|
on Urban and Real Estate Economics |
| By: | Xiaofang Dong; Shihe Fu; Yufei Yuan |
| Abstract: | Local governments often charge developers impact fees to finance local public goods. This has been practiced in the Chinese cities for more than two decades; however, no empirical studies have tested the effect of impact fees on real estate prices. Using a panel data set for 35 large and medium cities from 1998 to 2008, we find that impact fees lead to a significant increase in real estate prices. For a given city, an increase of impact fee by one yuan leads to an increase of about 5 yuan in the price of newly-built housing; a 1% increase in impact fee leads to an increase of 5 percentage points in the housing price index and 7 percentage points in the land price index. |
| Keywords: | Impact fee; Real estate price; Local public finance |
| JEL: | H71 R30 R31 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002181&r=ure |
| By: | Georges Bresson; Cheng Hsiao |
| Abstract: | This paper proposes a functional connectivity approach, inspired from brain imaging literature, to model cross-sectional dependence. Using a varying parameter framework, the model allows correlation patterns to arise from complex economic or social relations rather than being simply functions of economic or geographic distances between locations. It nests the conventional spatial and factor model approaches as special cases. A Bayesian Markov Chain Monte Carlo method implements this approach. A small scale Monte Carlo study is conducted to evaluate the performance of this approach in finite samples, which outperforms both a spatial model and a factor model. We apply the functional connectivity approach to estimate a hedonic housing price model for Paris using housing transactions over the period 1990-2003. It allows us to get more information about complex spatial connections and appears more suitable to capture the cross-sectional dependence than the conventional methods. |
| Keywords: | Bayesian hierarchical, Functional connectivity, Hedonic housing prices, Panel�spatial dependence. |
| JEL: | C21 C23 C31 C33 R21 R31 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002130&r=ure |
| By: | Puman Ouyang; Shihe Fu |
| Abstract: | In many countries inward foreign direct investment (FDI) typically concentrates in a few regions. However, there is little empirical evidence on whether spatially concentrated FDI boosts economic growth in other regions within the same country. We use a dataset that covers 96% of Chinese cities from 1996–2004 and find that “inter-regional spillovers†from FDI concentrated in China’s coastal cities have a positive and significant effect on the growth of inland cities. In addition, an inland city’s industrial development affects its absorptive capacity to gain such interregional spillovers from coastal FDI. |
| Keywords: | D124Foreign direct investment, Regional inequality, Inter-regional spillovers, Absorptive capacity, Growth |
| JEL: | F21 R12 O40 O14 O18 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002154&r=ure |
| By: | Elizabeth Ananat; Shihe Fu; Stephen L. Ross |
| Abstract: | We demonstrate a striking but previously unnoticed relationship between city size and the black-white wage gap, with the gap increasing by 2.5% for every million-person increase in urban population. We then look within cities and document that wages of blacks rise less with agglomeration in the workplace location, measured as employment density per square kilometer, than do white wages. This pattern holds even though our method allows for non-parametric controls for the effects of age, education, and other demographics on wages, for unobserved worker skill as proxied by residential location, and for the return to agglomeration to vary across those demographics, industry, occupation and metropolitan areas. We find that an individual’s wage return to employment density rises with the share of workers in their work location who are of their own race. We observe similar patterns for human capital externalities as measured by share workers with a college education. We also find parallel results for firm productivity by employment density and share college-educated using firm racial composition in a sample of manufacturing firms. These findings are consistent with the possibility that blacks, and black-majority firms, receive lower returns to agglomeration because such returns operate within race, and blacks have fewer same-race peers and fewer highly-educated same-race peers at work from whom to enjoy spillovers than do whites. Data on self-reported social networks in the General Social Survey provide further evidence consistent with this mechanism, showing that blacks feel less close to whites than do whites, even when they work exclusively with whites. We conclude that social distance between blacks and whites preventing shared benefits from agglomeration is a significant contributor to overall black-white wage disparities. |
| JEL: | J15 J24 J31 R23 R32 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002057&r=ure |
| By: | Rafael Boix Domenech; José Luis Hervás Oliver; Blanca De Miguel Molina |
| Abstract: | The occurrence of creative service industries (CSI) is a strong determinant of differences in wealth amongst European regions. However, it is unknown if the strong effects are limited to occurring within regional boundaries or whether there are spillover effects into neighbouring regions. The purpose of this paper is to assess the existence of CSI spillover effects on the wealth of neighbouring regions. CSI and spillovers are integrated into both an empirical model and an endogenous growth model. Both models are estimated for a sample of 250 regions in the European Union in 2008. We find that most of the effects of CSI take place within regions, although there is also evidence that CSI has indirect spillovers across regions. |
| Keywords: | creative industries; creative services; regional growth; spatial spillovers; spatial econometrics |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:uae:sermed:20&r=ure |
| By: | Shihe Fu; Stephen Ross |
| Abstract: | This paper tests whether the correlation between wages and the spatial concentration of employment can be explained by unobserved worker productivity differences. Residential location is used as a proxy for a worker’s unobserved productivity, and average workplace commute time is used to test whether location-based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census Long Form find that the agglomeration estimates are robust to comparisons within residential location and that the estimates do not persist after controlling for commuting costs suggesting that the productivity differences across locations are not due to productivity differences across individuals. |
| Keywords: | Agglomeration, Wages, Sorting, Locational Equilibrium, Human Capital Externalities |
| JEL: | R13 R30 J24 J31 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002155&r=ure |
| By: | Zhihong Chen; Shihe Fu; Dayong Zhang |
| Abstract: | Based on the parallel growth implications of the four urban growth theories (endogenous growth theory, random growth theory, hybrid growth theory, and locational fundamentals theory), this paper uses the Chinese city size data from 1984-2006 and time series econometric techniques to test for parallel growth. The results from various types of stationarity tests show that city growth is generally random. Conditioning on growth trend and structural change, certain groups of cities with common location specific characteristics, such as similar natural resource endowment or policy regime, grow parallel in the long run, suggesting that locational fundamentals may have persistent impacts on city growth. |
| Keywords: | Urban growth; Parallel growth; Zipf’s law; Locational fundamentals |
| JEL: | C22 R11 R12 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002022&r=ure |
| By: | Ling Peng; Yongmiao Hong |
| Abstract: | This paper estimates the impact of inter-sectoral linkages on productivity at the sectoral level. An exhaustive Chinese panel data set for capital, infrastructure and a sectoral agglomeration index is linked with an economic distance matrix derived from inter-sectoral transactions. The latter matrix can replace the conventional geographic distance matrix from spatial econometrics. The impact through spillovers is mixed—the direct impact passing to related sectors and back to the initial sector itself, and the indirect impact arising from changes in all sectors. The results suggest that (1) economic growth in a sector is driven by spillovers among sectors that are linked through flows of goods and services; economic distance plays a more important role in stimulating productivity spillover than spatial distance; a shorter economic distance transmits a larger productivity spillover between sectors; (2) infrastructure spillover improves labor productivity in linked sectors; (3) agglomeration diseconomies can be partially reduced by infrastructure investment. |
| Keywords: | Inter-sectoral linkages, Economic distance, Spatial econometrics, Spillover, indirect impact |
| JEL: | C33 O41 H41 D62 L69 P59 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002193&r=ure |
| By: | Yu Ren; Yufei Yuan; Cong Xiong |
| Abstract: | In this paper, we apply the theory of rational expectation bubbles to the Chinese house market. Rational expectation bubbles imply that negative returns on house prices are, theoretically, less likely to occur if the bubbles exist and persist. Based on the data of 29 cities in China, we find no evidence to support the existence of bubbles in the housing market. |
| Keywords: | China house price; rational expectation bubble; hazard rate |
| JEL: | R31 E31 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002032&r=ure |
| By: | Thomas Y. Mathä; Alessandro Porpiglia; Michael Ziegelmeyer |
| Abstract: | Crossing borders, be it international or regional, often go together with price, wage or indeed wealth discontinuities. This paper identifies substantial wealth differences between Luxembourg resident households and cross-border commuter households despite their similar incomes. The average (median) net wealth difference is estimated to be EUR 367,000 (EUR129,000) and increases for higher percentiles. Using several different regression and decomposition techniques, spatial (regional) differences in real estate price developments, and thus differences in accumulated nominal capital gains are shown to be one main driving factor for these wealth differences. Other factors contributing to the observed wealth differences are differences in age, income, education and other household characteristics. |
| Keywords: | household survey, wealth, real estate price dynamics, cross-border commuting |
| JEL: | D31 J61 F22 R23 R31 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:bcl:bclwop:bclwp090&r=ure |
| By: | Krenz, Astrid |
| Abstract: | We investigate the effects of job-specific knowledge for individual labor earnings of workers in the German economy. The results indicate a positive effect for earnings stemming in particular from high-knowledge in the areas of sales and marketing, computers and electronics, mathematics, biology and law and government. Investigating the geographical concentration of employment reveals, for example, that workers with highknowledge in the field of communication and media are concentrated in just a few places whereas workers with high-knowledge in law and government and administration and management are far more dispersed over the regions. These patterns of geographical localization of employment give evidence for differences in the dissemination of knowledge across peers and customers. -- |
| Keywords: | agglomeration,knowledge,growth,German regional planning units,wages,Heckman selection,Krugman index |
| JEL: | J31 J61 R11 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:206&r=ure |
| By: | N. Kundan Kishor (Department of Economics, University of Wisconsin-Mulwaukee); James Morley (School of Economics, Australian School of Business, the University of New South Wales) |
| Abstract: | This paper proposes a modified present-value model that takes into account the fact that movements in the price-rent ratio for housing may not be mean-reverting. Our approach decomposes the price-rent ratio into expected real rent growth, expected housing return and a non-present-value (NPV) component that represents the deviation of the price-rent ratio from its conventional present-value level for the 18 U.S. metropolitan areas and the nation from 1975 through 2012. This NPV component takes into account non-stationarity of the price-rent ratio. To estimate this modified present-value model, we use the unobserved component approach. Our findings suggest that the NPV component is significant and sometimes very large both at the national and the regional level. This is especially true for the MSAs that have experienced frequent booms and busts in the housing market. We also find that the MSAs that display larger deviation from the present-value model are more sensitive to mortgage rate changes. We also compare our results with a recent statistical test for periodically collapsing bubbles. The results from this test and for our model indicate that the MSAs that had large NPV components are also the MSAs that witnessed explosive sub-periods in their price-rent ratios, especially during the 2005-2007 subsample. Our approach also allows us to estimate the correlation between expected rent growth, expected housing return and the NPV component. We find that a shock to expected housing return and a shock to the non-stationary NPV component are highly positively correlated in the pre-2006 sample period, implying that they fed off of each other. This correlation declined significantly in the post-2006 sample period. Our results also show that most of the variation in the present-value component of the price-rent ratio arises due to the variation in expected housing return. |
| Keywords: | Price-Rent Ratio, Present-Value Model and Unobserved Component Model |
| JEL: | R31 G12 C5 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-20&r=ure |
| By: | Laura Golden; Barbara Harris; Diana Mercado-Garcia; rea Boyle; Kerstin Carlson Le Floch; Jennifer O'Day |
| Keywords: | SIG, School Improvement Grants, English Language Learners, Education |
| JEL: | I |
| Date: | 2014–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:8108&r=ure |
| By: | Leung, Charles Ka Yui |
| Abstract: | Central to recent debates on the "mis-pricing" in the housing market and the proactive policy of central bank is the determination of the "fundamental house price." This paper builds a dynamic stochastic general equilibrium (DSGE) model that produces reduced-form dynamics that are consistent with the error-correction models proposed by Malpezzi (1999) and Capozza et al (2004). The dynamics of equilibrium house prices are tied to the dynamics of the house-price-to-income ratio. This paper also shows that house prices and incomes should be co-integrated, and hence provides a justification of using co-integration tests to detect possible "mis-pricing" in the housing market. |
| Keywords: | fundamental house price, error-correction model, cointegration, house price-to-income ratio, endogenous house price and income. |
| JEL: | E30 O40 R30 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55654&r=ure |
| By: | Ilhom Abdulloev; Gil S. Epstein (Bar-Ilan University); Ira N. Gang |
| Abstract: | Some immigrants try to keep their ethnicity hidden while others become ever deeply more mired in their home culture. We argue that among immigrants this struggle manifests itself in the ethnic goods they choose to consume. Different types of ethnic goods have vastly different effects on immigrant assimilation. We develop a simple theoretical model useful for capturing the consequences of this struggle, illustrating it with examples of Central Asian assimilation into the Muscovite economy. |
| Keywords: | assimilation, migrants, culture, ethnic goods |
| JEL: | J15 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2014-03&r=ure |
| By: | Richard England; Min Qiang Zhao; Ju-Chin Huang |
| Abstract: | Decisions about residential lot size and square footage are influenced by a variety of determinants ranging from zoning regulations to neighborhood characteristics. Our theoretical analysis suggests that the property tax rate could also affect residential lot sizes and the sizes of newly constructed houses. Using descriptions for over 36 thousand houses built in New Hampshire between 1985 and 2006, we find empirical evidence that higher property taxes are indeed associated with both smaller lots and smaller houses. On average, higher property tax rates are associated with more additional living space per newly developed acre. These effects are modest in magnitude, however. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002186&r=ure |
| By: | Ying Fang; Li Qi; Zhongjian Lin |
| Abstract: | We measure the correlations between two cities’ real GDP growth rates (a measure of business cycle correlations) to capture the degree of segmentation across China’s provincial and regional borders. This type of segmentation can be caused by local protectionism as well as other economic and geographic factors that affect business cycle correlations between two cities. After controlling these other factors, we are able to pin down the border effect that is due to local protectionism: administrative border effect. We find that the inter-provincial administrative border effect first rose and then gradually declined in the period between 1991 and 2007. Further, its increase coincided with the introduction of the Tax Sharing System reform, which started in 1994. This administrative border effect declined steadily in recent years as the tax reform was fully instituted. Our analysis shows that China’s reform path (under market-preserving federalism) did not create a persistent provincial “administrative border effect†that debilitated market forces. |
| Keywords: | Border effect, Market integration, Business cycle correlation |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002016&r=ure |
| By: | Shihe Fu; Liwei Shan |
| 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: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002041&r=ure |
| By: | Cem Aysoy; Cevriye Aysoy; Semih Tumen |
| Abstract: | Using a national panel of housing units, this paper documents that the rate of nominal rigidities in housing rents is high in Turkey between 2008 and 2011. We find that, on average, 31.5 percent of the rents did not change from year to year in nominal terms. We then ask if the incidence of nominal rigidity depends on the turnover status of the housing unit. We show that 35.4 percent of the nonturnover units had rigid rents, while for only 17.1 percent of the turnover units rents did not change. We also present evidence that grid pricing is responsible for more than half of the observed nominal rigidities in housing rents. The household- and individual-level determinants of the nominal rigidities in rents, turnover status, and tenure in the same unit are also investigated using the micro-level details available in our dataset. Implications of these results for monetary policy, in ation accounting, welfare, asset prices, and other redistributional issues are discussed. |
| Keywords: | Housing rents; nominal rigidities; turnover; grid pricing |
| JEL: | E31 R21 R31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1409&r=ure |
| By: | Michael Fritsch; Michael Wyrwich |
| Abstract: | We use the historical self-employment rate as an indicator of a regional culture of entrepreneurship and link this measure to economic growth in recent periods. The results indicate that German regions with a high level of entrepreneurship in the mid-1920s have higher start-up rates about 80 years later. Furthermore, we find that the effect of current start-up activity on regional employment is significantly higher in regions with a pronounced entrepreneurial culture. We conclude that a regional culture of entrepreneurship is an important resource for regional growth. |
| Keywords: | Entrepreneurship, economic development, self-employment, new business formation, entrepreneurship culture, institutions |
| JEL: | L26 R11 O11 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1411&r=ure |
| By: | Beatrice CAMAIONI (INEA (National Institute for Agricultural Economics), Rome - Italy); Roberto ESPOSTI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Francesco PAGLIACCI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Franco SOTTE (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali) |
| Abstract: | This paper focuses on the main drivers of the distribution of the Rural Development Policy's expenditure throughout the EU. Ex-post funds distribution across EU NUTS3 regions is considered. Three effects are admitted as major drivers: the "country effect"; the "rural effect" (i.e., the more rural a region the larger the amount of support it is expected to receive); the "pure spatial effect" (i.e. the influence of bordering regions and, in particular, of their degree of rurality). These effects are estimated adopting alternative spatial model specifications: spatial Durbin model, SEM and SAR model. Results differ across alternative specifications and definitions of rurality, but the prevalent evidence suggests that rurality matters in a counterintuitive direction, while also neighbouring regions play a role. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:399&r=ure |
| By: | Odran Bonnet (Sciences Po, LIEPP, Département d'Economie); Pierre-Henri Bono (Sciences Po LIEPP); Guillaume Chapelle (Sciences Po, LIEPP, Département d'Economie); Etienne Wasmer (Département d'économie) |
| Abstract: | In his book, Capital in the 21st Century,Thomas Piketty highlights the risk of an explosion of wealth inequality because capital is accumulating faster than income in several countries including the US and European countries such as France. Our work challenges the conclusions of the author in three steps. First, the author’s result is based on the rise of only one of the components of capital, namely housing capital,and due to housing prices. In fact, housing prices have risen faster than rent and income in many countries.It is worth noting that “productive” capital, excluding housing, has only risen weakly relative to income over the last few decades. Over the longer run, the “productive” capital/income ratio has not increased at all. Second, rent, not housing prices, should matter for the dynamics of wealth inequality, because rent represents both the actual income of housing capital for landlords and the dwelling costs saved by “owner-occupiers” (people living in their own houses). Logically, to properly measure capital, the value of housing capital must be corrected by measuring it on actual rental price, and not housing prices. Third, when we apply this change, we find that the capital/income ratio is actually stable or only mildly higher in the countries analyzed (France, the US, the UK, and Canada) except for Germany where it rose. These conclusions are exactly opposite to those found by Thomas Piketty. However, this does not mean that housing prices do not contribute to other forms of inequality. When housing prices rise, owners of the housing capital hold a higher value that can be transformed into consumption. It is also more difficult for young adults to become homeowners. Housing incomes of owners however do not necessarily increase which casts serious doubt on Piketty’s conclusion of a potential explosive dynamics of inequality based on these trends. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpecon:info:hdl:2441/30nstiku669glbr66l6n7mc2oq&r=ure |
| By: | Marcel Ausloos (Liege & Amsterdam); Herbert Dawid (Bielefeld); Ugo Merlone (Torino) |
| Abstract: | Agent Based Modeling (ABM) has become a widespread approach to model complex interactions. In this chapter after briefly summarizing some features of ABM the different approaches in modeling spatial interactions are discussed. It is stressed that agents can interact either indirectly through a shared environment and/or directly with each other. In such an approach, higher-order variables such as commodity prices, population dynamics or even institutions, are not exogenously specified but instead are seen as the results of interactions. It is highlighted in the chapter that the understanding of patterns emerging from such spatial interaction between agents is a key problem as much as their description through analytical or simulation means. The chapter reviews different approaches for modeling agents' behavior, taking into account either explicit spatial (lattice based) structures or networks. Some emphasis is placed on recent ABM as applied to the description of the dynamics of the geographical distribution of economic activities, - out of equilibrium. The Eurace@Unibi Model, an agent-based macroeconomic model with spatial structure, is used to illustrate the potential of such an approach for spatial policy analysis. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1405.0733&r=ure |
| By: | Dauth, Wolfgang; Suedekum, Jens |
| Abstract: | We analyze how globalization has affected the sectoral anatomy of regional growth in Germany over the period 1978-2008. The aggregate German economy is characterized by a secular decline of manufacturing and a rise of modern service industries. This trend - also known as Petty's law - is not uniform across space, however. Some regions exhibit it at an even accelerated pace, while other regions have reinforced their manufacturing specializations. We first categorize all German regions into one of three groups, with protrend, anti-trend or featureless growth. Afterwards we propose an explanation why a particular region ended up in one of those groups: We argue that the regional profiles of growth and change are systematically related to the initial sizes, and the import and export exposures of the local manufacturing sectors. -- |
| Keywords: | structural change,local industry compositions,trade exposure,local employment growth |
| JEL: | R11 O14 F16 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:142&r=ure |
| By: | Ying Fang; Sung Y. Park; Jinfeng Zhang |
| Abstract: | It is well known that the standard Lagrange multiplier (LM) test loses its local optimality when the true non-null model is not correctly specified. In this paper, we derive a score test robust to local and distributional misspecifications for spatial error autocorrelation and spatial lag dependence. The proposed test is general enough to include several popular tests for the spatial dependence as special cases. In our framework, we find that Burridge (1980) and Anselin, Bera, Florax and Yoon (1996)’s tests are automatically robust to distributional misspecification in some special cases. The size and power performances of our proposed score tests are investigated by a Monte-Carlo simulation. |
| Keywords: | �Spatial�dependence;�Score�test;�Robust�test;�Distribution�misspecification; |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002027&r=ure |
| By: | Yu Ren; Yufei Yuan |
| Abstract: | This paper establishes a dynamic stochastic partial equilibrium model for explaining residential investment dynamics in the United States, focusing on the distinctive cyclical features of residential investment in that it leads the whole economy. This paper is different from the existing literature by adding three new features to the model: news shocks, collateral constraints and agent heterogeneity. The partial equilibrium analysis where interest rates are exogenously fixed shows that these assumptions are essential to generating the dynamic pattern in which residential investment leads consumption and GDP. |
| Keywords: | News shocks, Heterogeneous agents, Housing sector, Collateral constraints, Aggregate uncertainty |
| JEL: | E21 E25 E32 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002170&r=ure |
| By: | Zhang, Haimin |
| Abstract: | There is growing belief in many developed countries, including Canada, that the large influx of the foreign-born population increases crime. Despite the heated public discussion, the immigrant-crime relationship is understudied in the literature. This paper identifies the causal linkages between immigration and crime using panel data constructed from the Uniform Crime Reporting Survey and the master files of the Census of Canada. This paper distinguishes immigrants by their years in Canada and defines three groups: new immigrants, recent immigrants and established immigrants. An instrumental variable strategy based on the historical ethnic distribution is used to correct for the endogenous location choice of immigrants. Two robust patterns emerge. First, new immigrants do not have a significant impact on the property crime rate, but with time spent in Canada, a 10% increase in the recent-immigrant share or established-immigrant share decreases the property crime rate by 2% to 3%. Neither underreporting to police nor the dilution of the criminal pool by the addition of law-abiding immigrants can fully explain the size of the estimates. This suggests that immigration has a spillover effect, such as changing neighbourhood characteristics, which reduces crime rates in the long run. Second, IV estimates are consistently more negative than their OLS counterparts. By not correctly identifying the causal channel, OLS estimation leads to the incorrect conclusion that immigration is associated with higher crime rates. |
| Keywords: | Immigration; Crime |
| JEL: | F22 J15 K42 |
| Date: | 2014–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:clssrn:clsrn_admin-2014-20&r=ure |
| By: | Chitalu M. Chama-Chiliba and Steven F. Koch |
| Abstract: | This paper examines regional differences in the effect of user fee removal in rural areas of Zambia on the use of health institutions for delivery. The analysis uses quarterly longitudinal data covering 2003q1-2008q4. When unobserved heterogeneity, spatial dependence and quantitative supply-side factors are incorporated in the Interrupted Time Series (ITS) design, user fee removal is found to immediately increase aggregate institutional deliveries, although the national trend was unaffected. Drug availability and the presence of traditional birth attendants also influence institutional deliveries at the national level, such that, in the short-term, strengthening and improving community-based interventions could increase institutional deliveries. However, there is significant variation and spatial dependence masked in the aggregate analysis. The results highlight the importance of service quality in promoting institutional deliveries, and also suggest that social and cultural factors, especially in rural areas, influence the use of health facilities for delivery. These factors are not easily addressed, through an adjustment to the cost of delivery in health facilities. |
| Keywords: | Maternal care, Institutional devices, User fees, Spatial dependence |
| JEL: | I10 I18 I19 R10 R15 R58 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:427&r=ure |
| By: | Pierre-Alexandre Balland; José Antonio Belso-Martínez; Andrea Morrison |
| Abstract: | Although informal knowledge networks have often been regarded as a key ingredient behind the success of industrial clusters, the forces that shape their structure and dynamics remain largely unknown. Drawing on recent network dynamic models, we analyze the evolution of business and technical informal networks within a toy cluster in Spain. Empirical results suggest that the dynamics of the two networks differ to a large extent. We find that status drives the formation of business networks, proximity is more crucial for technical networks, while embeddedness plays an equally important role in the dynamics of business and technical networks. |
| Keywords: | Knowledge networks, industrial clusters, network dynamics, toy industry |
| JEL: | D85 B52 O18 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1412&r=ure |
| By: | Michael Ehrmann; Michael Ziegelmeyer |
| Abstract: | Mortgages constitute the largest part of household debt. An essential choice when taking out a mortgage is between fixed-interest-rate mortgages (FRMs) and adjustable-interest-rate mortgages (ARMs). However, so far, no comprehensive cross-country study has analyzed what determines household demand for mortgage types, a task that this paper takes up using new data for the euro area. Our results support the hypothesis of Campbell and Cocco (2003) that the decision is best described as household risk management: income volatility reduces the take-out of ARMs, while increasing duration and relative size of the mortgages increase it. Controlling for other supply factors through country fixed effects, loan pricing also matters, as expected, with ARMs becoming more attractive when yield spreads rise. The paper also conducts a simulation exercise to identify how the easing of monetary policy during the financial crisis affected mortgage holders. It shows that the resulting reduction in mortgage rates produced a substantial decline in debt burdens among mortgage-holding households, especially in countries where households have higher debt burdens and a larger share of ARMs, as well as for some disadvantaged groups of households, such as those with low income. |
| Keywords: | Credit and credit aggregates; Transmission of monetary policy |
| JEL: | D12 E43 E52 G21 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:14-1&r=ure |
| By: | XiaoBo Zhang; Ravi KANBUR |
| Abstract: | While increasing income inequality in China has been commented on and studied extensively, relatively little analysis is available on inequality in other dimensions of human development. Using data from different sources, this paper presents some basic facts on the evolution of spatial inequalities in education and healthcare in China over the long run. In the era of economic reforms, as the foundations of education and healthcare provision have changed, so has the distribution of illiteracy and infant mortality. Across provinces and within provinces, between rural and urban areas and within rural and urban areas, social inequalities have increased substantially since the reforms began. D 2005 Elsevier Inc. All rights reserved. JEL classification: D63; O15; O18 |
| Keywords: | Illiteracy; Infant mortality rate; Spatial inequality in China; Polarization |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002079&r=ure |
| By: | Harald Badinger (Department of Economics, Vienna University of Economics and Business); Peter Egger (Department of Management, Technology and Economics at ETH Zürich) |
| Abstract: | This paper develops a unified framework for fixed and random effects estimation of higher-order spatial autoregressive panel data models with spatial autoregressive disturbances and heteroskedasticity of unknown form in the idiosyncratic error component. We derive the moment conditions and optimal weighting matrix without distributional assumptions for a generalized moments (GM) estimation procedure of the spatial autoregressive parameters of the disturbance process and define both a random effects and a fixed effects spatial generalized two-stage least squares estimator for the regression parameters of the model. We prove consistency of the proposed estimators and derive their joint asymptotic distribution, which is robust to heteroskedasticity of unknown form in the idiosyncratic error component. Finally, we derive a robust Hausman-test of the spatial random against the spatial fixed effects model. |
| Keywords: | Higher-order spatial dependence, Generalized moments estimation, Heteroskedasticity, Two-stage least squares, Asymptotic statistics |
| JEL: | C13 C21 C23 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp173&r=ure |
| By: | Lauro Carnicelli; Fernando Antonio Slaibe Postali |
| Abstract: | With the pre-salt discoveries, the discussions about the impact of oil windfalls – royalties and special participation – on Brazilian localities have intensified. This article aims to contribute to the understanding of the issue, using a methodology that allows the building of a counterfactual for municipalities treated with oil resources. The aim is to investigate whether these transfers reduce the own tax effort of cities covered by such revenues. For this, we apply the doubly robust method to a panel of municipalities observed from 2000 to 2009. The method consists of two stages. Firstly, it estimates the likelihood of receiving oil revenues conditioned to observable variables; in the second stage, a fixed-effects model is estimated with data belonging to a common support constructed through the estimated propensity scores in the first stage. The results show that there is a negative effect of oil royalties on the fiscal effort of the cities benefited. However, this result does not occur when one computes the average effect on all cities. |
| Keywords: | Propensity score; doubly robust; oil royalties; fiscal effort; panel. |
| JEL: | H77 C21 |
| Date: | 2014–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2014wpecon3&r=ure |
| By: | Tommy Andersson; Zaifu Yang; Dongmo Zhang |
| Abstract: | Price controls are used in many regulated markets and well recognized as the cause of market inefficiency. This paper examines a practical housing market in the presence of price controls and provides a solution to the problem of how houses should be efficiently allocated among agents through a system of prices. We demonstrate that the dynamic auction by Talman and Yang (2008) always finds a core allocation in finitely many iterations, thus resulting in a Pareto efficient outcome. |
| Keywords: | Ascending auction, assignment market, price control, Pareto efficiency, core. |
| JEL: | C71 D44 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:14/05&r=ure |
| By: | Antonio Accetturo (Bank of Italy); Guido de Blasio (Bank of Italy); Lorenzo Ricci (ECARES-ULB) |
| Abstract: | Transfers can do good; however, they can also result in massive failures. This paper presents a model that highlights the ambiguous nature of the impact of transfers on local endowments of social capital. It then describes an empirical investigation that illustrates that the receipt of EU structural funds causes a deterioration of the endowments of trust and cooperation in the subsidized regions. |
| Keywords: | social capital, political economy, regional transfers |
| JEL: | R1 D7 Z1 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_959_14&r=ure |
| By: | Plakandaras, Vasilios (Democritus University of Thrace, Department of Economics); Gupta, Rangan (Pretoria University, Department of Economics); Papadimitriou, Theophilos (Democritus University of Thrace, Department of Economics); Gogas, Periklis (Democritus University of Thrace, Department of Economics) |
| Abstract: | The 2006 sudden and immense downturn in U.S. House Prices sparked the 2007 global financial crisis and revived the interest about forecasting such imminent threats for economic stability. In this paper we propose a novel hybrid forecasting methodology that combines the Ensemble Empirical Mode Decomposition (EEMD) from the field of signal processing with the Support Vector Regression (SVR) methodology that originates from machine learning. We test the forecasting ability of the proposed model against a Random Walk (RW) model, a Bayesian Autoregressive and a Bayesian Vector Autoregressive model. The proposed methodology outperforms all the competing models with half the error of the RW model with and without drift in out-of-sample forecasting. Finally, we argue that this new methodology can be used as an early warning system for forecasting sudden house prices drops with direct policy implications. |
| Keywords: | house prices forecasting; machine learning; Support Vector Regression; |
| JEL: | C32 |
| Date: | 2014–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:duthrp:2014_010&r=ure |
| By: | V. Brian Viard; Shihe Fu |
| Abstract: | We evaluate the environmental and economic effects of Beijing’s driving restrictions. Based on daily data from multiple monitoring stations, air pollution falls 19% during every-other-day and 8% during one-day-per-week restrictions. Based on hourly viewership data, the number of television viewers during the restrictions increases 1.7 to 2.3% for workers with discretionary work time but is unaffected for workers without, consistent with the restrictions’ higher per-day commute costs reducing daily labor. Causal effects are identified from both time-series and spatial variation in air quality and intra-day variation in viewership. We provide possible reasons for the policy’s success, including evidence of high compliance based on parking garage entrance records. Our results contrast with previous findings of no pollution reductions from driving restrictions and provide new evidence on commute costs and labor supply |
| Keywords: | Driving restrictions; externalities; environmental economics; pollution |
| JEL: | H23 D62 L51 J22 R41 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002039&r=ure |
| By: | Sniekers, F.J.T. (University of Amsterdam) |
| Abstract: | Moving between owner-occupied houses requires both buying and selling. During the Great Recession, the majority of movers sold their old houses before buying new ones, while in the preceding years the majority first bought new houses. In an equilibrium search model, by choosing the order of buying and selling, households affect the composition of buyer and seller types in the market. Because of their different outside options, different types bargain for different prices. Since prices have an impact on the incentives to enter the market as buyer or seller, a complementarity in the order of buying and selling exists. The resulting multiple equilibria can explain observed differences in trading volumes. Moreover, when all movers first buy and therefore own two houses for some time, the fraction of people paying double housing expenses is lower than when households enter as buyers and sellers simultaneously, due to a smaller time to sale. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ams:ndfwpp:14-02&r=ure |
| By: | Michael Dorsch; Brett Graham |
| Abstract: | The paper theoretically analyzes the public choice of transfer payments to the poor (welfare spending) by modeling poverty alleviation as a public good provided by local governments. Voters that are not welfare recipients support welfare spending out of self-interest, rather than altruism, due to the public good property of poverty alleviation. Equilibrium policies are then analyzed according to characteristics of localities, such as population density and income inequality. More generally, our paper provides a technique to solve certain multiple peak problems that arise when a public goods policy has an explicitly redistributive component. To provide empirical support for our model, we use county-level demographic and government expenditure data from the United States Census. |
| Keywords: | collective choice, poverty policy, public goods |
| JEL: | D72 H75 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:wpaper:002037&r=ure |
| By: | John Deke; Brian Gill; Lisa Dragoset; Karen Bogen |
| Keywords: | Regression discontinuity, impacts, supplemental educational services, Evaluation |
| JEL: | I |
| Date: | 2014–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:8115&r=ure |
| By: | Newhouse, David; Wolff, Claudia |
| Abstract: | This paper utilizes a cross-country panel of 83 developing countries to examine how changes in cohort size are correlated with subsequent employment outcomes for workers at different ages. The results depend on countries'level of development. In low-income countries, young adults that are born into smaller cohorts are less likely to work, but school attendance remains unchanged. In middle-income countries, young adults in smaller cohorts are less likely to be unemployed and more likely to work outside of agriculture. Neither pattern can be discerned among older adults, although the estimates are imprecise. In sum, reductions in cohort size are associated with moderate improvements in employment outcomes for youth in middle-income countries, but there is scant evidence that these improvements persist into adulthood. |
| Keywords: | Labor Markets,Labor Policies,Youth and Governance,Income,Inequality |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6848&r=ure |
| By: | Liu, Xin |
| Abstract: | This paper analyses a game theoretic model of tax competition in a system where tax authorities are revenue optimisers and countries are differentiated by size. The model accommodates more than two countries. In equilibrium, larger countries set higher tax rates non-cooperatively. By applying the Hotelling linear model, this paper gives examples where the size effect, neighbourhood effect, and peripheral effect coexist and push up the tax rate in equilibrium. -- |
| Keywords: | tax competition,cross-border shopping,Nash equilibrium,peripheral effects |
| JEL: | H20 H71 H73 R51 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201419&r=ure |