nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2011‒07‒13
38 papers chosen by
Steve Ross
University of Connecticut

  1. Measuring teacher and school effectiveness at improving student achievement in Los Angeles elementary schools By Buddin, Richard
  2. Spatial econometrics of innovation: Recent contributions and research perspectives By Corinne Autant-Bernard
  3. Firms Location under Demand Heterogeneity By Pierre M. Picard; Toshihiro Okubo
  4. House Price, Mortgage Premium, and Business Fluctuations By Nan-Kuang Chen; Han-Liang Cheng; Ching-Sheng Mao
  5. A Repayment Model of House Prices By Jakob B Madsen
  6. A q Model of House Prices By Jakob B Madsen
  7. Second-Best Cost?Benefit Analysis with a Microfoundation of Urban Agglomeration By Yoshitsugu Kanemoto
  8. How Teacher Turnover Harms Student Achievement By Matthew Ronfeldt; Hamilton Lankford; Susanna Loeb; James Wyckoff
  9. Heterogenous peer effects, segregation and academic attainment By Lugo, Maria Ana
  10. Effective Schools: Teacher Hiring, Assignment, Development, and Retention By Susanna Loeb; Demetra Kalogrides; Tara Béteille
  11. Agglomeration Economies and Local Comovement of Stock Returns By Fu, Shihe; Shan, Liwei
  12. Rising transport costs and urban development: Hamburg - a city of the future By Ott, Ingrid; Otto, Alkis Henri; Stiller, Silvia
  13. “Geography of talent and regional differences in Spain” By Ebru Kerimoglu; Burhan Can Karahasan
  15. REITs, interest rates and stock prices in Malaysia By Hooi Hooi Lean; Russell Smyth
  16. Cost-Effective Hiring in U.S. High Schools: Estimating Optimal Teacher Quantity and Quality Decisions By Anton Bekkerman; Gregory Gilpin
  17. Implications of rising energy and transportation costs for future urban development: Inner city trends in Hamburg By Otto, Alkis Henri
  18. The HAMP NPV model: development and early performance By Holden, Steve; Kelly, Austin; McManus, Doug; Scharlemann, Therese; Singer, Ryan; Worth, John
  19. Crossing boundaries : gender, caste and schooling in rural Pakistan By Jacoby, Hanan G.; Mansuri, Ghazala
  20. “How Important to a City Are Tourists and Daytrippers? The Economic Impact of Tourism on The City of Barcelona” By Joaquim Murillo; Esther Vayá; Javier Romaní; Jordi Suriñach
  21. University quality, interregional brain drain and spatial inequality. The case of Italy. By Ciriaci, Daria
  22. To Leave or Not to Leave? A Regression Discontinuity Analysis of the Impact of Failing High School Exit Exam By Dongshu Ou
  23. On Local Environmental Protection By Fabio Fiorillo; Agnese Sacchi
  24. Improving Reading Skills by Encouraging Children to Read: A Randomized Evaluation of the Sa Aklat Sisikat Reading Program in the Philippines By Ama Baafra Abeberese; Todd J. Kumler; Leigh L. Linden
  25. The impact of house prices on household debt when controlling for home ownership By Dag Henning Jacobsen; Bjørn Helge Vatne
  26. Innovation, Growth and Quality of Life: a Theoretical Model and an Estimate for the Italian Regions By d'Agostino, Giorgio; Scarlato, Margherita
  27. Development perspectives for the City of Hamburg: Migration, commuting, and specialization By Boje, Amelie; Ott, Ingrid; Stiller, Silvia
  28. The Economic Impact of Social Ties: Evidence from German Reunification By Burchardi, Konrad B.; Hassan, Tarek
  29. Charging the polluters: A pricing model for road and railway noise By Andersson, Henrik; Ögren, Mikael
  30. Self-Employment of Rural-to-Urban Migrants in China By Giulietti, Corrado; Ning, Guangjie; Zimmermann, Klaus F.
  31. What Caused the Recent Boom-And-Bust Cycle in Lithuania? Evidence from a Macromodel with the Financial Sector By Tomas Ramanauskas
  32. Racial Disparities in Credit Constraints in the Great Recession: Evidence from the UK By John Gathergood
  33. Understanding the lead/lag structure among regional business cycles By Stefano Magrini; Margherita Gerolimetto; Hasan Engin Duran
  34. A Repayment Model of House Prices Oil Price Dynamics in a Real Business Cycle Model By Vipin Arora; Pedro Gomis-Porqueras
  35. Regional Unemployment and Norm-Induced Effects on Life Satisfaction By Adrian Chadi
  36. Fiscal federalism in Germany: Stabilization and redistribution before and after unification By Hepp, Ralf; von Hagen, Jürgen
  37. Spatial Patterns of Growth and Poverty Changes in Peru (1993 – 2005) By Escobal, J., Ponce, C.
  38. Questioning Ethnic Fragmentation's Exogeneity - Drivers of Changing Ethnic Boundaries By Philipp Kolo

  1. By: Buddin, Richard
    Abstract: This study uses longitudinal student-level test score data to examine the effectiveness of elementary teachers and schools in Los Angeles. The results show that teacher effectiveness varies widely both across the Los Angeles school district and within district schools. Controlling for student background and preparation, we find only modest difference across schools in improving student achievement. We explore the sensitivity of teacher and school effectiveness measures to alternative regression controls. We find that teacher and school effectiveness measures are relatively insensitive to detailed controls for student and peer heterogeneity.
    Keywords: Student achievement; Teacher effectiveness; Value-added;
    JEL: J08 I2 J01 I21
    Date: 2011–05
  2. By: Corinne Autant-Bernard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: Preliminary introduced by Anselin, Varga and Acs (1997) spatial econometric tools are widely used in economic geography of innovation. Taking into account spatial autocorrelation and spatial heterogeneity of regional innovation, this paper analyzes how these techniques have improved the ability to quantify knowledge spillovers, to measure their spatial extent, and to explore the underlying mechanisms and especially the interactions between geographical and social distance. It is also argued that the recent developments of spatio-dynamic models opens new research lines to investigate the temporal dimension of both spatial knowledge flows and innovation networks, two issues that should rank high in the research agenda of the geography of innovation.
    Keywords: Geography of innovation; spatial correlation; spatio-dynamic panels; innovation
    Date: 2011–06–30
  3. By: Pierre M. Picard (CREA, University of Luxembourg (Luxembourg), and CORE, Université catholique de Louvain (Belgium).); Toshihiro Okubo (RIEB, Kobe University)
    Abstract: In this paper we build an economic geography model where firms sell product varieties with heterogenous demands. We show that firms selling the products with higher demands select to set up their plants in larger countries. Larger countries do not only get better access to more varieties but also to the most demanded and valuable ones. The impact of such a spatial selection on firms' location choice depends on the skewness of the distribution of demand intensity across varieties. In a model where only capital moves across regions, demand heterogeneity generally diminishes the amount of capital invested in the larger country. In a model where the work force moves across regions, demand heterogeneity is shown to eliminate dramatic changes in the location patterns and to result in the asymmetric dispersion of workers, rather their symmetric dispersion or complete agglomeration in a specific region.
    Keywords: heterogeneous taste and quality, spatial selection, economic geography, agglomeration, home market effect
    JEL: F12 F15 R11 R12
    Date: 2011
  4. By: Nan-Kuang Chen (National Taiwan University and Hong Kong Institute for Monetary Research); Han-Liang Cheng (Chung-Hua Institution for Economic Research); Ching-Sheng Mao (National Taiwan University)
    Abstract: This paper investigates the transmission mechanism of mortgage premium to characterize the relationship between the housing market and the business cycle for the U.S. economy. The model matches the main features of the U.S. housing market and business cycles well. The mortgage premium is crucial for the amplification and propagation of the model to match the data. If the Federal Reserve had exercised pre-emptive monetary policy in 2002Q1, the counterfactual analysis suggests that a higher interest rate would have stabilized house price and housing investment volatilities, but would have taken a big toll on real GDP: its volatility remains approximately the same, but the level of GDP contracts dramatically.
    Keywords: Mortgage Premium, House Price, DSGE
    JEL: E3 E4 E5 G1
    Date: 2011–06
  5. By: Jakob B Madsen
    Abstract: This paper proposes a model in which house prices are determined by housing affordability in the short run, while being determined by acquisition costs in the long run. Housing affordability is, in turn, determined by nominal income and nominal mortgage payments. The model explains the recent housing market run-up in the OECD countries by lower housing repayments, decreasing nominal interest rates, and a large inflow of migrants. Empirical estimates give strong support for the model and suggest that it explains house prices in the OECD better than the mainstream models.
    Keywords: house prices, institutions, affordability, financial innovations, Tobin’s q.
    JEL: E13 E22 G12
    Date: 2011–06
  6. By: Jakob B Madsen
    Abstract: This paper develops a Tobin’s q model of house prices which shows that changes in interest rates, demography, and income are likely to have only temporary effects on house prices while house prices in the long run are determined by prices of developed land, value added taxes, stamp duties, and construction costs. Empirical estimates show that agricultural land prices are a proxy for urban land prices, which, together with construction costs are the key determinants of house prices in the long run.
    Keywords: housing market, Tobin’s q, construction costs, land prices
    JEL: E13 E22 G12
    Date: 2011–06
  7. By: Yoshitsugu Kanemoto (National Graduate Institute for Policy Studies)
    Abstract: Many sources of urban agglomeration, such as the gains from variety, bette rmatching, and knowledge creation and diffusion, involve departures from the first-best world. Benefit evaluation of a transportation project must then take into account changes in excess burden along with any direct user benefits. A number of economists have addressed this issue, and policymakers in some countries, such as in the United Kingdom, have been attempting to include these considerations in their project assessments. By modeling the microstructure of agglomeration economies, we derive second-best benefit evaluation formulae for urban transportation improvements. Previous work has investigated the same problem, but without explicitly modeling the sources of agglomeration economies. Accordingly, our analysis examines whether earlier results remain valid when monopolistic competition with differentiated products provides the microfoundation of the agglomeration economies. By explicitly introducing the rural sector and multiple cities, we also show that the agglomeration benefits depend on where the new workers are from.
    Keywords: cost-benefit analysis; agglomeration economies; monopolistic competition;new economic geography; second-best economies
    Date: 2011–05
  8. By: Matthew Ronfeldt; Hamilton Lankford; Susanna Loeb; James Wyckoff
    Abstract: Researchers and policymakers often assume that teacher turnover harms student achievement, but recent evidence calls into question this assumption. Using a unique identification strategy that employs grade-level turnover and two classes of fixed-effects models, this study estimates the effects of teacher turnover on over 600,000 New York City 4th and 5th grade student observations over 5 years. The results indicate that students in grade-levels with higher turnover score lower in both ELA and math and that this effect is particularly strong in schools with more low-performing and black students. Moreover, the results suggest that there is a disruptive effect of turnover beyond changing the composition in teacher quality.
    JEL: I21
    Date: 2011–06
  9. By: Lugo, Maria Ana
    Abstract: Socioeconomic segregation is often decried for denying poorer children the benefits of positive'peer effects'. Yet standard, linear-in-means models of peer effects (a) implicitly assume that segregation is zero sum, with gains and losses to rich and poor perfectly offsetting, and (b) rule out theories of'social distance'whereby peer effects are strongest among similar pairings. The paper exploits the random assignment of pupils between classes to identify more general peer effects in Argentine test-score data. Estimates violate both assumptions (a) and (b), and provide micro foundations for the correlations between school segregation, average test-scores, and test-score inequality in municipality-level data.
    Keywords: Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning
    Date: 2011–06–01
  10. By: Susanna Loeb; Demetra Kalogrides; Tara Béteille
    Abstract: The literature on effective schools emphasizes the importance of a quality teaching force in improving educational outcomes for students. In this paper, we use value-added methods to examine the relationship between a school’s effectiveness and the recruitment, assignment, development and retention of its teachers. We ask whether effective schools systematically recruit more effective teachers; whether they assign teachers to students more effectively; whether they do a better job of helping their teachers improve; whether they retain more effective teachers; or whether they do a combination of these processes. Our results reveal four key findings. First, we find that more effective schools are able to attract and hire more effective teachers from other schools when vacancies arise. Second, we find that more effective schools assign novice teachers to students in a more equitable fashion. Third, we find that teachers who work in schools that were more effective at raising achievement in a prior period improve more rapidly in a subsequent period than do those in less effective schools. Finally, we find that more effective schools are better able to retain higher-quality teachers, though they are not differentially able to remove ineffective teachers. The results point to the importance of personnel, and perhaps, school personnel practices, for improving student outcomes.
    JEL: I21
    Date: 2011–06
  11. By: Fu, Shihe; Shan, Liwei
    Abstract: Existing studies in finance have documented the comovement of stock returns of companies headquartered in the same location. The interpretation is that local investors have a “local bias” due to an information advantage on local companies. This paper argues that localized agglomeration economies affect the fundamentals of local companies, resulting in the local comovement of stock returns. Using the data for China A-share listed companies from 1997-2007, we confirm the local comovement of stock returns of companies headquartered in the same city; moreover, the stock returns of a company headquartered in a city with stronger agglomeration economies are also correlated more highly with stock returns of other companies headquartered in the same city. The local comovement of earnings among companies headquartered in the same city is also found, and the local comovement of stock returns is correlated with the local comovement of earnings. We conclude that correlated local fundamentals due to localized agglomeration economies can explain the local comovement of stock returns.
    Keywords: Stock returns; Local bias; Agglomeration economies
    JEL: G1 R1 R3
    Date: 2011–06–24
  12. By: Ott, Ingrid; Otto, Alkis Henri; Stiller, Silvia
    Abstract: In order to derive a broadbrush picture of the effects of rising transport costs on the prospective urban development of the city of Hamburg, the Hamburg Institute of International Economics (HWWI) has set up a joint research project together with alstria First German REIT. The present HWWI Policy Paper briefly summarizes the central results of the project and derives policy recommendations with a clear focus on Hamburg. --
    Date: 2010
  13. By: Ebru Kerimoglu (Istanbul Technical University, Department of Urban and Regional Planning); Burhan Can Karahasan (Istanbul Bilgi University, Department of International Finance)
    Abstract: Tentative empirical evidence suggests that the agglomeration of talent contributes to regional development. However, given that talented people are not evenly distributed across regions, this paper seeks to determine how the concentration of talent affects patterns of regional development. Here, we empirically evaluate the effects of the distribution of talent on regional differences by means of a detailed analysis of the 17 Autonomous Communities of Spain between 1996 and 2004. We hypothesise that regions specialising in strategic sectors that are creative and which can be assumed to enjoy rapid growth in productivity will experience faster rates of development and, in turn, that this concentration of talent will have a positive impact on the region’s economic performance. Thus, we believe that this mechanism can explain the marked regional imbalances in Spain. Our findings confirm that regional differences, measured in terms of GDP per capita and by, - industrial and service- oriented production, are influenced by the Communities’ talent bases as determined by, educational attainment and employment in assumed to be strategic for regional development, inasmuch as these sectors provide economic specialization.
    Keywords: Talent, Regional differences, Panel data, Spain. JEL classification: C33, O18, R11, J24.
    Date: 2011–06
  14. By: Aliyu Ahmad Aliyu; Rozilah Kasim (PhD); David Martin (PhD) (Faculty of Technology Management, Business and Entrepreneurships Universiti Tun Hussein Onn Malaysia)
    Abstract: The purpose of the paper is to examine the problem of finance for home acquisition by private residential property developers in Bauchi metropolis, Nigeria
    Keywords: Developers, Finance, Home acquisition Problem, Nigeria, Private residential property
    JEL: M00
    Date: 2011–06
  15. By: Hooi Hooi Lean; Russell Smyth
    Abstract: This paper examines the dynamic linkages between real estate investment trusts (REITs), which are a proxy for investment in real estate, interest rates and stock prices in Malaysia over the period 2006 to 2009. Two mechanisms have been proposed to interpret the relationship between investment in real estate and stocks. The first is the wealth effect, which states that investors with unanticipated gains in share prices will invest in real estate. The second is the credit-price effect, which states that if real estate prices increase, firms holding commercial real estate will have large unrealized capital gains, meaning that investors will bid up the equity value of the firm. This suggests that the housing market will lead the stock market. Over the period 2006 to 2009, real estate and stock prices have surged in tandem in Malaysia. We find evidence of a wealth effect in the short-run, while in the long-run for some REITs we find support for the wealth effect, while for others we find evidence of feedback effects between real estate and stocks. This finding is consistent with a spiralling upturn in both prices and provides support for both effects operating together. The results lend support to concerns that the Malaysian real estate market is characterized by an asset bubble and that a decline in the stock market could burst the Malaysian real estate bubble.
    Keywords: REITs, interest rates, stock prices, Malaysia
    JEL: G15 E44
    Date: 2011–06
  16. By: Anton Bekkerman (Montana State University); Gregory Gilpin (Montana State University)
    Abstract: Extensive literature has shown that student attainment outcomes are affected by schools’ decisions to alter student-to-teacher ratios and overall teacher aptitude levels. However, these findings provide little information to policymakers and school administrators for understanding which teacher input decision provides the greatest student attainment return relative to the associated costs. This study estimates cost-effective teacher input strategies for U.S. high schools seeking to either increase graduation rates or four-year college attendance rates by graduating students. Empirical results indicate that reducing student-to-teacher ratios is the most cost-effective teacher input decision for high schools seeking to improve graduation rates. However, for schools whose objective is to increase four-year college attendance rates, it is more cost-effective to allocate funds to improving teacher quality levels. These results put into question policies such as class size reduction mandates, which disregard schools’ student attainment objectives and institute generalized teacher hiring constraints.
    Date: 2011–06
  17. By: Otto, Alkis Henri
    Abstract: The focus of this study is on the consequences of rising energy costs and demographical change in the city of Hamburg. In section 2 we present a class of models that help to understand and explain patterns of urban land use. Section 3 then discusses urban land use and the population structure of Hamburg. Section 4 addresses some future economic and demographic trends and relates them to rising energy costs. Section 5 finally highlights some conclusion drawn from the analysis. --
    Date: 2010
  18. By: Holden, Steve; Kelly, Austin; McManus, Doug; Scharlemann, Therese; Singer, Ryan; Worth, John
    Abstract: The foreclosure crisis that began in 2008 triggered the need for standardized tools to evaluate distressed mortgages as candidates for modification. A key component of the Obama Administration’s Home Affordable Modification Program (HAMP) was the development of a standardized Net Present Value (NPV) model to identify troubled loans that were value-enhancing candidates for payment-reducing modifications. This paper discusses the development of the HAMP NPV model, its purpose, and the constraints that dictated its structure and limitations. We describe the structure and the estimation of the model in detail. Furthermore, we describe the responsiveness of the model to key characteristics, such as loan to value and credit score and provide new evidence on the relationship between HAMP modification performance and key borrower and modification characteristics. The paper concludes with a discussion of model limitations and suggestions for further refinement of the model.
    Keywords: mortgage modification; loan modification; HAMP; Home Affordable Mortgage Program; NPV test; Net Present Value Test; distressed mortgage
    JEL: D18 R21 G21
    Date: 2011–07–02
  19. By: Jacoby, Hanan G.; Mansuri, Ghazala
    Abstract: Can communal heterogeneity explain persistent educational inequities in developing countries? The paper uses a novel data-set from rural Pakistan that explicitly recognizes the geographic structure of villages and the social makeup of constituent hamlets to show that demand for schooling is sensitive to the allocation of schools across ethnically fragmented communities. The analysis focuses on two types of social barriers: stigma based on caste affiliation and female seclusion that is more rigidly enforced outside a girl's own hamlet. Results indicate a substantial decrease in primary school enrollment rates for girls who have to cross hamlet boundaries to attend, irrespective of school distance, an effect not present for boys. However, low-caste children, both boys and girls, are deterred from enrolling when the most convenient school is in a hamlet dominated by high-caste households. In particular, low-caste girls, the most educationally disadvantaged group, benefit from improved school access only when the school is also caste-concordant. A policy experiment indicates that providing schools in low-caste dominant hamlets would increase overall enrollment by almost twice as much as a policy of placing a school in every unserved hamlet, and would do so at one-sixth of the cost.
    Keywords: Primary Education,Education For All,Disability,Adolescent Health,Tertiary Education
    Date: 2011–06–01
  20. By: Joaquim Murillo (Faculty of Economics, University of Barcelona); Esther Vayá (Faculty of Economics, University of Barcelona); Javier Romaní (Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona)
    Abstract: In this paper, we devise a methodology that is able to objectively quantify the impact of tourism on the urban economy. This methodology takes various dimensions into account. First, to analyse the impact at sectoral level, it should bear in mind that tourism is a "cross-sectional" activity which affects many sectors, both directly and indirectly. Therefore, it is important to consider the impact of urban tourism on sectors traditionally defined as "tourism-related" (that is, hotels, restaurants, shops, etc.) but also its impact on other sectors (for instance, textiles, food, construction, to name only a few) due to the intersectoral relationships that emerge. Second, we need to calculate the percentage of the turnover of each sector that is due to the tourism industry. Third, it is important to establish the geographic distribution of this impact: how is the effect shared between the city and its neighbouring areas? Finally, the effect of urban tourism should be quantified not only in terms of turnover, but also in terms of its contribution to GDP and employment.
    Keywords: Sports; Gambling; Recreation; Tourism; Input–Output Tables and Analysis;Allocative Efficiency; Cost–Benefit Analysis algorithms. JEL classification:
    Date: 2011–06
  21. By: Ciriaci, Daria
    Abstract: Universities are increasingly recognized as key driver of economic development through their role in knowledge production and human capital accumulation, and as attraction poles for talents. That is why this paper analyses the sequential migration behaviour of Italian students-graduates before their enrolment at university, and after graduation, and the role that university quality has in these choices. From a regional development perspective, a better understanding of the causes of Italian interregional brain drain may help to guide policy intervention aimed at reversing or partially compensating for its negative effects on the source regions. The results confirm ‘university quality’ as a «supply» tool for policy makers to counterbalance the negative effects of the brain drain on human capital accumulation.
    Keywords: Brain-drain; labour mobility; university quality; regional economic disparities.
    JEL: R58 J61 R23
    Date: 2009–12–06
  22. By: Dongshu Ou
    Abstract: The high school exit exam (HSEE) is rapidly becoming a standardized assessment procedure for educational accountability in the United States. I use a unique state-specific dataset to identify the effect of failing the HSEE on the likelihood that a student drops out early based on a Regression Discontinuity design. It shows that students who barely fail the exam are more likely to exit than those who barely pass despite being offered retest opportunities. The discontinuity amounts to a large proportion of the dropout probability of barely-failers, particularly for minority and low-income students, suggesting that the potential benefit of raising educational standards might come at the cost of increasing inequalities in the educational system.
    Keywords: high school exit exam, student dropout, regression discontinuity
    JEL: I21 I28 J24
    Date: 2009–08
  23. By: Fabio Fiorillo; Agnese Sacchi
    Abstract: We hereby propose a model to analyze the provision of environmental protection activities (United Nation 2005) with positive interregional externalities in order to verify - at least in theory - whether this kind of policy is better accomplished through centralized policymaking, which implies a coordinated solution among local representatives, or a decentralized system, whereby local authorities independently finance and implement their environmental protection policy. The research question concerns the identification of criteria on how to allocate powers and functions to environmental management at different tiers of government. Moreover, modelling interregional externalities as a mechanism contributing to lowering the cost of financing environmental policy in each region (production externality), we can assume that different environmental policies are allowed across regions. Given this general framework, considerations favouring either institutional setting in terms of individuals’ welfare seem to involve interaction among these key elements: the extent of the inter-jurisdictional spillovers, the size of local jurisdictions and the regional preferences for environmental protection policy.
    Keywords: Environmental protection activities; Environmental federalism; Externalities; Local government
    JEL: H71 H73 H23 Q58
    Date: 2011–06
  24. By: Ama Baafra Abeberese; Todd J. Kumler; Leigh L. Linden
    Abstract: We evaluate a program that aims to improve children’s reading skills by providing classes with age-appropriate reading material and incentivizing children to read through a 31 day read-a-thon. During the read-a-thon, the program significantly increases the propensity of children to read, causing 20 percent more children to have read a book in the last week at school and increasing the number of books read by 2.3 in the last week and 7.2 in the last month. These increases extend both after the end of the program and outside of school, although at lower rates. The program also increased students’ scores on a reading assessment, causing students’ scores to improve by 0.13 standard deviations immediately after the program. The effect persisted even after the program ended with an effect of 0.06 standard deviations three months later.
    JEL: I21 I28 O15
    Date: 2011–06
  25. By: Dag Henning Jacobsen (Norges Bank (Central Bank of Norway)); Bjørn Helge Vatne (Norges Bank (Central Bank of Norway))
    Abstract: We analyze the effect of house price changes on debt secured on dwellings in Norway. To this end, we use both macro time series and micro panel data. With the intention of being both a cross-check and motivation for the micro analysis, we estimate a structural vector auto regression using macro variables. A key result of the macro analysis is that positive house price innovations have positive and persistent effects on households debt secured on dwellings. Results from the micro data analysis suggest that the effect of house price changes on the borrowing decision differs from the effect on the instalment decision among existing home owners. These results are further investigated trough a two stage model where we control for income, collateral value and age. The model predicts that the size of both loans and instalments increase with income. Loan sizes increase and the instalments fall with increasing collateral value. The results support the existence of a wealth channel but do not provide support for a collateral channel.
    Keywords: VAR, house prices, mortgage equity withdrawal, logit model, micro panel data
    JEL: C25 C32 D12 D14 E21
    Date: 2011–07–05
  26. By: d'Agostino, Giorgio; Scarlato, Margherita
    Abstract: ABSTRACT. This paper carries out an explanatory investigation into the relationship between socio-institutional conditions, quality of life indicators and economic growth in the Italian regions. Previous studies stress the importance of institutional quality, social capital and social conditions in determining disparities between richer and poorer regions. Building on this literature, we consider a three-sector model of semi-endogenous growth with negative externalities depending on structural and institutional factors that affect the innovative capacity of regional systems (the “social externalities hypothesis”). Simulations based on the scaled stationary system confirm that endogenous socio-economic conditions are crucial for the successful translation of innovation into economic growth. It is suggested that generating a development strategy designed to improve social conditions and well-being in the poorer regions may yield dividends in terms of the effectiveness of public policy and economic development.
    Keywords: Development; growth; regional disparities; well-being
    JEL: R58 O10 O30 C23 C61 R11 O40
    Date: 2011–06–28
  27. By: Boje, Amelie; Ott, Ingrid; Stiller, Silvia
    Abstract: This paper disentangles the single effects of increasing transportation costs on the arising economic structure and applies them to the regional level of the metropolis of Hamburg. Therefore we begin with a general indexing of the metropolis Hamburg in the context of Germany's ten biggest cities according to some key economic variables. Of major importance are issues of migration, commuting as well as structural change and regional specialization. As will become apparent all these aspects are differently affected by (changing) transportation costs and it is finally the interplay of different forces that shapes the future structure and hence the economic success of the metropolis. From the viewpoint of private individuals, increasing transportation costs affect the outweighing of commuting from home to the working place versus migration. Focusing on the production site, not only direct but also indirect effects that arise from horizontal or vertical relationships gain importance. --
    Date: 2010
  28. By: Burchardi, Konrad B.; Hassan, Tarek
    Abstract: We use the fall of the Berlin Wall in 1989 to identify a causal effect of social ties on regional economic growth. We show that households who have social ties to East Germany in 1989 experience a persistent rise in their personal incomes after the fall of the Berlin Wall. Moreover, the presence of these households significantly affects economic performance at the regional level: it increases the returns to entrepreneurial activity, the share of households who become entrepreneurs, and the likelihood that firms based within a given West German region invest in East Germany. As a result, West German regions which (for idiosyncratic reasons) have a high concentration of households with social ties to the East exhibit substantially higher growth in income per capita in the early 1990s. A one standard deviation rise in the share of households with social ties to East Germany in 1989 is associated with a 4.6 percentage point rise in income per capita over six years. We interpret our findings as evidence that social ties between individuals can indeed facilitate economic growth.
    Keywords: economic development; German Reunification; migration; networks; social ties
    JEL: J61 L14 O11
    Date: 2011–07
  29. By: Andersson, Henrik (Toulouse School of Economics (UT1, CNRS, LERNA)); Ögren, Mikael (VTI)
    Abstract: This study outlines a method to estimate the short run marginal cost (SRMC) for road and railway noise. It is based on standardized calculation methods for total noise levels and monetary cost estimates from well established evaluation methods. Here official calculation methods and monetary values are used for Sweden, but the estimation method for the SRMC outlined can be directly applied using other standardized noise calculation methods and monetary values. This implies that the current knowledge regarding the calculation of total noise levels and the evaluation of the social cost of noise can be extended to estimate the marginal effect as well. This is an important finding since it enables policy makers to price noise externalities in an appropriate way. Several sensitivity tests run for the SRMC show that: (i) increasing the total traffic on the infrastructure has only a minor influence, (ii) estimates are quite sensitive to the number of exposed individuals, and (iii) to the monetary values used. Hence, benefits transfer, i.e. using monetary values elicited based on road noise for railway noise, should be done with caution or not at all. Results also show that the use of quiet technology can have a significant effect on the SRMC. The fact that this model is able to differentiate not only modes of transport, but also vehicles and even technologies is an important finding. It is essential that the noise charges give the operators the right incentives to choose their optimal allocation.
    Keywords: Externalities; Marginal cost; Noise; Railway; Road
    JEL: D62 Q51 R41
    Date: 2010–12–21
  30. By: Giulietti, Corrado (IZA); Ning, Guangjie (Nankai University); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: This paper focuses on the determinants of self-employment among rural to urban migrants in China. Two self-selection mechanisms are analysed: the first relates to the manner in which migrants choose self-employment or paid work based on the potential gains from either type of employment; the second takes into account that the determinants of the migration decision can be correlated with employment choices. Using data from the 2008 Rural-Urban Migration in China and Indonesia (RUMiCI) survey, a selection model with endogenous switching is estimated. Earnings estimates are then used to derive the wage differential, which in turn is used to model the employment choice. The procedure is extended to account for migration selectivity and to compare individuals with different migration background and employment histories. The results indicate that self-employed individuals are positively selected with respect to their unobserved characteristics. Furthermore, the wage differential is found to be an important driver of the self-employment choice.
    Keywords: self-employment, wages, rural to urban migration, selection bias magnets, European Union
    JEL: J23 J61 O15
    Date: 2011–06
  31. By: Tomas Ramanauskas (Bank of Lithuania)
    Abstract: In this paper we analyse determinants of the recent boom-and-bust cycle of the Lithuanian economy with the help of a medium-sized macroeconometric model that incorporates a functional financial block. Special emphasis is put on the role of credit market conditions during the overheating episode. We quantitatively estimate the impact of credit conditions and externally funded bank lending on macroeconomic developments. There is evidence that easy credit conditions and active credit expansion contributed moderately to real economic growth but significantly added to overheating pressures by pushing up real estate prices, encouraging concentration of labour and capital into procyclical sectors and increasing private sector’s debt burden. During the boom episode buoyant external environment provided strong background for export-led growth, which was later strongly affected by temporary foreign trade collapse at the outset of the economic crisis. Model results also suggest that government’s discretionary fiscal policies may have contributed to economic overheating and severity of the ensuing crisis by not adopting sufficiently prudent fiscal stance during the boom episode. The model confirms that more favourable interest rate environment and accommodating fiscal policies are important for providing a temporary relief for the crisis-stricken economy but deep structural transformation of the economy is needed for the sustainable recovery to take hold.
    Keywords: structural macroeconometric modelling, macrofinancial linkages, economic cycles, credit, banking sector, housing price bubble
    JEL: E10 E17 E37 E51
    Date: 2011–07–04
  32. By: John Gathergood
    Abstract: This paper investigates racial disparities in household credit constraints using U.K. survey data. We find a widening disparity in the proportion of racial minority households reporting they face credit constraints compared with non-minority households over the period 2006-2009. By 2009 three times as many racial minority households faced credit constraints compared with White households. The difference in credit constraints across racial minority and non-minority households is not explained by a broad set of covariates. While crosssection variation in reported credit constraints might most likely reflect unobservables, we argue this time series variation is very unlikely to arise due to unobservables and is evidence of growing perceived disparity in credit access between racial groups over the period.
    Keywords: credit constraints, race.
  33. By: Stefano Magrini (Department of Economics, University Of Venice Cà Foscari); Margherita Gerolimetto (Department of Economics, University Of Venice Cà Foscari); Hasan Engin Duran (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The analysis of synchronization among regional or national business cycles has recently been attracting a growing interest within the economic literature. Far less attention has instead been devoted to a closely related issue: given a certain level of synchronization, some economies might be systematically ahead of others along the swings of the business cycle. In other words, there could be a lead/lag structure in which some economies systematically lead or lag behind others. In the present paper we aim at providing a thorough analysis of the lead/lag structure among a system of regional economies. This task is achieved in two steps. First, we show that leading (or lagging behind) is a feature that does not occur at random across the economies. Second, we investigate the economic drivers that could explain such a behavior. To do so, we employ data for 48 conterminous US states between 1979 and 2010.
    Keywords: Regional business cycles, lead/lag structure, synchronization
    JEL: R10 E32 O18 F40
  34. By: Vipin Arora; Pedro Gomis-Porqueras
    Abstract: We show the importance of endogenous oil prices and production in the real business cycle framework. Endogenising these variables improves the model's predictions of business cycle statistics, oil related and non-oil related, relative to a situation where either is exogenous. This result is robust to the standard extensions (variable capacity utilisation and monopolistic competition) used in the literature. In particular, we first show that with either exogenous oil prices or production the standard real business cycle model and variants cannot match the oil-related and business cycle facts. In contrast, when both of these variables are endogenous, we can substantially improve the corresponding co-movements and slightly improve standard business cycle properties for consumption and investment.
    Keywords: Oil price, two regions, variable capacity utilization
    JEL: E37 F47 Q43
    Date: 2011–06
  35. By: Adrian Chadi
    Abstract: While rising unemployment generally reduces people’s happiness, researchers argue that there is a compensating social-norm effect for the unemployed individual, who might suffer less when it is more common to be unemployed. This empirical study, however, rejects this thesis for German panel data and finds individual unemployment to be even more hurtful when aggregate unemployment is higher. On the other hand, an extended model that separately considers individuals who feel stigmatised from living off public funds yields strong evidence that this group of people does in fact suffer less when the normative pressure to earn one’s own living is lower.
    Keywords: social norms, unemployment, well-being, social benefits, labour market policies
    JEL: I3 J6
    Date: 2011
  36. By: Hepp, Ralf; von Hagen, Jürgen
    Abstract: We provide empirical estimates of the risk-sharing and redistributive properties of the German federal fiscal system based on data from 1970 until 2006, with special attention to the effects of German unification. We find that tax revenue sharing between the states and the federal government and the fiscal equalization mechanism (Länderfinanzausgleich) together reduce differences in per-capita state incomes by 37 percent during period 1970 to 1994. After the full integration of East German states into the mechanism in 1995, the redistributive effects increase slightly to about 39 percent. With respect to the insurance effect of the German fiscal system, our results indicate that the federal fiscal system offsets 47 percent of an asymmetric shock to state per-capita incomes. This effect has significantly decreased after the inclusion of the East German states in 1995. Furthermore, we find that the German fiscal system provides almost perfect insurance for state government budgets against asymmetric revenue shocks; also, its redistributive effect with regard to the tax resources available to state governments is very strong. --
    Keywords: Regional Risk-sharing,Fiscal Federalism,Monetary Union
    JEL: H77 E63 F42
    Date: 2010
  37. By: Escobal, J., Ponce, C. (Rimisp)
    Abstract: This document is the result of the Rural Territorial Dynamics Program, implemented by Rimisp in several Latin American countries in collaboration with numerous partners. The program has been supported by the International Development Research Center (IDRC, Canada). We authorize the non-for-profit partial or full reproduction and dissemination of this document, subject to the source being properly acknowledged.
    Keywords: spatial patterns, growth, poverty, changes, Peru
    JEL: D44 D82 L86 C72
    Date: 2011
  38. By: Philipp Kolo (Georg-August-Universität Göttingen / Germany)
    Abstract: Ethnic fragmentation is a variable increasingly used in the economic literature to explain differences in economic development level, growth or the incidence of conflicts. Nearly all articles have in common that they treat ethnic fragmentation as a static, exogenous fact. Only recently some contributions outlined first ideas, why different levels of ethnic fragmentation evolved based on biodiversity and evolutionary theories. This article has two main goals. In connecting with these recent findings, the article boldly confirms their results that a ‘base-level’ of fragmentation evolved due to geographical and evolutionary factors. Additionally, it draws the attention to the impact of colonization on fragmentation, especially on how a country was colonized. The main goal, however, is to show that ethnic fragmentation is not only evolving over centuries, but changes over a short period of time. As static factors, e.g. geographical ones, can’t be responsible for changes in the short run, the article offers a structured assessment of factors that may influence diversity levels in the short term. Although migration is the most obvious factor, urbanization and especially education play an even more important role in influencing a country’s ethnic boundaries.
    Keywords: Colonization, Endogeneity, Ethnic fractionalization (ELF), Heterogeneity
    JEL: C23 F54 I29 O10 Z10

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