nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2014‒09‒05
thirty-six papers chosen by
Steve Ross
University of Connecticut

  1. Gross Migration, Housing and Urban Population Dynamics By Marcelo Veracierto; Jonas Fisher; Morris Davis
  2. The impact of peripheral shopping centers on dense urban areas: application to Brussels By Christophe Heyndrickx; Stef Proost
  3. Strategic Options for Urbanization in the People's Republic of China: Key Findings By Asian Development Bank (ADB); ; ;
  4. Default When House Prices are Uncertain By Erwan Quintin; Morris Davis
  5. Household Formation and Tenure Choice: Did the great Irish housing bust alter consumer behaviour? By Byrne, David; Duffy, David; FitzGerald, John
  6. Assessing Regional Quality of Life: A Call for Action in Regional Science By Rickman, Dan S.
  7. Updated Estimates for the Extent of Negative Equity in the Irish Housing Market By Duffy, David
  8. Projected Population Change and Housing Demand: A County Level Analysis By Morgenroth, Edgar
  9. Demographic Changes in China's Three Major Megalopolises (Japanese) By MENG Jianjun
  10. Vietnamese Inter – regional labor migration: system approach to the modeling 1989, 1999, 2009. By Tadashi Kikuchi
  11. What Calls to ARMs? International Evidence on Interest Rates and the Choice of Adjustable-Rate Mortgages By Cristian Badarinza; John Y. Campbell; Tarun Ramadorai
  12. A discrete continuous model of vehicle ownership and use in Flanders By Franckx, Laurent; Michiels, Hans; Mayeres, Inge
  13. Augmented and Unconstrained: revisiting the Regional Knowledge Production Function By Sylvie Charlot; Riccardo Crescenzi; Antonio Musolesi
  14. Taxing home ownership: distributional effects of including net imputed rent in taxable income By Panos Tsakloglou; Francesco Figari; Alari Paulus; Holly Sutherland; Gerlinde Verbist; Francesca Zantomio
  15. Modeling positive inter-jurisdictional public spending spillovers By Martin Gregor
  16. Job Networks in Izmir: Why are Migrants Different? By Idil Goksel; Alper Duman
  17. Challenges in modeling the impacts of modern development policies: The case of the GMR-approach By Attila Varga
  18. No reversal of fortune in the long run: geography and spatial persistence of prosperity in Colombia, 1500-2005 By Adolfo Meisel
  19. Geographical Simulation Analysis for Logistics Enhancement in Asia By Kenmei Tsubota; Satoru Kumagai; Kazunobu Hayakawa; Ikumo Isono; Souknilanh Keola
  20. Economic Evaluation of Climate Change Impacts on Ground Transportation in Atlantic Canada: General Equilibrium Framework By Yuri Yevdokimov
  21. A regional framework for analysing the Western Australian economy By Alan S Duncan; Ken Leong
  22. House Prices, Capital Inflows and Macroprudential Policy By Maria Teresa Punzi; Caterina Mendicino
  23. A deliberative-participative procedure for sustainable urban mobility – Findings from a test in Bari (Italy) By S. Franceschini; G. Marletto
  24. Myanmar: Urban Development and Water Sector Assessment, Strategy, and Road Map By Asian Development Bank (ADB); ; ;
  25. Localization of Knowledge-creating Establishments By INOUE Hiroyasu; NAKAJIMA Kentaro; SAITO Yukiko
  26. Exploring Public-Private Partnership in Preschool Education Provision as a Contributor to Socio-Economic Development By Aynur Nabiyeva; Ulviyya Mikayilova; Vitaly Radsky; Aynur Nabiyeva
  27. Regional planning insights from a Portuguese bi-regional Input-Output model By Ana Sargento; Pedro Ramos; Eduardo Barata; Luís Cruz
  28. Measuring Mobility By Austin Nichols
  29. Regional disparities in GDP and disposable income in Belgium By Dirk Hoorelbeke
  30. Online networks and subjective well-being By Sabatini, Fabio; Sarracino, Francesco
  31. Financing Low Carbon Urban Development in South Asia: A Post-2012 Context By Asian Development Bank (ADB); ; ;
  32. The Spatial Probit Model – An Application to the Study of Banking Crises at the End of the 90’s By Victor Mendes; Andrea Amaral; Margarida Abreu
  33. Asymmetric tax competition with public inputs and imperfect labour markets By Johannes Pauser; Holger Gillet
  34. Economic Corridor Development for Inclusive Asian Regional Integration: Modeling Approach to Economic Corridors By Asian Development Bank (ADB); ; ;
  35. Great Teachers : How to Raise Student Learning in Latin America and the Caribbean--Overview By Barbara Bruns; Javier Luque
  36. Sustainable urban transport strategies and job creation By Christophe Heyndrickx; Joko Purwanto; Rodric Frederix

  1. By: Marcelo Veracierto (Federal Reserve Bank of Chicago); Jonas Fisher (Federal Reserve Bank of Chicago); Morris Davis (University of Wisconsin-Madison)
    Abstract: Cities experience significant, near random walk productivity shocks, yet population is slow to adjust. In practice local population changes are dominated by variation in net migration, and we argue that understanding gross migration is essential to quantify how net migration may slow population adjustments. Housing is also a natural candidate for slowing population adjustments because it is dicult to move, costly to build quickly, and a large durable stock makes a city attractive to potential migrants. We quantify the influence of migration and housing on urban population dynamics using a dynamic general equilibrium model of cities which incorporates a new theory of gross migration motivated by patterns we uncover in a panel of US cities. After assigning values to the model's parameters with an exactly identified procedure, we demonstrate that its implied dynamic responses to productivity shocks of population, gross migration, employment, wages, home construction and house prices strongly resemble those we estimate with our panel data. The empirically validated model implies that costs of attracting workers to cities drive slow population adjustments. Housing plays a very limited role.
    Date: 2014
  2. By: Christophe Heyndrickx; Stef Proost
    Abstract: In this paper we develop a model of the urban economy, where the commercial sub center of a city, goes in competition with a peripheral sub center. We consider both centers to be in a spatial asymmetric duopoly, where both centers need to compete for customers and employees. Competition takes the form of a joint price and quality competition, where the transport network and the accessibility of the center take a vital role. We approach quality from a ‘varieties’ stand-point, where consumers make a trade-off between accessibility, price and variety. We study under which circumstances, peripheral shopping activity can be beneficial and under which circumstances harmful to the city. We consider the impact of the accessibility, both by private as by public transport. We also go deeper into the effect of a number of specific policy scenarios that are used to reduce the impact of peripheral shopping activity. The particular case we will focus on is the development of a large shopping center called U-Place, which will be constructed along the ring road of Brussels. The development of this center is controversial and the subject of intense debate between the local and national government. This paper starts with presenting a theoretical model of the urban region, using elements of general equilibrium modelling and New Economic Geography (NEG). The results is a flexible model for the location of shopping centers around (or in) urban areas. The model takes quality & variety, accessibility of the city and suburban region and the transport network as the main parameters. In a next step, the model is applied to the city of Brussels, where a number of new developments are planned around the ringroad (R0). We study the impact of these new developments by a simple applied spatial general equilibrium model, based on the theoretical model & actual data for Brussels. We comment on the new development and give insight in the short term and longer term impacts.- Theoretical model for development of shopping centers around urban areas using elements of New Economic Geography & variety based competition. - Critical analysis of the impact of new developments on the ring road of Brussels
    Keywords: Belgium, General equilibrium modeling, Regional modeling
    Date: 2014–07–03
  3. By: Asian Development Bank (ADB); (East Asia Department, ADB); ;
    Abstract: Over the past 30 years, rapid urbanization and economic growth have transformed the cities of the People’s Republic of China (PRC). But this unprecedented urbanization has highlighted challenges that demand significant changes to basic urban management and planning policies. This report is based on a 2011–2012 policy study for the PRC’s forthcoming national urbanization plan that will set out urban development policies and guidelines over the coming decade. It examines the PRC’s urbanization challenges and suggests actions for improving the urban environment through changes in the design, financing, administration, and social integration of cities.
    Keywords: china, urban development, people’s republic of china, prc, urbanization plan, urban housing, municipal finances, urban society, urban administration, urban population, migrant workers, urban planning, urban strategy, city, cities, megacities, conurbation
    Date: 2013–09
  4. By: Erwan Quintin (University of Wisconsin at Madison); Morris Davis (University of Wisconsin-Madison)
    Abstract: During the 2000-2011 housing boom and bust, changes to self-assessed house prices in 20 different metro areas are highly correlated with changes to the Case-Shiller-Weiss (CSW) house price indexes, but do not change percent-for-percent with the CSW indexes during the boom or bust. We argue this evidence is consistent with an environment in which homeowners imperfectly observe the value of their home and update their guess of home value using a Kalman filter. Using data on self-assessed house prices and the CSW indexes, we estimate the parameters of a simple model of imperfectly-observed house prices. In an out-of-sample forecast exercise, we show the model is nearly perfectly able to replicate the sequence of self-assessed house prices from 2006-2011 in many MSAs, from places experiencing a modest boom like Atlanta and Detroit to the “bubble†areas like Miami and Phoenix. We then specify an economic model of the optimal default decisions of homeowners when homeowners imperfectly observe the value of their home. We show that, relative to a standard model of default, homeowners delay their decision to default after a bad house price shock. We argue this phenomenon helps to explain default patterns in the United States during the 2007-2011 housing bust.
    Date: 2014
  5. By: Byrne, David; Duffy, David; FitzGerald, John
    Date: 2014–07
  6. By: Rickman, Dan S.
    Abstract: Intellectual appeal and simplicity of use has led to the widespread application of the spatial hedonic model in assessing regional quality of life. Yet, the traditional spatial hedonic approach contains numerous assumptions, which typically are untested. Violation of the assumptions in practice can lead to significantly biased estimates of regional quality of life. More sophisticated econometric approaches have been developed to reduce the biases. However, each approach typically only addresses one or two of the concerns. More promising, is the use of structural models, which by design have the potential to overcome all the limitations of the spatial hedonic approach.
    Keywords: Hedonic estimation; Spatial equilibrium; Quality of life
    JEL: Q51 R23 R31
    Date: 2014–08–24
  7. By: Duffy, David
    Date: 2014–08
  8. By: Morgenroth, Edgar
    Date: 2014–08
  9. By: MENG Jianjun
    Abstract: The economic development and urbanization of China in recent years have resulted in the formation of a few large-scale megalopolises, mostly in the eastern coastal area. The three major megalopolises are the Bohai Sea rim area around Beijing, the Yangtze River Delta area around Shanghai, and the Pearl River Delta area around Guangdong Province. I define the three major megalopolises as having been formed by 156 urban areas that are administratively categorized as districts or larger units as a result of rapid infrastructure development in recent years. Per the 2010 census, the average population in these urban areas is five million. This paper analyzes the causes and characteristics of demographic changes in the three major megalopolises, using 2000 and 2010 census data of the 156 urban areas. First, I define and categorize the three megalopolises according to their regional characteristics. Next, through a quantitative analysis of the census data, I examine the similarities and differences of the demographic changes in the three megalopolises. Then, the causes of the demographic changes are analyzed. Finally, the impact of demographic changes on Chinese economic society and related policy issues are discussed.
    Date: 2014–08
  10. By: Tadashi Kikuchi
    Abstract: Author used the data of Vietnam Population Census 1989, 1999, 2009 and estimated inter regional labor migration function of Vietnam. Based on the method of system approach of Poot (1986), author adapted it to Vietnamese data and also studied the convergence speed of the migration function. The method of system approach is applied to the Vietnam Population Census Data 1989, 1999, 2009. Estimation of migration function is OLS methods. More information is mentioned in attached summary. Author states here, in brief, four interesting findings in the paper. (1)Apart from dynamical in and out migration all over the country, Vietnam, from the end of 1980s to the early of 2000s, author shows the evidence that there exists regional inflow and out flow of migrations between Hochiminh city and its neighbor provinces. (2)There exists a decrease, “slow down,” of the influence on the in – migration power in all provinces in Vietnam. For example, during the years that economic recession was covering over developing countries from 1990s to the early of 2000s, high regional average income became less attractive to make labor force in – migrate from outside into the region/province. (3)Coincidently, neighbor provinces of Hochimonh, such as Dong Nai, Binh Duong, started industrialization and regional development from 1990s to the early of 2000s. This resulted in an inverse labor inflow from the region with high income Hochiminh city to regions with low income neighbor provinces of Hochimonh. (4)Based on these finding, author then extended the model to study on long term labor migration. Author estimated ECM, error correction model, and showed that the coefficient of convergence to the long term model is – 0.534. It means that Vietnamese migration would converge by nine ty percent until 2020, and ninety nine percent until 2050.
    Keywords: Vietanman, Developing countries, Regional modeling
    Date: 2014–07–03
  11. By: Cristian Badarinza; John Y. Campbell; Tarun Ramadorai
    Abstract: The relative popularity of adjustable-rate mortgages (ARMs) and fixed-rate mortgages (FRMs) varies considerably both across countries and over time. We ask how movements in current and expected future interest rates affect the share of ARMs in total mortgage issuance. Using a nine-country panel and instrumental variables methods, we present evidence that near-term (one-year) rational expectations of future movements in ARM rates do affect mortgage choice, particularly in more recent data since 2001. However longer-term (three-year) rational forecasts of ARM rates have a weaker effect, and the current spread between FRM and ARM rates also matters, suggesting that households are concerned with current interest costs as well as with lifetime cost minimization. These conclusions are robust to alternative (adaptive and survey-based) models of household expectations.
    JEL: D14 E43 G21
    Date: 2014–08
  12. By: Franckx, Laurent; Michiels, Hans; Mayeres, Inge
    Abstract: We estimate a discrete-continuous model of vehicle demand and use for the Belgian region of Flanders, combining the results of the official regional travel survey with a detailed database of vehicle characteristics. The overall predictive value of the submodel predicting the number of vehicles owned by each household is satisfying, and in line with expectations. However, existing data turn out to be relatively poor predictors of the vehicle class owned by households and of the annual mileage per vehicle. We argue that the current travel survey focuses on determinants of travel in the peak periods. In order to predict overall travel demand, future versions of the travel survey should identify indicators with a higher predictive value for travel behavior for other than commuting purposes.
    Keywords: vehicle choice, discrete-continuous choice modelling
    JEL: C25 H23 R41 R48
    Date: 2014–08–25
  13. By: Sylvie Charlot (GAEL UMR 1215, INRA; University of Grenoble, France.); Riccardo Crescenzi (London School of Economics, Spatial Economics Research Centre, UK.); Antonio Musolesi (Dept. of Economics and Management. University of Ferrara, Italy.)
    Abstract: By adopting a semiparametric approach, the 'traditional' regional knowledge production function is developed in three complementary directions. First, the model is augmented with region-specic time trends in order to account for endogeneity due to selection on unobservables. Second, the nonparametric part of the model relaxes the standard assumptions of linearity and additivity regarding the effect of R&D and human capital. Finally, the assumption of homogeneity in the effects of R&D and human capital is also relaxed by explicitly accounting for the differences between developed and lagging regions. The analysis of the genesis of innovation in the regions of the European Union unveils nonlinearities and threshold effects, complex interactions, and shadows effects that cannot be uncovered by standard parametric formulations.
    Keywords: Innovation, Europe, R&D, Regional knowledge production function, Semiparametric models
    JEL: O32 R11 C14 C23
    Date: 2014–08
  14. By: Panos Tsakloglou; Francesco Figari; Alari Paulus; Holly Sutherland; Gerlinde Verbist; Francesca Zantomio
    Abstract: Imputed rental income of homeowners is tax exempt in most countries, despite the long-standing arguments recommending its inclusion in the tax base, on both equity and efficiency grounds. The current fiscal crisis revived interest towards this form of taxation. The paper investigates the fiscal and distributional consequences of including homeowners’ imputed rent, net of mortgage interest and maintenance costs, in taxable income as any cash income source that extends consumption opportunities. Three scenarios are analysed in six European countries: in the first imputed rent is included in the taxable income of homeowners, while at the same time existing mortgage interest tax relief schemes and taxation of cadastral incomes are abolished. In two further revenue-neutral scenarios, the additional tax revenue raised through the taxation of imputed rent is redistributed to taxpayers, either through a proportional rebate or a lump-sum tax credit. Results show how including net imputed rent in the tax base might affect inequality in each of the countries considered. Housing taxation appears to be a promising avenue for raising additional revenues, or lightening taxation of labour, with no inequality-increasing side-effects. See above See above
    Keywords: See above, Impact and scenario analysis, Microsimulation models
    Date: 2014–07–03
  15. By: Martin Gregor
    Abstract: This paper builds spatial microfoundations for the functional forms used in the analysis of inter-jurisdictional public spending spillovers. The paper introduces a symmetric bilateral model that distinguishes between three stages: production of multiple public inputs (intermediary goods), production of multiple public outputs (final goods) including asymmetries and non-additive aggregations, and consumption of the public outputs with asymmetries and preferences for variety. The paper identifies sufficient conditions for the different combinations of the features to be isomorphic. Additionally, it analyzes which microfoundations for the inter-jurisdictional spillovers lead to asymmetrically structured demands for public spending.
    Keywords: Any decentralized country, Public finance, Regional modeling
    Date: 2013–06–21
  16. By: Idil Goksel; Alper Duman
    Abstract: The aim of this paper is to investigate the network effect on the probability of job finding. This paper uses a specific data set from the Izmir region, prepared by the Turkish Statistical Institute for a specific project carried out by Izmir University of Economics in cooperation with the Izmir Commerce Centre, the Izmir branch of the Turkish Statistical Institute and the Turkish Labour Institute. Its aim was to investigate the labour market situation of Izmir and to understand the main problems of labour market and reasons of unemployment and suggest possible policy implications. During this study we found that the migrants who have moved to Izmir five years or more ago have higher probability to find a job than Izmir born ones. The same argument is also valid for the ones who moved less than two years ago. Only the ones that have moved 2-5 years ago have less chance to find a job. These trends show also difference according to the gender. Furthermore, it is found that migrants tend to earn more relative to the natives. This variety made us think that it will be interesting to analyze this subject a bit deeper. Izmir is the third biggest city in Turkey and has been one of the preferred destinations of migrants. Izmir attracts both skilled and unskilled migrants. Moreover, we believe doing such an analysis at a local level is more promising than doing it in the state level, as it will be easier to isolate the network effects in local level. The paper aims to analyze how the network effect differs between skilled and unskilled people and the nonlinearity in the network effects. It is assumed that the more time spent in a city, the larger is the network and quality of the network connections depend on the job seeker’s qualifications. Using Armengol and Jackson (2007) theoretical model and the empirical framework of Munshi (2003), a probit model that estimates the probability of being employed is used. In the model personal characteristics, the sectors, and the number of years spent in Izmir are controlled for. Moreover, the education levels and occupations of the parents are used as proxies for the size and the quality of the network. It is expected to find nonlinearity in network effects. We also expect to find higher influence of quality of network with respect to its dimension. It will be also interesting to investigate whether network effects differ according to the gender or not.
    Keywords: Turkey, Labor market issues, Regional modeling
    Date: 2013–06–21
  17. By: Attila Varga
    Abstract: Two modern approaches to development policy have recently evolved and dispute with each other, the space-neutral and the place-based approaches Perhaps the most notable conceptual development common in these modern approaches is a strong awareness of the key role of geography in policies targeting aggregate economic growth. It became clear in new policy thinking that the impact of countries' structural policies largely depends not only on the specific instruments (e.g., human capital development, infrastructure investments, SME support) applied but also on the concrete geographic patterns in which these instruments are deployed geographically. It is suggested in this paper that economic models that integrate both the national and regional levels could usefully help policymakers in their choice of a particular geography-instrument mix. I survey the most important modeling challenges raised by modern economic development. To illustrate how economic models can respond to these challenges I briefly introduce the GMR economic modeling approach with a policy analysis application. integrated macro and regional modeling As indicated above it is a conceptual paper with an example application
    Keywords: EU, Regional modeling, General equilibrium modeling
    Date: 2014–07–03
  18. By: Adolfo Meisel
    Abstract: This paper examines the non-reversal of fortune thesis proposed by Acemoglu, Johnson, and Robinson (2002) in the light of the Colombian experience over the last 500 years. Using a total of 14 national population censuses and the record of tributary Indians in 1559, it is found that the population density of Colombian regions presented a high degree of persistence through time. Thus, the evidence indicates that those places that were prosperous circa 1500 remain so today, and viceversa. These results indicate that the long run influences of geography on regional economic disparities within a country are not negligible.
    Keywords: Comparative Economic History, Demographic Economics, Latin America.
    JEL: N16 J10 N36
    Date: 2014–08–21
  19. By: Kenmei Tsubota; Satoru Kumagai; Kazunobu Hayakawa; Ikumo Isono; Souknilanh Keola
    Abstract: The purpose of this paper is to evaluate the impact of trade cost reduction on the Asian economy by employing a sub-national level model based on New Economic Geography. Our model comprises seven sectors, including manufacturing and non-manufacturing sectors, and 1,715 regions in 18 countries/economies in Asia in addition to the two economies of the US and the European Union. As a Computable General Equilibrium of New Economic Geography, we have developed a simulation model for multi-region and multi-sector that consists of the agriculture sector, five manufacturing sectors and the service sector. We assume that there are increasing returns to scale in manufacturing and service sectors. We have introduced modal choice and separation of trade costs respect to physical and non-physical infrastructure. While physical infrastructure improvements are expected to have a drastic impact on the distribution of economic activities, we found that the positive effects of physical transport infrastructure improvements are rather limited to the neighboring regions of the projects and that the existing concentrations of economic activities are rather persistent. Furthermore, we also find that, besides the ongoing physical transport infrastructure improvements, further trade facilitation or tackling behind-the-border issues among countries could enhance the prevalence of economic growth in each country.
    Keywords: Bangladesh, Brunei Darussalam, Cambodia, China, Hong Kong, India, Indonesia, Japan, Korea, Lao PDR, Macao, Myanmar, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam with rest of the world, Regional modeling, Impact and scenario analysis
    Date: 2013–06–21
  20. By: Yuri Yevdokimov
    Abstract: Climate change has become one of the most serious consequences of human activities. According to the IPCC Fourth assessment report, the emission of greenhouse gases (GHG) generated by human activities is the primary cause of the climate change and especially global warming. In general, transportation is one of the areas where climate change problem is the most severe. On the one hand, with passage of time vehicle usage will result in more greenhouse gases, which would contribute to further climate change; on the other hand, climate change itself makes transportation infrastructure, vehicles and operations vulnerable to various impacts. Unfortunately, very little has been done in order to estimate economic losses due to climate change impacts on transportation. THis study tries to capture this gap.In this study, climate change impacts and their economic consequences for Atlantic Canada ground transportation network are analyzed. First, major climate change impacts in the area are identified. Second, the best economic model to evaluate consequences of the climate change impacts is chosen. Third, using the existing literature and studies that describe future climate changes in the region, various scenarios of future challenges for the regional ground transportation network are specified. Finally, economic consequences of the regional climate change impacts on the ground transportation network are evaluated. The above specified consequences are imposed on a dynamic general equilibrium model and their cumulative impacts are traced over time.Climate change impacts could reduce the volume of transpiration associated with analyzed regional network by 0.07 to 0.14 million vehicles per year compared to the current volume of 4.89 million. It could lead to the loss in value added by 11.136 million per year.
    Keywords: Atlantic Canada, General equilibrium modeling, Impact and scenario analysis
    Date: 2014–07–03
  21. By: Alan S Duncan (Bankwest Curtin Economics Centre (BCEC), Curtin University); Ken Leong (Bankwest Curtin Economics Centre, Curtin Business School)
    Abstract: Western Australia is a diverse state with unique regions. Studies on the economy that adopt a ‘one size fits all’ approach’ are likely to be hindered by a lack of the richness and variability inherent in the intra-state regions. This paper proposes a modelling framework for the Western Australian macroeconomy by utilising existing and constructed data on its ten regions. As an export-oriented state, WA is affected by external factors such as the exchange rate, commodity prices and developments in emerging economies. However, with different composition of domestic- versus external-facing industrial sectors, each region is expected to respond differently to such shocks. Initial projections suggest WA’s growth is likely to decrease from its present 5.1 per cent to between 5-7 per cent through 2013-2014. When hit with an adverse shock to commodity prices initiated by, for example, a structural change in the Chinese economy, the mining-intensive region of Pilbara suffers by a factor of 3 percentage points in the near term over less exposed regions such as Great Southern and Peel.
    Keywords: Western Australian economy, gross regional product, regional analysis, industrial composition, forecasting, simulation.
    JEL: E01 R11 E17
    Date: 2014–06
  22. By: Maria Teresa Punzi (Department of Economics, Vienna University of Economics and Business); Caterina Mendicino (Economics and Research Department, Bank of Portugal)
    Abstract: This paper evaluates the monetary and macroprudential policies that mitigate the procyclicality arising from the interlinkages between current account deficits and financial vulnerabilities. We develop a two-country dynamic stochastic general equilibrium (DSGE) model with heterogeneous households and collateralised debt. The model predicts that external shocks are important in driving current account deficits that are coupled with run-ups in house prices and household debt. In this context, optimal policy features an interest-rate response to credit and a LTV ratio that countercyclically responds to house price dynamics. By allowing an interest-rate response to changes in financial variables, the monetary policy authority improves social welfare, because of the large welfare gains accrued to the savers. The additional use of a countercyclical LTV ratio that responds to house prices, increases the ability of borrowers to smooth consumption over the cycle and is Pareto improving. Domestic and foreign shocks account for a similar fraction of the welfare gains delivered by such a policy.
    Keywords: house prices, financial frictions, global imbalances, saving glut, dynamic loan-to value ratios, monetary policy, optimized simple rules
    JEL: C33 E51 F32 G21
    Date: 2014–08
  23. By: S. Franceschini; G. Marletto
    Abstract: Participation is advocated as an essential component of strategies and policies for sustainable urban mobility. This paper refers to the overall literature on participation and provides the design, test and ex-post evaluation of a deliberative-participative procedure (DPP) aimed at selecting a new scheme for the regulation of traffic and parking in the “Murat”, a central area of Bari (Italy). The potential benefits and shortcomings of participation were explicitly considered when designing a DPP which integrates three tools - an opinion poll and two deliberative arenas – the “stakeholder dialogue” and the “citizens jury”. The ex-post evaluation of the test confirmed ex-ante design choices. The use of understandable techniques for deliberation and assessment helped participants to generate an unambiguous final result which was based on the “hybridisation” of the alternative schemes proposed to participants at the beginning of the procedure. The continuous reference to citizens opinion avoided that more powerful stakeholders may capture the whole procedure. Only a “frustration” effect was generated because of the limited involvement of the Municipality of Bari, thus confirming that the involvement of the relevant Authority is an essential requisite for successful participation. We suggest that the generation of new knowledge and learning could be further assured by the participation of citizens and stakeholders to the definition of the alternatives they will assess later.
    Keywords: Deliberation, participation, Sustainable mobility, Traffic scheme, Bari
    JEL: H43 Q58 R42
    Date: 2014
  24. By: Asian Development Bank (ADB); (Southeast Asia Department, ADB); ;
    Abstract: This publication documents the current assessment and strategic investment priorities for the urban development and water sector in Myanmar. It highlights sector performance, priority development constraints, plans and strategies, past Asian Development Bank (ADB) support and experience, support of other development partners, and future ADB support strategy. The document assesses the key development needs of urban development and the water sector in Myanmar, and outlines key ADB initiatives to improve access of the population, including poor urban communities, to basic urban services. The main urban thrusts of ADB’s investments program are rehabilitation and expansion of water supply, sanitation, solid-waste management, drainage, and other basic urban infrastructure in the main cities, complemented by capacity development for urban planning and improved performance in urban services.
    Keywords: ADB, Myanmar, urban development, water, sanitation. country sector assessment, country planning document, asian development bank
    Date: 2013–08
  25. By: INOUE Hiroyasu; NAKAJIMA Kentaro; SAITO Yukiko
    Abstract: This study investigates the localization of establishment-level knowledge creation by using data from the Japanese patent database. Using distance-based methods, we obtained the following results. First, Japanese patent-creating establishments are significantly localized at the 5% level, with the range of localization at approximately 80 km. Second, localization was found for all patent technology classes, while the extent of localization differs among the classes. Third, the extent of localization is stronger in more creative establishments, in terms of both the number of patents created and the number of citations. These results suggest that geographical proximity is important for knowledge spillover regardless of the concerned technology and that creative establishments require external knowledge.
    Date: 2014–08
  26. By: Aynur Nabiyeva; Ulviyya Mikayilova; Vitaly Radsky; Aynur Nabiyeva
    Abstract: Equitable and quality education provision is widely recognized as an integral part of socio-economic development. Current theories propose different approaches for explaining the impact of education, and of early-childhood education in particular, on economic development. Despite opposition to the idea of assigning returns (especially monetary returns) to distinct periods in a child’s development, a substantial body of literature supports the correlation between educational interventions and individual and national productivity. For example, Heckman (2006) uses economic model analysis to link investments on different age groups to skill formation later in life. He demonstrates the relationship between education and economic success at later stages of the life cycle, and shows that the return to investment at earlier stages of development, particularly during preschool years, has the highest rate of return. Over the last decade, this return on investment- based analysis of educational investment has become increasingly influential with policymakers throughout the world. Drawing from a small-scale pilot project launched and implemented by the Center for Innovations in Education (CIE) in the Shamkir region of Azerbaijan, this paper analyzes the potential of public-private partnerships (PPP) in preschool education and social support provision as a model contributing to accessibility and affordability of these services, in addition to rejuvenating employability of a largely unemployed population of preschool professionals. The project focuses on supporting families with young children through community-based preschool services and improving the quality of primary education. Arguments presented in this paper are based on a review of existing scholarship on the PPP model, previous policy analysis on expanding national access to preschool education through PPP (and other service provision models) done by CIE, and a review of the ongoing project. The project exemplifies a case of PPP through the cooperation of a local municipal authority, business sector corporate social responsibility department, and a civil society organization. This alternative model is of particular importance, when taking into account that the expansion of preschool education is one of the areas included in Azerbaijan’s national development strategies. This paper examines the effectiveness of social practices developed through cross-sectoral collaboration and explores how such cooperation may lead to socio-economic development of society as a whole.From the perspective of different stakeholders involved, this model suggests multi-layered desired outcomes. For private sector and corporate stakeholders, the PPP model for preschool services may present a type of arrangement that helps to achieve more sustainable social benefit in realization of their CSR. In addition, the small scale of this model better enables educational services to meet the diverse needs of communities and beneficiaries. In the example of the CIE project, the community-based PPP model suggests several components that may help to increase return on national education investment. Hiring and training of qualified but unemployed professionals develops both unemployed former educators and community children. Considering the highly centralized nature of pre-school education services and institutions in urban areas, an approach that utilizes untapped local resources facilitates the expansion of preschool services to rural areas and in general, outside the capital.
    Keywords: Azerbaijan, Socio-economic development, Sectoral issues
    Date: 2013–09–05
  27. By: Ana Sargento; Pedro Ramos; Eduardo Barata; Luís Cruz
    Abstract: In Portugal, the public debate at regional level is typically absorbed in the discussion of asymmetries amongst the ‘interior’ and the ‘coast’. What is often discussed, with political and social relevance, is the extent of the interior’s delay (in terms of development) comparatively to the coastal region, and into what extent the dynamics of the economy, or eventually the ‘bias’ introduced by public policies, contributes to this drawback. Interestingly, however, the Portuguese regional science has miscarried this debate, largely on the grounds that the official statistics do not include this cleavage. In fact, the design of the NUTS II in Portugal splits the country horizontally, forgetting the vertical gap that separates the interior of the coast. Departing from the construction of a bi-regional Input-output model for the Portuguese economy, the main aim is then to assess how the effects of a shock that hits only one of the regions are ‘distributed’ among the two regions. In particular, we intend to analyse at a greater detail the role of the agriculture sector in the Inland Region. Our modelling approach departs from the construction of a bi-regional input-output model for the Portuguese economy, where both the model and the database are formulated in terms of detailed technical parameters, reproducing both inter-sectoral and interregional interdependencies. We consider a rectangular IO model (431 products by 125 industries), decomposing the Portuguese economy into two regions with comparable territorial sizes (the Coastal Region, comprising 44% of the Portuguese surface, and the Inland Region). The Coastal Region is the most industrialized and economically developed one (representing nearly 89% of the Portuguese GDP) and is, simultaneously, the region where most of the population lives (almost 85% of the Portuguese households). In contrast, the Inland Region is more dispersed and founds its economic basis in products such as the ones from agriculture, metal ores, beverages, electricity and transportation services, although the consumption of these products occurs largely abroad. The model is presented at ‘domestic flows’, which means that the use of goods and services produced within the region is distinguished from the use of those produced in other regions/countries. Further, as the model is presented at ‘basic prices’, the VAT and ‘Other Taxes less Subsidies on Production’ are considered outside the core of the IO model. Lastly, the model is ‘closed’ for the private consumption of households below 65 (which is supposed to be endogenous, as it depends on regional employment and therefore on households’ earnings - labor compensations and mixed income - that result from the local production process and simultaneously determines the regional economic variables, including the regional production level), while the older households are considered in the final demand section of the matrix. Therefore, the exogenous final demand is considered to be the one of households whose heads exceed 65 years old plus the one associated with public consumption, investment, (international and inter-regional) exports and changes in inventories. Typical (uni-regional) Input-Output (IO) models describe the inter-sectoral dependencies in a given economy. Multi-regional IO models describe the inter-sectoral dependencies both within the region and between the regions. Thus, in reaction to an external shock, the multi-regional IO framework allows to estimate, e.g., the feedback effects that may be felt in other regions/economies and the ones that then ‘return’ to the region which initially felt the original disturbance. Preliminary overall results illustrate the dependence of the Interior on the Coastal region, and that the (positive or negative) effects of a shock that hits the Interior Region tend to leak to the Coastal Region, while an exogenous event in the Coastal Region tends to see its effects contained within the region. Thus, this analysis can be particularly relevant to policy-makers in dealing with regional and territorial planning, as they are better informed about the root causes of some outcomes. Accordingly, a summary of the key lessons learned and a discussion of their policy relevance, both at regional and national levels will be offered.
    Keywords: Portugal, Regional modeling, Impact and scenario analysis
    Date: 2013–06–21
  28. By: Austin Nichols (Urban Institute)
    Abstract: Various measures of mobility using panel data are reviewed, with applications to measuring economic or social mobility in survey data. A variety of approaches are demonstrated.
    Date: 2014–08–02
  29. By: Dirk Hoorelbeke
    Abstract: HERMREG is a regional econometric model for Belgium. It provides midterm forecasts for the three Belgian regions (the Brussels Capital Region, the Flemish Region and the Walloon Region) on a sectoral level. The model started off as a top-down model, but recently the model has been enriched with some bottom-up elements. In a production function framework with four production factors (capital, labour, energy and other intermediate inputs) the demand functions four these production functions are derived. Both short term and long term versions of these demand functions are estimated on a regional and sectoral level. Both the used methodology and estimation results will be presented. A comparison of forecasts using the 'old' top-down model and the 'new' hybrid model will also be presented as well as some technical variants (e.g. oil price shock and a regional shock).
    Keywords: Belgium , Macroeconometric modeling, Regional modeling
    Date: 2013–06–21
  30. By: Sabatini, Fabio; Sarracino, Francesco
    Abstract: We argue that the use of online networks may threaten subjective well-being in several ways, due to the inherent attributes of Internet-mediated interaction and through its effects on social trust and sociability. We test our hypotheses on a representative sample of the Italian population. We find a significantly negative correlation between online networking and well-being. This result is partially confirmed after accounting for endogeneity. We explore the direct and indirect effects of the use of social networking sites (SNS) on well-being in a SEM analysis. We find that online networking plays a positive role in subjective well-being through its impact on physical interactions, whereas SNS use is associated with lower social trust. The overall effect of networking on individual welfare is significantly negative.
    Keywords: social participation; online networks; Facebook; social trust; social capital; subjective well-being; hate speech; broadband; digital divide
    JEL: O32 O33 Z13
    Date: 2014–08–25
  31. By: Asian Development Bank (ADB); (South Asia Department, ADB); ;
    Abstract: The cities of South Asia are growing at an unprecedented rate, and there is potential to steer this development onto a sustainable and green path. Carbon financing serves as a valuable revenue source to help cities earn additional income to support low-carbon development. With the end of the first commitment period of the Kyoto Protocol on 31 December 2012, a fragmented international carbon market now exists with various approaches to reducing greenhouse gas emissions outside the national borders of Annex I (industrialized) countries. Considering the potential for low-carbon development in South Asia, there is a need to help countries understand and navigate this new international carbon market. This guidance note (i) provides an overview of the carbon financing market in the post-2012 context, (ii) guides readers on how to access carbon finance, and (iii) highlights good practices in low-carbon urban development. It is aimed at government officials and project developers throughout South Asia, and is structured in a question-and-answer format for quick and easy reference.
    Keywords: climate change, urban development, carbon finance, green cities, sustainability, solid waste management, economic development, environment, livable city, sustainable city, urbanization, sustainable development
    Date: 2013–10
  32. By: Victor Mendes; Andrea Amaral; Margarida Abreu
    Abstract: We use a spatial Probit model to study the effect of contagion between banking systems of different countries on the probability of a systemic crisis in one county. Applied to the late 90’s banking crisis in Asia we show that the phenomena of contagion is better seized using a spatial than a traditional Probit model. Unlike the latter, the spatial Probit model allows one to consider the cascade of cross and feedback effects of contagion that result from the outbreak of one initial crisis in one country or system. These contagion effects may result either from business connections between institutions of different countries or from institutional similarities between banking systems The paper is structured as follows. The spatial Probit model is presented in section 2. In section 3 we discuss the dataset and variables used in the empirical application. Results are discussed (and compared with those from the traditional model) in section 4, while section 5 concludes the paper. The study of banking crisis through a traditional Probit model isn’t satisfactory. The results from the spatial Probit model are statistically more reliable, and more robust than those from the traditional model. If the observations are inter-related, the maximization of the usual likelihood function in the Probit model produces inconsistent and inefficient estimators. The estimates here obtained for the traditional Probit model are an example of it, and this lack of quality of the estimators and of reliability of the statistic inference probably explains why previous studies didn’t find any significant relationship between the occurrence of crises and the characteristics of the banking sector (Eichengreen and Rose 1998) or bank liquidity (Demirgüç-Kunt and Detragiache 1998b, Domaç and Peria 2003). Contagion is crucial to understanding the occurrence of systemic banking crises but the phenomenon may result from business connections between institutions or from similarities between banking systems. However, our results show little sensitivity to the proximity concept used, which could be a sign that the contagion channels are diverse. This is also, without a doubt, a sign of the robustness of the phenomenon of contagion.
    Keywords: developed and developing countries, Macroeconometric modeling, Monetary issues
    Date: 2014–07–03
  33. By: Johannes Pauser; Holger Gillet
    Abstract: - The paper examines efficiency in public input provision in two large jurisdictions with imperfect labour markets. - It analyses how equilibrium capital tax rates and public input provision levels differ between asymmetric jurisdictions that can strategically influence the interest rate on the common capital market in an international tax competition setting. - The corresponding lack in research and the motivation of the paper is explained in section 1 of the paper. - We use an international tax competition setting with public inputs (productive public goods) where regions are asymmetric (non-price-taking environment) and labour markets are distorted. - Decentralised jurisdictions maximise welfare of employed and unemployed individuals (benevolent governments). - Analysis of the decentralised Nash-equilibrium (Cournot-Nash), where policy makers select tax and expenditure instruments strategically to maximise the welfare in their region (for various tax games). - Comparative statics analysis of the reaction of capital and labour to a change in policy instruments: Public inputs, source-based capital taxes, head taxes. - Derivation of equilibrium capital tax rates, labour tax rates, and public input provision levels for different tax games. - The non-cooperative equilibrium is inefficient also when governments have capital and head taxes at disposal. - As a source of both the distortion in the capital allocation between jurisdictions and the inefficiency in public input provision, we identify the governments' incentives to decrease unemployment, as well as fiscal and pecuniary externalities. - Efficiency in public input provision can be restored, if the set of fiscal instruments available for regional policy makers is extended by a labour tax.
    Keywords: Global (International), Tax policy, Labor market issues
    Date: 2014–07–03
  34. By: Asian Development Bank (ADB); (Office of Regional Economic Integration, ADB); ;
    Abstract: The question underlying the entirety of this publication is: “How can viable economic corridors be called into existence by dint of government and multilateral support?” The authors answer this question by examining the experience of economic corridor development of different regions from across continents. There are important lessons to be learned for successful corridor development from the experiences of the European Union and South Asia Subregional Economic Cooperation regions. In each case, detailed models were constructed to assess the economic impact of corridor investments. What emerged from a consideration of these two cases (as well as broader discussions) was a framework for evidence-based policy analysis. When key policy makers and stakeholders pursue measurable outcomes for the development of regional economic corridors, the model and data framework (at a standard economic scale of relevance) allows for an investment-relevant development of scenarios, which will be monitored within an effective organizational process. Such a process, with all the elements of an evidence-based policy in place, is highly likely to generate successful economic corridor development, which would realize envisaged opportunities within the regions. Two priority regions in Asia, the Greater Mekong Subregion and the Central Asia Regional Economic Cooperation, face different opportunities.
    Keywords: economic corridors, economic cooperation, regional integration, regional cooperation, Central Asia, south asia, southeast asia, inclusive growth, regional development, trade, carec, gms, sasec, mekong, china, eu, europe
    Date: 2014–01
  35. By: Barbara Bruns; Javier Luque
    Keywords: Secondary Education Teaching and Learning Education - Education For All Education - Primary Education Tertiary Education
    Date: 2014–07
  36. By: Christophe Heyndrickx; Joko Purwanto; Rodric Frederix
    Abstract: This work is based on 2 working papers, produced within the NEUJOBS project ( We studied the impact of a number of transport policies in the EU, focussing on the interaction of transport with the labour market. The objective was to determine: - if policies towards promoting sustainable transport have a positive impact on net job creation. - if so, which policies or combination of policies are the most effective in stimulating the labour market and for what reasons - in which EU countries the impacts were the largest - the impact of demographic changes and resource scarcity on the sustainability of transport. In the project this is called: 'a socio-ecological transition'. - the contribution of each policy to reducing the social and environmental externality of transport The results we present are based on a set of model runs with the EDIP model (Ivanova O., Heyndrickx C et al, 2007) which was developed in the REFIT project (part of the EU FP6 framework program). The EDIP model is a Computable General Equilibrium model for Europe, covering each country of the EU 28 and Switzerland, Norway and Turkey. We combine literature review on the marginal impact of transport policy on net job creation & growth in GDP, with model runs and scenario analysis. The reference year for the scenario analysis is 2030. The scenarios take into account a number of demographic changes, rise in the price of resources & fuels and technological change. We make a detailed analysis for 8 EU countries (AT, BE, DE, FI, ES, BG, PL, IT) and a more general analysis of the impact for the full EU.We find that 1) Policies aiming at improving the sustainability of transport can have a positive impact on employment, while reducing the external cost of transport. This is most clear with policies towards improving transport efficiency & internalization of external costs. 2) Fuel efficiency & especially the introduction of electric vehicles are not affecting the job market positively, as was claimed in other studies. 3) The relative impact of the proposed transport policies is about 3 times larger in the Eastern European countries, when measured in an FTE / million euro equivalent. 4) The impact of transit development on GDP is much lower that claimed in some VAR based studies
    Keywords: Full EU 28 & detailed analysis for AT, BE, DE, FI, ES, BG, PL, IT, General equilibrium modeling, Labor market issues
    Date: 2014–07–03

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