe (NUTS 2 level) for the periods 1991-1995 and 2001-2005. Innovation outcomes are measured by means of the number of patent applications per million inhabitants. Given the geographical concentration and subsequent diffusion of innovation activity, and the spatial selectivity of immigrants' location choices, we take account of spatial dependence and of the endogeneity of immigrant settlement in our econometric modelling. We use the location of McDonald's restaurants as a novel instrument for immigration. The results confirm that innovation is clearly a function of regional accessibility, industrial structure, human capital, and GDP growth. In addition, patent applications are positively affected by the diversity of the immigrant community beyond a critical minimum level. An increase in the fractionalization index by 0.1 from the regional mean of 0.5 increases patent applications per million inhabitants by about 0.2 percent. Moreover, the average skill level of immigrants (proxied by global regions of origin) also affects patent applications. In contrast, an increasing share of foreigners in the population does not conclusively impact on patent applications. Therefore, a distinct composition of immigrants from different backgrounds is a more important driving force for innovation than the sheer size of the immigrant population in a certain locality.
    Keywords: innovation, economic growth, cultural diversity, immigration, spatial autocorrelation
    JEL: J61 O31 R23
    Date: 2011–04
  7. By: Lyons, Seán; Mayor, Karen; Moro, Mirko; Tol, Richard S. J.
    Abstract: Does the housing market reflect cultural heritage? We estimate several specifications of a hedonic price equation to establish whether distance to cultural heritage site is capitalised into housing prices in Greater Dublin, Ireland. The results show that distance to the nearest historic building has a significant and robust effect on housing prices. To our knowledge this is the first application of the hedonic price method to cultural heritage.
    Keywords: non-market valuation; hedonic price; hedonic regression; cultural heritage; cultural economics
    Date: 2011–05
  8. By: Tan, teck hong
    Abstract: This paper attempts to examine the impacts of neighborhood types, as defined by a gated-guarded neighborhood with landscape compound and a freehold tenure neighborhood on residential property values in Klang Valley, Malaysia. A weighted least squares method together with a heteroscedasticity consistent covariance matrix estimator is used to estimate the coefficients of structural, locational, and neighborhood attributes of dwellings on house prices. Results show the gated-guarded neighborhood with landscape compound could increase residential property values by 18.1%. Additionally, the positive perception of a freehold property in the neighborhood could induce a price premium of 23.7%. It is reasonable to believe that neighborhood types play a role in determining residential property values. In order to meet the increasingly affluent and discerning house buyers, developers instead of just offering dream homes in prime locations, they should provide intangible benefits in the neighborhood that just as sought after by today’s house buyers, such as a sense of security in the landscape compound, a feeling of harmony with one’s surroundings, and an infrastructure which supports the lifestyle of house buyers.
    Keywords: Neighborhood types; Property prices; Klang Valley; Malaysia
    JEL: P25 R21 R23
    Date: 2011–03
  9. By: Robert J. Shiller; Rafal M. Wojakowski; M. Shahid Ebrahim; Mark B. Shackleton
    Abstract: Continuous Workout Mortgage (CWM) balance and payments are indexed using market-observable house price index in an economic environment with prepayments. Our main results include: (a) explicit modelling of repayment and interest-only CWMs; (b) closed form formulas for mortgage payment and mortgage balance of a repayment CWM; (c) a closed form formula for the actuarially fair mortgage rate of an interest-only CWM. For repayment CWMs we extend our analysis to include two negotiable parameters: adjustable "workout proportion" and adjustable "workout threshold." These results are of importance as they not only help in the understanding of the mechanics of CWMs and estimating key contract parameters, but they also provide guidance on how to enhance the resilience of the financial architecture and mitigate systemic risk.
    JEL: C63 D11 D14 D92 G13 G21 R31
    Date: 2011–05
  10. By: Atuesta, Laura; Paredes, Araya
    Abstract: This paper describes a methodology to calculate a spatial cost of living index using Colombian data for 2006 that takes into consideration the microeconomic behavior of households. Using the Almost Ideal Demand System and recovering the expenditure functions for the 23 main Colombian cities, the index proposed is compared to the traditional methodologies used to calculate the regional basket of goods in the country and to an alternative methodology proposed by Romero (2005). This comparison suggests that when the substitution effects are not considered, and the same basket of goods is evaluated in every city, the index is biased, and this bias increases when the diference between cities increases. For reducing the bias, we use a microeconomic approach that keeps the households' level of utility constant and allows substitution among diferent baskets of goods. According to our calculations, Bogota is still the most expensive city in the country followed by Armenia, Cali, Bucaramanga and Ibague.
    Keywords: Spatial Price Index; Almost Ideal Demand System
    JEL: D12 C34 C24
    Date: 2011–04–29
  11. By: Norman, Eva Benedicte Danielsen (Samfunns- og Næringslivsforskning); Norman, Victor Danielsen (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: In this paper we develop a framework for studying tax competition and local public goods supply in a setting where real and fiscal externalities interact with local democracy. We use the framework (a) to analyse if there is any reason to believe that local autonomy generally will give a tax race to the bottom (there is not), and (b) to look more closely at possible sources of oversupply or undersupply of publicly provided goods in a setting where local democracies compete for people. We identify two potential sources – the relationship between individual mobility and willingness to pay for publicly provided goods, and the mobility distribution of individuals (i.e. the distribution of individuals over residential preferences). The two could reinforce each other in a local democracy if the majority of the residents in a community are relatively mobile (the “American” case), while they would pull in opposite directions if the majority of residents are relatively immobile (the “European” case).
    Keywords: Tax competition; local public goods; agglomeration; migration; regional economic policy
    JEL: F12 H21 H73 J61
    Date: 2010–08–17
  12. By: M. Ayhan Kose; Stijn Claessens; Marco Terrones
    Abstract: This paper analyzes the interactions between business and financial cycles using an extensive database of over 200 business and 700 financial cycles in 44 countries for the period 1960:1-2007:4. Our results suggest that there are strong linkages between different phases of business and financial cycles. In particular, recessions associated with financial disruption episodes, notably house price busts, tend to be longer and deeper than other recessions. Conversely, recoveries associated with rapid growth in credit and house prices tend to be stronger. These findings emphasize the importance of developments in credit and housing markets for the real economy.
    Keywords: Business cycles , Economic models , Economic recession , Economic recovery , Financial sector , Fiscal policy , Monetary policy ,
    Date: 2011–04–20
  13. By: M. Ayhan Kose; Stijn Claessens; Marco Terrones
    Abstract: This paper provides a comprehensive analysis of financial cycles using a large database covering 21 advanced countries over the period 1960:1-2007:4. Specifically, we analyze cycles in credit, house prices, and equity prices. We report three main results. First, financial cycles tend to be long and severe, especially those in housing and equity markets. Second, they are highly synchronized within countries, particularly credit and house price cycles. The extent of synchronization of financial cycles across countries is high as well, mainly for credit and equity cycles, and has been increasing over time. Third financial cycles accentuate each other and become magnified, especially during coincident downturns in credit and housing markets. Moreover, globally synchronized downturns tend to be associated with more prolonged and costly episodes, especially for credit and equity cycles. We discuss how these findings can guide future research on various aspects of financial market developments.
    Keywords: Business cycles , Capital markets , Credit , Developed countries , Housing prices , Stock prices ,
    Date: 2011–04–05
  14. By: Giulio Cainelli (University of Padova); Massimiliano Mazzanti (University of Ferrara); Sandro Montresor (University of Bologna)
    Abstract: This paper investigates the drivers of the environmental innovations (EI) introduced by firms in local production systems (LPS). The role of firm network relationships, agglomeration economies and internationalization strategies is analysed for a sample of 555 firms in the Emilia-Romagna region, North-East of Italy. Cooperating with ‘qualified’ local actors – i.e. universities and suppliers – is the most important driver of EI for most firms, along with their training policies and IT innovations. The role of agglomeration economies is less clear and seems to depend on the EI propensity of more locally oriented firms playing in district areas, which might even turn agglomeration into dis-economies. Networking effects and agglomeration economies are instead found to strongly promote the adoption of EI by multinational firms, thus highlighting the importance of local-global interactions. We provide some interesting findings for particular kinds of challenging EI in fields as CO2 abatement and ISO labelling, generally extending the analysis EI driver by joining local and international factors.
    Keywords: Eco-Innovation, Foreign Ownership, Networking, District, Agglomeration Economics, Local Production Systems
    JEL: C21 L60 O13 O30 Q20 Q58 F23
    Date: 2011–02
  15. By: Ricardo Biscaia (CIPES and Faculdade de Economia, Universidade do Porto); Isabel Mota (CEF.UP and Faculdade de Economia, Universidade do Porto)
    Abstract: This critical review focuses on the development of spatial competition models in which the location choice by firms plays a major role. Therefore, after a brief review of the roots of spatial competition modeling, this paper intends to offer a critical analysis over its recent developments. The starting point is the recognition of the increased importance of this topic through the quantification of the research in this field by using some bibliometric tools. After that, this study proceeds by identifying the main research paths within spatial competition modeling. Specifically, the type of strategy (Bertrand vs. Cournot competition) and its implications over location equilibria are discussed. Additionally, it is presented a comparison of the effects on the location equilibria of the most typical assumptions in literature, that respect to the market (linear vs. circular), production costs, transportation costs, as well as the number of firms. Finally, the type of information (complete vs. incomplete) and its effects over the equilibria are also discussed.
    Keywords: spatial competition, review, Hotelling, game theory
    JEL: L13 R10 D82
    Date: 2011–04
  16. By: JG. Brida; Marta Meleddu; Manuela Pulina
    Abstract: This study via a travel cost model estimates the likelihood to revisit South Tyrol s Museum of Archaeology, best known as the Ötzi museum, in the Autonomous Province of Bolzano(Italy). The purpose of this investigation is to analyse in what measure this museum may be regarded as a potential icon for the urban development of Bolzano. To this aim, the number of actual visits to the museum are employed as an economic indicator of the museum attraction propensity and an investigation on visitors’ preferences and behavior is carried out. The relevant data were obtained from a survey undertaken in the months from June to August 2010 at site and a zero- truncated count data model is estimated. The empirical findings provide an important tool to plan the future urban development around the Ötzi museum.
    Keywords: Museum; urban icon; travel cost; repeat visits; zero-truncated Poisson
    JEL: D12 L83 C19
    Date: 2011
  17. By: Ermini, Barbara; Santolinib , Raffaella
    Abstract: This paper tests the effects of several dimensions of globalization on fiscal decentralization by decomposing the effects of the KOF index of globalization into its main components: economic, political and social integration. We attempt to recognize whether different aspects of globalization promote fiscal decentralization, measured according to different definitions. Empirical analysis shows that social integration fosters both revenue and expenditure decentralization. Instead, the impact of economic and political globalization is less robust. Economic integration significantly promotes fiscal decentralization only when we use tax revenue decentralization as proxy for decentralization while political integration significantly and positively affects only expenditure decentralization. Overall, since higher social globalization contributes to lower barriers across countries and inter-jurisdictional mobility of productive factors, we argue that correlation between social integration and decentralization may reflect the willingness of local authorities to reinforce their competitiveness to attract firms and workers. Moreover, the emergence of forces of “glocalization” could strengthen pressure towards decentralization to recover local cultural identity and to assign local actors with higher decision-making power.
    Keywords: Globalization; Glocalization; Decentralization; social integaration
    JEL: H7
    Date: 2011
  18. By: Auriol, Emmanuelle (TSE, ARQADE and IDEI); Demonsant, Jean-Luc (Universidad Autonoma de Nuevo Leon)
    Abstract: The paper aims at studying determinants of schooling in traditional hierarchical societies confronted with an established history of outmigration. In the village, a ruling caste controls local political and religious institutions. For children who do not belong to the ruling caste, migration is a social mobility factor that is enhanced by formal schooling. Since formally educated children tend not to return, the ruling caste seeks to develop family loyalty by choosing religious education instead. The theory hence predicts that the social status of the family has a signicant impact on educational choice. Children from the ruling caste who are sent abroad have a lower probability of being sent to formal school. They are more likely to be sent to Koranic schools that emphasize religious and family values. The theoretical predictions are tested on data from Matam region in Senegal, a region where roughly one of every two children have ever attended school.
    Keywords: Schooling, Migration, Social Status, Haalpulaar
    JEL: I21 O12 O15 O17 Z13
    Date: 2011–03–28
  19. By: Lockwood, Ben (University of Warwick); Porcelli, Francesco (University of Warwick)
    Abstract: This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a simple theoretical political agency model, we predict that CPA should increase service quality and local taxation, but have an ambiguous e¤ect on the e¢ ciency of service provision. We test these predictions using a difference in difference approach, using Welsh local authorities as a control group, exploiting the fact that local authorities in Wales were not subject to the same CPA regime. To do this, we construct original indices of service quality and e¢ ciency, using Best Value Performance Indicators. We estimate that CPA increased the effective band D council tax rate in England relative to Wales by 4%, and increased our index of service quality output also by about 4%, but had no signifcant effect on our efficiency indices. There is evidence of heterogenous effects of CPA on efficiency, with some evidence that CPA impacted more on less efficient councils, and the "harder test" from 2005-8 having a much bigger effect. Key words: local government ; incentives ; efficiency ; difference in difference ; DEA JEL classification: H10 ; H70 ; H77 ; C21
    Date: 2011
  20. By: Ooghe, Erwin (K.U.Leuven)
    Abstract: Many countries provide extra resources to schools serving disadvantaged pupils. We exploit a discontinuity in the assignment of such personnel subsidies in Flanders to estimate the impact on cognitive outcomes via a regression discontinuity (RD) design. Because bias can be substantial in RD designs, we include a bias correction in the specification of the control function. Overall, we find positive effects for mathematics, reading and spelling, but the impact is significant for spelling only. The effects are larger for disadvantaged pupils defined on the basis of family background, smaller – or less reliable – for low initial performers, and again larger at schools that used the resources to foster socio-emotional development.
    Keywords: impact evaluation, disadvantaged students, school resources
    JEL: H52
    Date: 2011–04
  21. By: Eleonora Cutrini, Enzo Valentini (University of Macerata)
    Abstract: <div style="text-align: justify;">It is well-known that Italy has two distinguishing characteristics closely intertwined with each other and unusual for an advanced country: a persisting specialization in traditional industries and deep internal disparities. The Italian "anomaly" is rooted in the predominance of clusters of small firms producing and exporting low-skilled labour-intensive goods. Some authors have suggested that marked regional variations in manufacturing structures underpin Italy’s perpetual North-South divide, with northern regions more oriented to capital (and knowledge) intensive industries than the rest of the country. Whatever the remote causes of the Italian "anomaly" may be, we provide evidence of a new tendency whereby capital- and knowledge intensive regional structural change has occurred. The literature to date may provide some descriptive and indirect evidence on the dynamics of regional specialization in high-tech industries during the past decades, but previous studies have not addressed the issue of what determines such specialization. The aim of the article is to fill this gap. Our main research question can be summarized as follows: What are the structural characteristics that may explain the regional high-tech share in manufacturing? The methodology is based on a panel analysis (GLS with dummies to account for regional fixed effects) over the period 2004-2007. We control for panel level heteroskedasticity, autocorrelation and endogeneity. The results suggest that various factors such as labour force composition, firms borrowing capacity, accessibility, R&D, private and public expenditure and a good cultural environment significantly and positively influence regional high-tech specialization. We also find that a high prevalence of industrial districts may lock-in regional structures away from capital-intensive and high-tech manufacturing activities.</div>
    Keywords: manufacturing structure,GLS panel analysis,High-tech specialization, Italy
    JEL: C33 O18 R11
    Date: 2011–05
  22. By: Pau Rabanal; Christopher W. Crowe; Deniz Igan; Giovanni Dell'Ariccia
    Abstract: The financial crisis showed, once again, that neglecting real estate booms can have disastrous consequences. In this paper, we spell out the circumstances under which a more active policy agenda on this front would be justified. Then, we offer tentative insights on the pros and cons as well as implementation challenges of various policy tools that can be used to contain the damage to the financial system and the economy from real estate boom-bust episodes.
    Keywords: Bank credit , Business cycles , Cross country analysis , Demand , Fiscal policy , Housing , Monetary policy , Private sector , Property taxes , Real estate prices , Taxes ,
    Date: 2011–04–27
  23. By: Batarce, Marco (Toulouse School of Economics); Ivaldi, Marc (Toulouse School of Economics)
    Abstract: This paper computes optimal nonlinear prices for public transportation in Santiago of Chile. We formulate and estimate a structural model for travel demand, in which users have heterogeneous preferences and make their transport decisions considering the network congestion. A key component in the model is that users have incomplete information about the preferences of other users in the network and they behave strategically when they make transportation decisions (mode and number of trips). Therefore, the congestion level is endogenously determinate in the equilibrium of the game played by users. For the estimation, we use the first order conditions of users' utility maximization problem to derive the likelihood function and apply Bayesian methods for inference. Using data from Santiago of Chile, the estimated demand elasticities are consistent with results reported in the literature and the parameters confirm the effect of the congestion on the individuals' preferences. As result, the nonlinear pricing schedule produces total benefits slightly greater than the linear pricing; however the former requires significantly lower subsidy.
    Date: 2010–05
  24. By: Stefano Corradin (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Reint Gropp (European Business School.); Harry Huizinga (Tilburg University and CEPR.); Luc Laeven (International Monetary Fund and CEPR.)
    Abstract: Homestead exemptions to personal bankruptcy allow households to retain their home equity up to a limit determined at the state level. Households that may experience bankruptcy thus have an incentive to bias their portfolios towards home equity. Using US household data from the Survey of Income and Program Participation for the period 1996-2006, we find that especially households with low net worth maintain a larger share of their wealth as home equity if a larger homestead exemption applies. This home equity bias is also more pronounced if the household head is in poor health, increasing the chance of bankruptcy on account of unpaid medical bills. The bias is further stronger for households with mortgage finance, shorter house tenures, and younger household heads, which taken together reflect households that face more financial uncertainty. JEL Classification: G11, K35, R21.
    Keywords: Homestead exemptions, Personal bankruptcy, Portfolio allocation, Home ownership.
    Date: 2011–05
  25. By: Maré, David C. (Motu Economic and Public Policy Research Trust); Fabling, Richard (Reserve Bank of New Zealand); Stillman, Steven (Motu Economic and Public Policy Research Trust)
    Abstract: We combine firm-level innovation data with area-level Census data to examine the relationship between local workforce characteristics, especially the presence of immigrants and local skills, and the likelihood of innovation by firms. We examine a range of innovation outcomes, and test the relationship for selected subgroups of firms. We find a positive relationship between local workforce characteristics and average innovation outcomes in labour market areas, but this is accounted for by variation in firm characteristics such as firm size, industry, and research and development expenditure. Controlling for these influences, we find no systematic evidence of an independent link between local workforce characteristics and innovation.
    Keywords: local labour market, immigration, innovation
    JEL: O31 R30
    Date: 2011–04
  26. By: Driouchi, Ahmed; Zouag, Nada
    Abstract: Abstract: The objective of this paper is to show that universities can be engines for local development in Southern economies. Previous contributions to the literature on this subject have already shown the positive effects of regional sources of tacit knowledge on local development. Using data on developed, developing and emerging countries, regression analysis is pursued with the available data. The attained results show that developing economies do have room for local development as this can be further provided by regional universities and schools. These potential gains have been expressed to be higher for developing and emerging countries. These results imply that developing and emerging countries can enhance their local and overall development through the promotion of local universities and schools but these sources of skills and knowledge need to be tied with the local needs of the population as in developed countries. The case of Morocco illustrates the potential and positive effects of regional universities on local development. The transmission channel includes encouragement of skills, access to patents and intellectual property rights protection besides enterprise creation and implementation. These trends are likely to be accelerated within the regionalization process and the role of regional knowledge centers.
    Keywords: universities-innovations-local development-Southern countries-Morocco
    JEL: R10 O18 O31
    Date: 2011–04–29
  27. By: Gabriela Miranda; Hyoung-Woo Chung; David Gibbs; Richard Howard; Lisa Rustico
    Abstract: Extremadura is the fifth largest region in Spain, with certainly one of the most diverse eco-systems and abundant natural resources. Extremadura launched a series of initiatives to facilitate the transition to a green economy which means a model that takes into consideration economic, social and environmental aspects with one core objective: create jobs. <p> How can Extremadura exploit its capacities to broaden the employment basis while moving to a green economy? What actions and priorities should the regional government take into account to move an economic development and employment agenda forward in this new context? How can Extremadura pursue its efforts to remain one of the least polluting regions in Spain while supporting job creation? Which are the economic sectors with potential for job creation in Extremadura? This study sought to provide guidance and policy recommendation to Extremadura on these and other issues related to the transition of the labour market to the green economy.<p> The study on "Climate Change, Employment and Local Development in Extremadura", was undertaken by the Local Economic and Employment Development (LEED) Programme of the Organisation for Economic Co-operation and Development (OECD) in collaboration with the Regional Ministry of Equality and Employment of Extremadura
    Date: 2011–04
  28. By: Loken, Katrine V. (University of Bergen); Lommerud, Kjell Erik (University of Bergen); Lundberg, Shelly (University of California, Santa Barbara)
    Abstract: Norwegian registry data is used to investigate the location decisions of a full population cohort of young adults as they complete their education, establish separate households and form their own families. We find that the labor market opportunities and family ties of both partners affect these location choices. Surprisingly, married men live significantly closer to their own parents than do married women, even if they have children, and this difference cannot be explained by differences in observed characteristics. The principal source of excess female distance from parents in this population is the relatively low mobility of men without a college degree, particularly in rural areas. Despite evidence that intergenerational resource flows, such as childcare and eldercare, are particularly important between women and their parents, the family connections of husbands appear to dominate the location decisions of less-educated married couples.
    Keywords: intergenerational proximity, marriage, location decisions
    JEL: J12 J16 J61
    Date: 2011–04
  29. By: Marie-Laure Breuille (INRA, UMR1041 CESAER); Pascale Duran-Vigneron (Department of Economics, University of Exeter); Anne-Laure Samson (LEDA-LEGOS, University Paris Dauphine)
    Abstract: The purpose of this paper is to analyze the effect of inter-municipal cooperation on local taxation. Municipalities that join/create an inter-municipal jurisdiction choose between three tax regimes, which may induce both horizontal and vertical tax externalities. Using the differences in differences method with a quasi-exhaustive panel for French municipalities over the 1994-2010 period, we show a positive causal effect of cooperation on the level of cumulative tax rates (i.e. the sum of municipal and inter-municipal tax rates). In addition, we show that cooperation leads to a convergence of tax rates within an inter-municipal structure, which thus reduces tax disparities among municipalities.
    Keywords: Inter-municipal cooperation, tax competition, ?scal disparities.
    JEL: H23 H7
    Date: 2011
  30. By: James Andreoni; Laura K. Gee
    Abstract: This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the “hired gun” mechanism, to deter free riding and improve group welfare. The “hired gun” mechanism (Andreoni and Gee, 2011) is an example of a low cost device that promotes complete compliances and minimal enforcement as the unique Nash equilibrium. We find that subjects are willing to pay to hire a delegated policing mechanism over 70% of the time, and that this mechanism increases welfare between 15% to 40%. Moreover, the lion’s share of the welfare gain comes because the hired gun crowds out vigilante peer-to-peer punishments.
    JEL: C72 C91 C92 D7 H41
    Date: 2011–05
  31. By: Entorf, Horst (Goethe University Frankfurt)
    Abstract: This paper tests predictions of a structural, augmented supply-of-offenders model regarding the relative effects of police, public prosecution and courts, respectively, on crime. Using detailed data on the different stages of the criminal prosecution process in Germany, empirical evidence suggests that public prosecutors and their influence on the probability of conviction play a major role in explaining the variation of crime rates, while the impact of the severity of punishment is small and insignificant.
    Keywords: public prosecutors, certainty of punishment, general deterrence, informal punishment, panel data
    JEL: K14 K41 C23
    Date: 2011–04
  32. By: Vásquez Urriago, Ángela Rocio; Barge-Gil, Andrés; Modrego Rico, Aurelia; Paraskevopoulou, Evita
    Abstract: Science and Technology Parks (STP) are one of the most important and extensive innovation policy initiatives introduced in recent years. This work evaluates the impact of STP on firm product innovation in the Spanish context. Spain is less developed than most of the advanced countries, and regional and national governments are prioritizing STP initiatives. The large firm sample for our study is from the Spanish Technological Innovation Survey, provided by the National Statistical Institute. We focus on average treatment effects for firms located in 22 Spanish STP. Our results show that Spanish STP have a strong and positive impact on the probability and amount of product innovation achieved by STP located firms. These results hold for different assumptions about the mechanisms underlying location in a STP.
    Keywords: Science and Technology Parks; product innovation; treatment effects; regional development policies.
    JEL: R53 L25 O25 O18 L38 O30 H76
    Date: 2011–02–25
  33. By: Naushin Mahmood (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: This study examines how the changing demographics in Pakistan, resulting primarily from fertility transition, would affect educational attainment of school-age population during the next two decades. The basic question addressed is whether the expected population change would enable the country to benefit from the demographic dividend and enhance the chances to achieve universal primary education by 2015, one of the targets of the Millennium Development Goals (MDGs). Using projected population es timates and school enrolment data, the findings show that about 9.5 million children aged 5-9 years were not enrolled in school in 2005-06. Assuming a gradual and steady increase in enrolment, education simulations show that the number of children aged 5-9 years who will never enter school will cumulatively rise to approximately 27.7 million by 2030, of which 12.2 million would be boys, and 15.5 million girls, and it may take another two decades to achieve universal primary enrolment. Furthermore, children aged 10-14 years not attending secondary level were 14.5 million in 2005-06. Given the current trends in enrolment, this number is expected to increase almost four times by 2030, thereby widening the population education gap over the years. Thus rapid increase in enrolment is the desired option. Otherwise the large education deficit would create conditions highly unfavourable to capitalis e on the demographic dividend, and pose a threat rather than offer an opportunity to stimulate economic development. In terms of policy actions, investments in school education need to be almost doubled to absorb the prospective increase in the school-age population during the next two decades.
    Keywords: Demographic Dividend, Education, Primary Enrolment
    JEL: J1 I2 I22
    Date: 2011
  34. By: David Bahan (Ministère des finances du Québec); Alexandre Montelpare (Ministère des finances du Québec); Luc Savard (GREDI, Université de Sherbrooke)
    Abstract: The economic literature has been investigating the positive relation between public infrastructure spending and the productivity of the private sector since Munnell (1992). We have thus introduced this relation into the recursive dynamic computable general equilibrium model of Quebec to assess the economic impacts of scaling up infrastructure on the economy. We use we draw our assumptions from Estache et al. (2010) combined with sectoral elasticity parameters from Harchaoui and Tarkhani (2003) based on Canadian estimations. We conduct a comparative analysis between a scenario without positive external effects of infrastructures, and another with positive externalities. The investments are financed by debt. The externalities help attenuate the negative macroeconomic effects associated with scaling up of infrastructure and amplify the positive effects.
    Keywords: CGE model, infrastructure, productivity
    JEL: D58 H54 H63 O47
    Date: 2011–07

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