nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2015‒06‒05
fifty-four papers chosen by
Steve Ross
University of Connecticut

  1. Do bank loans and local amenities explain Chinese urban house prices? By Huang, Daisy J.; Leung, Charles Ka Yui; Qu, Baozhi
  2. Valuing school quality using boundary discontinuity By Stephen Gibbons; Stephen Machin; Olmo Silva
  3. Increasing Wage Gap, Spatial Structure and Market Access: Evidence from Swedish Micro Data By Nabavi, Pardis
  4. Cross-commuting and housing prices in a polycentric modeling of cities By Vincent Viguié
  5. House Prices, Local Demand, and Retail Prices By Ströbel, Johannes; Vavra, Joseph
  6. Evolutionary Economic Geography By Ron Boschma; Koen Frenken
  7. Heterogeneous expectations, boom-bust housing cycles, and supply conditions: A nonlinear dynamics approach By Dieci, Roberto; Westerhoff, Frank
  8. When and how does commuting to cities influence rural employment growth? By Lavesson, Niclas
  9. Housing market dynamics: Any news? By Gomes, Sandra; Mendicino, Caterina
  10. Co-Teaching in Clinical Experiences: Student Teacher Transitions By Denise G. Meister
  11. Macroprudential Policy in a Recovering Market: Too Much too Soon? By Duffy, David; Mc Inerney, Niall; McQuinn, Kieran
  12. The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to a Large Improvement in Housing By Sebastian Galiani; Paul J. Gertler; Raimundo Undurraga
  13. Economic Liberalisation and the Mobility of Minority Groups: Evidence from M?ori in New Zealand By Isabelle Sin; Steven Stillman
  14. Gibrat’s law and the British industrial revolution By Alexander Klein; Tim Leunig
  15. Networking, context and firm-level innovation: Cooperation through the regional filter in Norway By Fitjar, Rune Dahl; Rodriguez-Pose, Andres
  16. Regional heterogeneity and monetary policy By Beraja, Martin; Fuster, Andreas; Hurst, Erik; Vavra, Joseph
  17. A Comparative Analysis of Gibrat’s and Zipf’s Law on Urban Population By M. Modica; A. Reggiani; P. Nijkamp
  18. Location Strategies of Multinationals from Emerging Countries in the EU Regions By Riccardo Crescenzi; Carlo Pietrobelli; Roberta Rabellotti
  19. Amortization Requirements and Household Indebtedness: An Application to Swedish- Style Mortgages By Hull, Isaiah
  20. Spatial interaction of Renewable Portfolio Standards and their effect on renewable generation within NERC regions By Eric Bowen; Donald J. Lacombe
  21. The Development of Public-Private Partnerships as a Key Condition for the Solution of Issues of Affordable Housing, the Creation of Social and Engineering Infrastructure By Ivankina, Elena; Rogozhina, N
  22. Political Entrepreneurship, Cluster Policies and Regional Growth By Karlsson, Charlie
  23. Assessing the Sustainable Nature of Housing-Related Taxation Receipts: The Case of Ireland By McQuinn, Kieran; Addison-Smyth, Diarmaid
  24. Theoretical approaches of endogenous regional development By Daniela, Antonescu
  25. Ready for Take-off? The Economic Effects of Regional Airport Expansion By Philipp Breidenbach
  26. Understanding the Long-Run Decline in Interstate Migration: Online Appendix By Schulhofer-Wohl, Sam; Kaplan, Greg
  27. Does Agglomeration Discourage Fertility? Evidence from the Japanese General Social Survey 2000-2010 By KONDO Keisuke
  28. Universal Pre-School Education: The Case of Public Funding with Private Provision By Jo Blanden; Emilia Del Bono; Sandra McNally; Birgitta Rabe
  29. The Urban-Rural Gap in Governance: Evidence from Vietnam By Jairo, Acuna-Alfaro; Nguyen, Cuong; Tran, Anh; Phung, Tung
  30. Dynamic Allocation of Objects to Queuing Agents: The Discrete Model By Francis Bloch; David Cantala
  31. The stabilisation properties of immovable property taxation: Evidence from OECD countries By Hansjörg Blöchliger; Balázs Égert; Bastien Alvarez; Aleksandra Paciorek
  32. Thinking, Fast and Slow? Some Field Experiments to Reduce Crime and Dropout in Chicago By Sara B. Heller; Anuj K. Shah; Jonathan Guryan; Jens Ludwig; Sendhil Mullainathan; Harold A. Pollack
  33. The Changing Returns to Crime: Do Criminals Respond to Prices? By Mirko Draca; Theodore Koutmeridis; Stephen Machin
  34. Professional Sports Facilities, Teams and Property Values: Evidence from Seattle's Key Arena By Brad R. Humphreys; Adam Nowak
  35. Teams, Organization and Education Outcomes: Evidence from a field experiment in Bangladesh By Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves
  36. Robot Cars and Dynamic Bottleneck Congestion: The Effects on Capacity, Value of Time and Preference Heterogeneity By Vincent A.C. van den Berg; Erik T. Verhoef
  37. Knowledge externalities and knowledge creation: the role of inventors’ working relationships and mobility By Favaro, Donata; Ninka, Eniel; Turvani, Margherita
  38. Delivering education : a pragmatic framework for improving education in low-income countries By Andrabi,Tahir; Das,Jishnu; Khwaja,Asim Ijaz
  39. Commercial bank failures during the Great Recession: the real (estate) story By Antoniades, Adonis
  40. Firming Up Inequality By Nicholas Bloom; Fatih Guvenen; David J. Price; Jae Song
  41. Autoregressive Spatial Spectral Estimates By Abhimanyu Gupta
  42. Does Ethnic Diversity Affect Social Capital in the Russian Context? By Alexander Tatarko; Anna Mironova; Segey Chuvashov
  43. Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession By Christelis, Dimitris; Georgarakos, Dimitris; Jappelli, Tullio
  44. Ancestry, Language and Culture By Spolaore, Enrico; Wacziarg, Romain
  45. Persistence vs. Reversal and Agglomeration Economies vs. Natural Resources. Regional inequality in Argentina in the first half of the twentieth century By María Florencia Aráoz; Esteban A. Nicolini
  46. Real estate markets and macroprudential policy in Europe By Hartmann, Philipp
  47. Economic Development: Is Social Capital Persistent? By Rakesh N R Gupta
  48. Role of the interfirm buyer-seller network in aggregate fluctuation and the effect of link renewal By Ryohei Hisano; Tsutomu Watanabe; Takayuki Mizuno; Takaaki Ohnishi; Didier Sornette
  49. The Local Impact of Typhoons on Economic Activity in China: A View from Outer Space By Robert J R Elliott; Eric Strobl; Puyang Sun
  50. Local versus Foreign: A Microeconomic Analysis of Cultural Preferences By Maria Masood; ;
  52. Labour market adjustments in Europe and the US: How different? By Beyer, Robert C. M.; Smets, Frank
  53. Research clusters: How public subsidies matter? By Marie-Laure Cabon-Dhersin; Emmanuelle Taugourdeau
  54. Peer Settings Induce Cheating on Task Performance By Agnes Baeker; Mario Mechtel

  1. By: Huang, Daisy J. (Hong Kong University of Science and Technology); Leung, Charles Ka Yui (City University of Hong Kong); Qu, Baozhi (China Merchants Group)
    Abstract: Based on Chinese city-level data from 1999 to 2012 and controlling for geological, environmental, and social diversity, this study suggests that credit plays a significant role in driving up house prices after the Great Recession, whereas property prices only influence bank lending before 2008. Local amenities such as higher education, green infrastructure, healthcare, and climate also positively affect house prices. Moreover, the impacts of bank loans on housing prices tend to be related to the level of amenities, suggesting an integrated approach (i.e. combining macroeconomic and urban economic variables) of housing market for the future research.
    JEL: G21 O18 R11
    Date: 2015–03–01
  2. By: Stephen Gibbons; Stephen Machin; Olmo Silva
    Abstract: Existing research shows that house prices respond to local school quality as measured by average test scores. However, higher test scores could signal better quality teaching and academic value-added, or higher ability, sought-after intakes. In our research, we show decisively that value-added drives households' demand for good schooling. However, prior achievement - linked to the background of children in school - also matters. In order to identify these effects, we improve the boundary discontinuity regression methodology by matching identical properties across admissions authority boundaries; by allowing for boundary effects and spatial trends; by re-weighting our data towards transactions that are closest to district boundaries; by eliminating boundaries that coincide with major geographical features; and by submitting our estimates to a number of novel falsification tests. Our results survive this battery of experiments and show that a one-standard deviation change in either school average value-added or prior achievement raises prices by around 3%.
    Keywords: house prices; school quality; boundary discontinuities
    JEL: C21 H75 I20 R21
    Date: 2013–11–16
  3. By: Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The new economic geography predicts that the wage gap will increase with accessibility to markets but does not consider the impact of spatial proximity. In contrast, urban economic theory explains wage differences by density without accounting for accessibility. Using a rich Swedish micro-panel, we empirically examine the two rival theories for males and females separately, controlling for individual, firm and regional characteristics. The regression results indicate that wage dispersion is correlated with both accessibility to markets and density. However, the urban economic theory has greatest explanatory power when we control for factors such as occupation, ethnical background, skill, firm size, technical change, ownership, commuting time, unobserved heterogeneity and spatial autocorrelation.
    Keywords: New economic geography; urban economics; spatial econometrics; micro panel data
    JEL: C21 J30 R12 R23
    Date: 2015–06–01
  4. By: Vincent Viguié (CIRED)
    Abstract: Long term strategies, relying on city planning and travel demand management, are essential if deep GHG reduction ambitions are to be achieved in urban transport sector. However, how to precisely design such strategies remains unclear. Indeed, whereas there is a broad consensus that urban spatial structure is a key determinant in explaining travel pattern generation, the mechanisms are not yet fully understood. Especially, the interplay between commuting and localization choices leading to cross commuting in a polycentric city remains an open question, and cannot be easily explained using existing urban economics frameworks. In this study, we introduce a novel urban economic framework, fully micro-economic based, which describes land prices, population distribution and commuting travel choices in a polycentric city, with jobs locations exogenously given. It relies on the modeling of moving costs and market imperfections, especially housing-search imperfections. Using Paris as a case study, we show how this model, when adequately calibrated, reproduces available data on the internal structure of the city (rents, population densities, travel choices). A validation over the 1900-2010 period also shows that the model captures the main determinants of city shape evolution over this time. This suggests that this tool can be used to inform policy decisions.
    Keywords: urban economics, cross-commuting, urban planning, climate change mitigation
    JEL: Q5 R14 R4
    Date: 2015–05
  5. By: Ströbel, Johannes; Vavra, Joseph
    Abstract: We use detailed micro data to document a causal response of local retail price to changes in house prices, with elasticities of 15%-20% across housing booms and busts. Notably, these price responses are largest in zip codes with many homeowners, and non-existent in zip codes with mostly renters. We provide evidence that these retail price responses are driven by changes in markups rather than by changes in local costs. We then argue that markups rise with house prices, particularly in high homeownership locations, because greater housing wealth reduces homeowners’ demand elasticity, and firms raise markups in response. Consistent with this explanation, shopping data confirms that house price changes have opposite effects on the price sensitivity of homeowners and renters. Our evidence has implications for monetary, labor, and urban economics, and suggests a new source of markup variation in business cycle models.
    Keywords: business cycle; demand elasticity; household shopping; housing wealth; markup; retail prices
    JEL: E12 E21 E31 E32 E52 R22
    Date: 2015–05
  6. By: Ron Boschma; Koen Frenken
    Abstract: The chapter gives a brief overview of the most recent literature on Evolutionary Economic Geography (EEG). We describe how EEG has provided new and additional insights on a number of topics that belong to the core of the economic geography discipline: why do industries concentrate in space, how do clusters operate and evolve, how are innovation networks structured in space and how do they evolve over time, what types of agglomeration externalities induce urban and regional growth, how do regions diversify, and how do institutions and institutional change matter for the development of new growth paths in regions.
    Keywords: Evolutionary Economic Geography, related variety, regional branching, proximity, path dependence, co-evolution, institutional change
    Date: 2015–05
  7. By: Dieci, Roberto; Westerhoff, Frank
    Abstract: We combine a standard stock-flow housing market model, incorporating explicit relationships between house prices, the housing stock, and the rent level, with a parsimonious expectation formation scheme of housing market investors, reflecting an evolving mix of extrapolative and regressive expectation rules. The model results in a two-dimensional discrete-time nonlinear dynamical system. Based on realistic parameters, the model is able to generate endogenous boom-bust housing market dynamics with lasting periods of overvaluation and overbuilding. We thus exploit our model to investigate how real forces, in particular supply conditions, interact with expectations-driven housing market fluctuations.
    Keywords: Housing markets,Speculation,Housing supply,Boom-bust cycles,Nonlinear dynamics
    JEL: D84 R21 R31
    Date: 2015
  8. By: Lavesson, Niclas (CIRCLE, Lund University)
    Abstract: Urban areas tend to grow in population and employment while most rural areas face decline. Earlier research suggests that well-growing rural areas benefit from urban proximity and more specifically from rural-to-urban commuting. Studies on local labor markets suggest that highly educated individuals earn more than other commuters and that they tend to travel over longer distances to work. This suggests that the impacts on growth differ for different parts of commuting labor. The aim of this paper is to combine these literatures and explore how rural employment growth is influenced by commuting and how far across space these effects reach.
    Keywords: Urban spread effects; rural-urban integration; commuting
    JEL: R00
    Date: 2015–05–29
  9. By: Gomes, Sandra; Mendicino, Caterina
    Abstract: This paper explores the link between agent expectations and housing market dynamics. We focus on shifts in the fundamental driving forces of the economy that are anticipated by rational forward-looking agents, i.e. news shocks. Using Bayesian methods and U.S. data, we find that news-shock-driven-cycles account for a sizable fraction of the variability in house prices and other macroeconomic variables over the business cycle and have also contributed to run-ups in house prices over the last three decades. By exploring the link between news shocks and agent expectations, we show that house price growth was positively related to inflation expectations during the boom of the late 1970’s but negatively related to interest rate expectations during the mid-2000’s housing boom. JEL Classification: C50, E32, E44
    Keywords: Bayesian estimation, financial frictions, housing market, local identification, news shocks, survey expectations
    Date: 2015–04
  10. By: Denise G. Meister (Penn State Harrisburg)
    Abstract: The No Child Left Behind Act (NCLB) of 2001 in the United States mandated standardized testing to measure student achievement. Over time, this act began close scrutiny and criticism of curriculum and instruction. As schools struggled with meeting the mandate, Race to the Top, a $4.35 billion United States Department of Education contest, was created in 2009 to spur innovation and reforms in state and local district K-12 education. States were awarded points for satisfying certain educational policies, such as implementing performance-based standards for teachers and principals, complying with Common Core standards, turning around the lowest-performing schools, and building data systems. In order to apply for this competitive grant, school districts had to demonstrate a systematic evaluation of teachers’ performance through their students’ achievement. This initiative has led to mandated teacher evaluation systems that include one component tying student test scores to teacher performance. With teachers’ yearly evaluations now being tied to student test scores, district administrators are weary of supporting student teachers in their schools. A way to allow teachers to continue to have a teaching presence with a student teacher placement is through co-teaching. This method of instruction allows the mentor teacher to collaborate with the student teacher in various instructional strategies. Committed to making co-teaching an integral part of our clinical practice, our faculty members trained in the co-teaching model and, in turn, trained student teachers, mentor teachers, principals, and college supervisors in the model. We will share the principles of co-teaching and their first efforts at co-teaching Spring 2014. We will explain why we adopted this model and how we formed partnerships with school districts. We will share what we learned, what curriculum changes we made, the assessment instruments we used, and our next steps. Finally, we will share the findings of a research study. This study included three in-depth interviews with six mathematics and social studies student teachers and their mentor teachers to study their perceptions of co-teaching.
    Keywords: Reference Jane Wilburne
    Date: 2014–10
  11. By: Duffy, David; Mc Inerney, Niall; McQuinn, Kieran
    Abstract: The aftermath of the 2007/08 financial crisis has resulted in many Central Banks and regulatory authorities examining the appropriateness of macroprudential policy as an effective and efficient policy option in preventing the emergence of future credit bubbles. Specific limits on loan-to-value (LTV) and loan-to-income (LTI) ratios have been assessed and applied in a large number of markets both in developing and developed economies as a means of ensuring greater financial stability. The Irish property and credit market were particularly affected in the crisis as the domestic housing market had, since 1995, experienced sustained price and housing supply increases. Much of the activity in the Irish market was fuelled by a sizeable credit bubble which was greatly facilitated by the growth of international wholesale funding post 2003. After a period of pronounced declines, Irish house prices in late 2013 started to increase significantly. In early 2015, the Irish Central Bank responded by imposing new LTV and LTI limits to curb house price inflation. However, the introduction of these measures comes at a time when housing supply and mortgage lending are at historically low levels. In this paper we use a newly developed structural model of the Irish property and credit market to examine the implications of these measures for house prices and key activity variables in the mortgage market.
    Date: 2015–05
  12. By: Sebastian Galiani (University of Maryland and NBER); Paul J. Gertler (UC Berkeley and NBER); Raimundo Undurraga (New York University)
    Abstract: A fundamental question in economics is whether happiness increases pari passu with improvements in material conditions or whether humans grow accustomed to better conditions over time. We rely on a large-scale experiment to examine what kind of impact the provision of housing to extremely poor populations in Latin America has on subjective measures of well-being over time. The objective is to determine whether poor populations exhibit hedonic adaptation in happiness derived from reducing the shortfall in the satisfaction of their basic needs. Our results are conclusive. We find that subjective perceptions of wellbeing improve substantially for recipients of better housing but that after, on average, eight months, 60% of that gain disappears.
    JEL: I31
    Date: 2015–05
  13. By: Isabelle Sin (Motu Economic and Public Policy Research); Steven Stillman (University of Otago)
    Abstract: Between 1984 and 2003, New Zealand undertook comprehensive market-oriented economic reforms. In this paper, we use Census data to examine how the internal mobility of M?ori compares to that of Europeans in New Zealand in the period after these reforms. It is often suggested that M?ori are less mobile than other ethnic groups because of attachment to particular geographical locations. If this were the case, M?ori may have been disadvantaged in the post-reform period because they were more likely to be living in adversely affected areas and less likely to move to pursue better employment opportunities. In contrast to the anecdotal evidence, we find that M?ori are more mobile on average than similar Europeans. However, M?ori who live in areas with strong networks of their iwi are slightly less mobile than Europeans. The difference between M?ori who live locally to their iwi and those who do not is even more pronounced when we consider responsiveness to local labour market shocks. Non-local M?ori are considerably more responsive to changes in economic opportunities than are Europeans, whereas local M?ori are almost entirely unresponsive.
    Keywords: Mobility, Migration, New Zealand, M?ori, Labour Market Areas
    JEL: J61 J15 R23
    Date: 2015–01
  14. By: Alexander Klein; Tim Leunig
    Abstract: Gibrat's Law states that the growth of towns and cities is independent of their initial size. We show that the Industrial Revolution was revolutionary enough to violate this law for 1761-1801, 1801-1891, and all decades within. Small places grew more slowly throughout this period. Larger towns, in contrast, typically grew faster, but only if they were in core Industrial Revolution Counties. In line with economic theory, towns grew disproportionately when agglomeration economies exceeded urban disamenities, allowing wage rises that induced workers to migrate to the town. This only occurred in places characterised by new, mechanised industries and mining.
    Keywords: Gibrat’s law; city-size distribution; industrial revolution
    JEL: N0
    Date: 2015–05
  15. By: Fitjar, Rune Dahl; Rodriguez-Pose, Andres
    Abstract: The paper assesses the role for innovation of one aspect which has been generally overlooked by evolutionary economic geography: context. It analyses how context shapes the impact of collaboration on firm-level innovation for 1604 firms located in the five largest city regions of Norway. Specifically, the analysis shows how the benefits to firms of collaborating within regional, national, and international innovation networks are affected by the knowledge endowments of the region within which the firm is located. Using a logit regression analysis, we find, first, that only national and international networking have a significant positive impact on the likelihood of innovation (the former only for process innovation), whereas the regional knowledge endowments have no direct effect. Second, regional cooperation is particularly effective in regions with high investments in R&D, whereas international cooperation is important in regions with an educated workforce – and regional and national collaboration may be ineffective in such cases. We conclude that, in the case of Norway, context is essential in determining the capacity of firms to set up networks and innovate. Regions with an educated workforce can use the resulting absorptive capacity to successfully assimilate knowledge being diffused through global pipelines from faraway places. However, this absorptive capacity is likely to be heavily filtered if regional firms mainly rely on internal connections within Norway.
    Keywords: context; firms; human capital; innovation; interaction; networking; Norway; R&D
    JEL: O31 O32
    Date: 2015–05
  16. By: Beraja, Martin (University of Chicago); Fuster, Andreas (Federal Reserve Bank of New York); Hurst, Erik (University of Chicago); Vavra, Joseph (University of Chicago)
    Abstract: We study the implications of regional heterogeneity within a currency union for monetary policy. We ask, first, does monetary policy mitigate or exacerbate ex-post regional dispersion over the business cycle? And second, does ex-ante regional heterogeneity increase or dampen the aggregate effects of a given monetary policy? To help answer these questions, we use detailed U.S. micro data to explore the extent to which mortgage activity differed across local areas in response to the first round of Quantitative Easing (QE1), announced in November 2008. We document that QE1 increased both mortgage activity and real spending but that its effects were smaller in parts of the country with the largest employment declines. This heterogeneous regional effect is driven by the fact that collateral values were most depressed in the regions with the largest employment declines, reducing the extent to which borrowers were able to benefit from rate decreases. We explore the implications of our empirical results for theoretical monetary policymaking using an incomplete-markets, heterogeneous-agent model of a monetary union whereby monetary policy influences local spending through collateralized lending. Preliminary results suggest that both the distributional and aggregate consequences of monetary policy depend on the joint distribution of local shocks. We find that if regions with low relative income also have depressed collateral values (as in 2008), then expansionary mon
    Keywords: monetary policy; regional inequality; quantitative easing; mortgage refinancing
    JEL: E21 E52 G21
    Date: 2015–06–01
  17. By: M. Modica; A. Reggiani; P. Nijkamp
    Abstract: The regional economics and geography literature on urban population size has in recent years shown interesting conceptual and methodological contributions on the validity of Gibrat’s Law and Zipf’s Law. Despite distinct modeling features, they express similar fundamental characteristics in an equilibrium situation. Zipf’s law is formalized in a static form, while its associated dynamic process is articulated by Gibrat’s Law. Thus, it is likely that both Zipf’s Law and Gibrat’s Law share a common root. Unfortunately, empirical investigations on the direct relationship between Gibrat’s Law and Zipf’s Law are rather rare and not conclusive. The present paper aims to answer the question whether (a generalisation of) Gibrat’s Law allows us to infer Zipf’s Law, and vice versa? In our conceptual and applied framework, particular attention will be paid to the role of the mean and the variance of city population as key indicators for assessing the (non-) validity of the generalised Gibrat’s Law. Our empirical experiments are based on a comparative analysis between the dynamics of the urban population of four countries with entirely mutually contrasting spatial-economic and geographic characteristics: Botswana, Germany, Hungary and Luxembourg. We arrive at the following results: if (i) the mean is independent of city size (first necessary condition of Gibrat’s law) and (ii) the coefficient of the rank-size rule/Zipf’s Law is different from one, then the variance is dependent on city size.
    JEL: C46 D30 O40 R11
    Date: 2015–05
  18. By: Riccardo Crescenzi; Carlo Pietrobelli; Roberta Rabellotti
    Abstract: This paper contributes to the current debate in both Economic Geography and International Business on the nature and strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs). The paper fills a relevant gap in the existing literature by shedding new light on the location strategies of EMNEs at the national and regional level, looking at their investment drivers and systematically comparing them with those of multinationals from advanced countries (AMNEs). The empirical analysis looks at the location choices of MNEs in the European Union (EU-25) regions and unveils that EMNEs follow distinctive location strategies. Their attraction into large regional markets is similar to AMNEs as well as their irresponsiveness to efficiency seeking motives. Conversely, the most knowledge-intensive investments of EMNEs respond mainly to two ‘attraction’ factors: strategic assets (in the form of local technological dynamism) and the agglomeration of foreign investments in the same business functions. In addition, both the national and the regional levels are simultaneously relevant to EMNEs decisions.
    Keywords: multinationals, emerging countries, regions, European Union
    JEL: F21 F23 O33 R12 R58
    Date: 2015–05
  19. By: Hull, Isaiah (Research Department, Central Bank of Sweden)
    Abstract: Since the mid-1990s, many OECD countries have experienced a substantial in- crease in household indebtedness. Sweden, in particular, has seen indebtedness rise from 90% of disposable income in 1995 to 172% in 2014. The Swedish Financial Supervisory Authority (FSA) has identi ed mortgage amortization requirements as a potential instrument for reducing indebtedness; and has drafted guidelines that will intensify the rate and duration of amortization. In this paper, I charac- terize Swedish-style mortgage contracts, which dier substantially from U.S.-style contracts. I then evaluate the policy changes in an incomplete markets model with three types of debt and a novel mortgage contract speci cation that is cali- brated to match Swedish micro and macro data. I nd that intensifying the rate and duration of amortization is largely ineective at reducing indebtedness in a realistically-calibrated model. In the absence of implausibly large re nancing costs or tight restrictions on the maximum debt-service-to-income ratio, the policy im- pact is small in aggregate, over the lifecycle, and across employment statuses. These results may be relevant for other OECD countries, such as Norway and Canada, that have also not seen a reduction in house prices or indebtedness since the 2007 nancial crisis.
    Keywords: Mortgages; Amortization; Heterogeneous Agents; Incomplete Markets; Financial Regulation
    JEL: E44 G21 R21
    Date: 2015–04–01
  20. By: Eric Bowen (West Virginia University, College of Business and Economics); Donald J. Lacombe (West Virginia University, Regional Research Institute)
    Abstract: While several studies have examined the effectiveness of renewable portfolio standard laws on renewable generation in states, previous literature has not assessed the potential for spatial dependence in these policies. Spatial dependence in the electric grid is likely, considering the connectivity of the electric grid across NERC regions. Using the latest spatial panel methods, this paper estimates a number of econometric models to examine the impact of RPS policies when spatial autocorrelation is taken into account. Consistent with previous literature, we find that RPS laws do not have a significant impact on renewable generation within a state. However, once spatial dependence is accounted for, we find evidence that a state’s RPS laws have a significant positive impact on the share of renewable generation the NERC region as a whole. These findings provide evidence that electricity markets are efficiently finding the lowest-cost locations to serve renewable load to states with more stringent RPS laws.
    Keywords: Renewable Portfolio Standards, Renewable Energy Policy, Spatial Econometrics
    JEL: Q42 Q48 R15
    Date: 2015–05
  21. By: Ivankina, Elena (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Rogozhina, N (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The work is dedicated to the use of public-private partnership (PPP) in the formation of an affordable housing market in Russia and the creation of social and engineering infrastructure. The development of PPPs is extremely important for our country. Currently, PPP in Russia is in its infancy and many aspects, including legislative control, need to be addressed. Of particular relevance is the topic of PPP development in the formation of affordable housing, the creation of social and engineering infrastructure. The paper provides guidance on the introduction and development of different types of PPPs, on the mechanism of the use of PPPs in the regions of the Russian Federation to the creation of affordable housing, social and engineering infrastructure, proposals for the establishment of legal and regulatory environment for the wide use of PPP for projects in the field of affordable housing.
    Keywords: public-private partnership, infrastructure, affordable housing
    Date: 2015–04
  22. By: Karlsson, Charlie (Centre of Excellence for Science and Innovation Studies and Jönköping International Business School)
    Abstract: In recent years and not least after the latest financial and economic crisis, we have seen a strongly renewed interest for industrial policy to get the developed economies growing again. The political entrepreneurs, i.e. the politicians and their experts and advisers have been hunting desperately for new approaches to industrial policy. With political entrepreneurs, we here understand politicians/bureaucrats/civil servants/authorities within publically financed activities that with different methods try to stimulate entrepreneurship and self-employment with the overall goal to increase employment and economic growth. The renewed interest for industrial policy and the increased importance of political entrepreneurs motivate that we once again ask the fundamental question about what shall be the proper focus, measures and extent of industrial policy. Shall the industrial policy be vertical and focus at specific industries and even specific companies or shall it be horizontal and focus at improving the general conditions for all industries and firms? However, there is a related and partly more controversial question, namely, what is the proper spatial scale for the policy interventions by the political entrepreneurs? Shall the industrial policy focus at certain places and possibly focus at existing and/or emerging industrial clusters or shall it be spatially neutral and not try to discriminate between different regions and places? The purpose of this paper is to throw some light over all above questions but with some extra focus at the questions concerning the spatial aspects. The above questions are by no means new but there are today very good reasons to throw new light at them not least against the back¬ground of EU´s new industrial and regional policy that aims at achieving ‘smart specialization’, what that now may be.
    Keywords: Political entrepreneurship; industrial policy; clusters; smart specialization; regional growth
    JEL: L38 L52 L53 R11 R58
    Date: 2015–06–01
  23. By: McQuinn, Kieran; Addison-Smyth, Diarmaid
    Abstract: Even by international standards, Ireland?s fiscal position was particularly affected by the recent financial crisis. As budgetary surpluses quickly gave way to significant deficits post 2007, the deterioration in the Irish public finances culminated in an Excessive Deficit Procedure being launched in 2009 and entry into a formal EU/IMF assistance programme in late 2010. Much of this deterioration was caused by the sudden and sharp decline in the Irish housing market as property-related taxes dried up. In this paper we quantify the extent of housing related tax windfall gains and losses. We find that at various times over the past three decades, there have been instances where dis-equilibrium in the Irish housing market has had significant implications for the associated taxation receipts. Examining taxation aggregates in this manner can be seen as an important complement to recent policy responses aimed at improving fiscal governance.
    Date: 2015–05
  24. By: Daniela, Antonescu
    Abstract: The territory affects how economic systems work, geographic proximity being a primary source of economic and social benefits. Generally speaking, territorial development is minimal determined by exogenous factors, while the main factors that influence the potential of local development are: endowment, resources, human and social capital, accessibility, infrastructure etc. These factors can be found in the regional growth theory which, by its scientific nature, is assimilated with macroeconomic theory. New economic geography emphasizes the importance of these factors, which focus on the lower production costs. At the same time, technological change and diffusion of technologies are considered endogenous variables which react to the market signals. Positive externalities are produced by using technological investment, employment and income redistribution in society. Research development, entrepreneurial skills, local production, innovation, knowledge, learning networks etc. are considered to be the engine of economic growth. In this paper, there are presented the main theoretical approaches of endogenous growth, which have contributed to understanding the implications and the effects of this process upon regional development.
    Keywords: regional endogenous growth, new economic geography, endogenous factors
    JEL: A1 A11 A12 A2 A20 A23 R00 R1 R13
    Date: 2015–05–28
  25. By: Philipp Breidenbach
    Abstract: This paper analyzes whether the expansion of regional airports in Germany caused positive spillover effects on the surrounding economies, exploiting the deregulation of the European aviation market as a quasi-experiment. Such potential spillovers are often used as an argument for the substantial annual subsidies to airports. Previous evaluations often suffer from the problem of reverse causality, since investment decisions are based on the economic conditions of the region. By contrast, the aviation deregulation under the Single European Market-initiative provides an exogenous incentive for investing in the expansion of existing regional airports. A difference-in-differences approach is used to estimate the causal effects of this expansion on regional growth. The results are sobering, though, as there is no evidence for any positive spillover effects.
    Keywords: Banking union; currency union; default; shock absorber; two-tier reinsurance system
    JEL: E42 E50 F3 G21
    Date: 2015–04
  26. By: Schulhofer-Wohl, Sam (Princeton University); Kaplan, Greg (Princeton University)
    Abstract: This appendix contains eight sections. Section 1 gives technical details of how we calculate standard errors in the CPS data. Section 2 discusses changes in the ACS procedures before 2005. Section 3 examines demographic and economic patterns in migration over the past two decades, in more detail than in the main paper. Section 4 examines the cross-sectional variance of location-occupation interactions in earnings when we define locations by MSAs instead of states. Section 5 describes alternative methods to estimate the variance of location-occupation interactions in income. Section 6 measures the segregation of industries across states and of occupations and industries across MSAs. Section 7 gives technical details on the use of SIPP and census data to calculate repeat and return migration rates. Section 8 discusses transition dynamics in the model.
    Keywords: Interstate migration; Labor mobility; Gross flows; Information technology; Learning
    JEL: D83 J11 J24 J61 R12 R23
    Date: 2015–06–01
  27. By: KONDO Keisuke
    Abstract: This study empirically investigates whether agglomeration discourages married couples' fertility decisions. Exploiting Japanese social survey data to control for economic and social factors underlying fertility, it examines whether agglomeration affects completed fertility and the timing of childbirth. Results indicate that agglomeration impedes completed fertility. In addition, this study finds that agglomeration delays young married couples' fertility decision, and that they bear children later in life.
    Date: 2015–05
  28. By: Jo Blanden; Emilia Del Bono; Sandra McNally; Birgitta Rabe
    Abstract: This paper studies the effect of free pre-school education on child outcomes in primary school. We exploit the staggered implementation of free part-time pre-school for three-year-olds across Local Education Authorities in England in the early 2000s. The policy led to small improvements in attainment at age five, with no apparent benefits by age 11. We argue that this is because the expansion of free places largely crowded out privately paid care, with small changes in total participation, and was achieved through an increase in private provision, where quality is lower on average than in the public sector.
    Keywords: Childcare, child outcomes, publicly provided goods
    JEL: I21 I24 H44
    Date: 2015–05
  29. By: Jairo, Acuna-Alfaro; Nguyen, Cuong; Tran, Anh; Phung, Tung
    Abstract: The relationship between development and governance is a central question in the public administration literature on developing countries. Yet, we still understand little about the gap between urban and rural governance in these nations. Our paper tackles this issue using the novel Vietnam Provincial Governance and Public Administration Performance Index (PAPI). PAPI is Vietnam’s largest nationwide survey, and it is considers six dimensions of local public administration, including participation, transparency, accountability, corruption control, administrative procedures, and public service delivery. Using a small area estimation approach we present three new findings. First, urban citizens report better local governance and public administration than rural citizens do. Second, districts with better reported governance tend to have a smaller urban-rural public administration gap. Third, this gap follows a U-shaped pattern, decreasing initially and then increasing slightly as local living standards rise. These findings have implications for priorities in public administration reforms.
    Keywords: Governance, urban-rural difference, PAPI, small area estimation, Vietnam.
    JEL: H0 R1 R2
    Date: 2014–09–10
  30. By: Francis Bloch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); David Cantala (El Colegio de Mexico - El Colegio de México)
    Abstract: This paper analyzes the optimal allocation of objects which arrive sequentially to agents organized in a waiting list. Applications include the assignment of social housing, deceased donor organs and daycare slots. A mechanism is a probability distribution over all priority orders which are consistent with the waiting list. We consider three efficiency criteria: first order stochastic dominance in the vector of agents' values, the probability of misallocation and the expected waste. We show that the strict seniority order dominates uniform random order according to the two first criteria, and the uniform random order dominates strict priority according to the third criterion. If agents values are perfectly correlated, strict priority dominates all other probabilistic mechanisms for all agents values.
    Date: 2014–05
  31. By: Hansjörg Blöchliger; Balázs Égert; Bastien Alvarez; Aleksandra Paciorek
    Abstract: This paper contributes to the scarce literature on the macroeconomic effects of property taxes, in particular on the relationships between property taxes, house prices and the wider economy. The paper first estimates a fiscal reaction function which analysis the reaction of property tax revenues to house prices. It then analyses a house price reaction function looking at the relation of how house prices react to changes in property taxes. For a set of OECD countries, the results suggest that property taxes tend to be a-cyclical or slightly pro-cyclical. They provide a stable revenue source for sub-central governments but do not stabilise the economy. The results also suggest that an increase in property tax revenues or in the tax revenue-to-GDP share slows down house price increases and that higher property taxation tends to reduce house price volatility.<P>Les propriétés stabilisatrices de la fiscalité des biens immobiliers : Données relatives aux pays de l'OCDE<BR>Ce document vient compléter les rares travaux publiés sur les effets macroéconomiques des impôts immobiliers, en particulier sur la relation entre la fiscalité immobilière, les prix des logements et l'économie dans son ensemble. Nous estimons d'abord une fonction de réaction budgétaire permettant d'analyser la réaction des recettes d'impôts immobiliers aux variations des prix des logements. Nous analysons ensuite une fonction de réaction des prix des logements, permettant de déterminer comment réagissent les prix des biens immobiliers d'habitation aux variations des impôts immobiliers. Pour un ensemble de pays de l'OCDE, les résultats obtenus laissent à penser que les impôts immobiliers tendent à être acycliques ou légèrement procycliques. Ils constituent une source de recettes stables pour les administrations infranationales mais ne stabilisent pas l'économie. Les résultats obtenus laissent également à penser qu'une hausse des recettes d'impôts immobiliers ou du ratio recettes fiscales/produit intérieur brut (PIB) a pour effet de ralentir les augmentations des prix des logements, et qu'une fiscalité immobilière plus lourde tend à réduire la volatilité des prix des logements.
    Keywords: immovable property tax, stabilisation, housing market, marchés du logement, stabilisation, fiscalité des biens immobiliers
    JEL: E32 H50 H60
    Date: 2015–05–29
  32. By: Sara B. Heller; Anuj K. Shah; Jonathan Guryan; Jens Ludwig; Sendhil Mullainathan; Harold A. Pollack
    Abstract: This paper describes how automatic behavior can drive disparities in youth outcomes like delinquency and dropout. We suggest that people often respond to situations without conscious deliberation. While generally adaptive, these automatic responses are sometimes deployed in situations where they are ill-suited. Although this is equally true for all youths, disadvantaged youths face greater situational variability. This increases the likelihood that automaticity will lead to negative outcomes. This hypothesis suggests that interventions that reduce automaticity can lead to positive outcomes for disadvantaged youths. We test this hypothesis by presenting the results of three large-scale randomized controlled trials (RCTs) of interventions carried out on the south and west sides of Chicago that seek to improve the outcomes of low-income youth by teaching them to be less automatic. Two of our RCTs test a program called Becoming a Man (BAM) developed by Chicago-area non-profit Youth Guidance; the first, carried out in 2009-10, shows participation improved schooling outcomes and reduced violent-crime arrests by 44%, while the second RCT in 2013-14 showed participation reduced overall arrests by 31%. The third RCT was carried out in the Cook County Juvenile Temporary Detention Center (JTDC) in 2009-11 and shows reductions in return rates of 22%. We also present results from various survey measures suggesting the results do not appear to be due to changes in mechanisms like emotional intelligence or self-control. On the other hand results from some decision-making exercises we carried out seem to support reduced automaticity as a key mechanism.
    JEL: C91 C93 D03 D1 I24 I3 I32 K42
    Date: 2015–05
  33. By: Mirko Draca; Theodore Koutmeridis; Stephen Machin
    Abstract: In economic models of crime individuals respond to changes in the potential value of criminal opportunities. We analyse this issue by estimating crime-price elasticities from detailed data on criminal incidents in London between 2002 and 2012. The unique data feature we exploit is a detailed classification of what goods were stolen in reported theft, robbery and burglary incidents. We first consider a panel of consumer goods covering the majority of market goods stolen in the crime incidents and find evidence of significant positive price elasticities. We then study a particular group of crimes that have risen sharply recently as world prices for them have risen, namely commodity related goods (jewellery, fuel and metal crimes), finding sizable elasticities when we instrument local UK prices by exogenous shifts in global commodity prices. Finally, we show that changes in the prices of loot from crime have played a role in explaining recent crime trends.
    Keywords: Crime, goods prices, metal crime, commodity prices
    JEL: K42
    Date: 2015–06
  34. By: Brad R. Humphreys (West Virginia University, College of Business and Economics); Adam Nowak (West Virginia University, College of Business and Economics)
    Abstract: Professional sports teams and facilities can generate negative or positive amenities to be capitalized into nearby property prices. We investigate the effect of the departure of a National Basketball Association team, the Seattle SuperSonics, from Key Arena in Seattle in 2008 on nearby residential property values. The arena continued to operate after the team left, so this departure represents a natural experiment to identify the net effects of a sports team from the effect of a facility and other events that take place in the facility. Results from a repeat sale regression model indicate that the departure of the SuperSonics was associated with excess appreciation of condo prices near Key Arena, suggesting that the team generated disamenities in this market.
    Keywords: repeat sales regression model, property values, professional sports
    JEL: R13 R58 H71 L83
    Date: 2015–05
  35. By: Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves
    Abstract: We study the relationship between network centrality and educational outcomes using a field experiment in primary schools in Bangladesh. After obtaining information on friendship networks, we randomly allocate students into groups and give them individual and group assignments. We find that the groups that perform the best are those whose members have high Katz-Bonacich and key-player centralities. Leaders are mostly responsible for this effect, while bad apples have little influence. Group members' network centrality is also important in shaping individual performance. We show that network centrality captures non-cognitive skills, especially patience and competitiveness.
    Keywords: leaders; Network centrality; soft skills; team work
    JEL: A14 C93 D01 I20
    Date: 2015–05
  36. By: Vincent A.C. van den Berg (VU University Amsterdam, the Netherlands); Erik T. Verhoef (VU University Amsterdam, the Netherlands)
    Abstract: ‘Robot cars’ are cars that allow for automated driving. They can drive closer together than human driven ‘normal cars’, and thereby raise road capacity. Obtaining a robot car instead of a normal car can also be expected to lower the user’s value of time losses (VOT), because travel time can be used for other activities than driving. With a mix of normal and robot car users, the VOT is therefore (more strongly) heterogeneous. We study the effect of robot cars on social welfare for a number of market organizations: private monopoly, perfect competition and public supply. Increasing the share of robot cars raises average capacity (especially if robot cars drive concentrated in time), but may hurt existing robot car users as the switchers’ lowered VOT will increase their bottleneck-congestion externality. When the capacity effect dominates, buying a robot imposes a net positive externality, but otherwise, it causes a net negative externality. Numerical analysis suggests that a net positive externality is more likely; nevertheless, for a small, but still plausible, capacity effect a net negative externality results. With a positive (negative) externality, marginal cost provision tends to lead to an undersupply of robot cars, and a public supplier needs to subsidise (tax) robot car purchase in order to maximise welfare. A monopolist supplier ignores the externality and tends to add a mark-up to its price. This almost always leads to a substantial undersupply.
    Keywords: robot cars; heterogeneity; bottleneck model; autonomous cars; self-driving cars; market structure
    JEL: D42 D62 H23 L12 L51 R41 R48
    Date: 2015–05–22
  37. By: Favaro, Donata; Ninka, Eniel; Turvani, Margherita
    Abstract: We study the transmission of tacit knowledge arising from working relationships established by inventors and its impact on firms’ knowledge creation. First, we consider knowledge spillovers that originate through inventor working relationships that are not the result of collaboration agreements among patenting firms. Second, we analyse their effect on the creation of new knowledge as measured by companies’ patenting activity. The study focuses on the role played by geographical proximity. The analysis was carried out on the population of firms located in the Italian region of Veneto and is based upon the original OECD REGPAT database that records all patenting applications at EPO.
    Keywords: patenting activity, knowledge externalities, working relationships, mobility, geographical proximity
    JEL: J24 O3 R1
    Date: 2014–12
  38. By: Andrabi,Tahir; Das,Jishnu; Khwaja,Asim Ijaz
    Abstract: Even as primary-school enrollments have increased in most low-income countries, levels of learning remain low and highly unequal. Responding to greater parental demand for quality, low-cost private schools have emerged as one of the fastest growing schooling options, challenging the monopoly of state-provided education and broadening the set of educational providers. Historically, the rise of private schooling is always deeply intertwined with debates around who chooses what schooling is about and who represents the interests of children. This time is no different. But rather than first resolve the question of how child welfare is to be adjudicated, this paper argues instead for a `pragmatic framework?. In this pragmatic framework, policy takes into account the full schooling environment?which includes public, private and other types of providers?and is actively concerned with first alleviating constraints that prohibit parents and schools from fulfilling their own stated objectives. Using policy actionable experiments as examples, this paper shows that the pragmatic approach can lead to better schooling for children. Alleviating constraints by providing better information, better access to finance or greater access to skilled teachers brings more children into school and increases test-scores in language and mathematics. These areas of improvement are very similar to those where there is already a broad societal consensus that improvement is required.
    Keywords: Primary Education,Education For All,Secondary Education,Tertiary Education,Effective Schools and Teachers
    Date: 2015–05–26
  39. By: Antoniades, Adonis
    Abstract: The primary driver of commercial bank failures during the Great Recession was exposure to the real estate sector, not aggregate funding strains. The main \toxic" exposure was credit to non-household real estate borrowers, not traditional home mortgages or agency-issued MBS. Private-label MBS contributed to the failure of large banks only. Failed banks skewed their portfolios towards product categories that performed poorly on aggregate, and within each category invested in assets of lower quality than survivor banks did. They expanded more rapidly into real estate during the pre-crisis period, but rapid growth alone cannot explain differences in asset performance. JEL Classification: G21, G28
    Keywords: bank failures, credit lines, Great Recession, mortgage-backed securities, real estate
    Date: 2015–04
  40. By: Nicholas Bloom; Fatih Guvenen; David J. Price; Jae Song
    Abstract: Earnings inequality in the United States has increased rapidly over the last three decades, but little is known about the role of firms in this trend. For example, how much of the rise in earnings inequality can be attributed to rising dispersion between firms in the average wages they pay, and how much is due to rising wage dispersion among workers within firms? Similarly, how did rising inequality affect the wage earnings of different types of workers working for the same employer—men vs. women, young vs. old, new hires vs. senior employees, and so on? To address questions like these, we begin by constructing a matched employer-employee data set for the United States using administrative records. Covering all U.S. firms between 1978 to 2012, we show that virtually all of the rise in earnings dispersion between workers is accounted for by increasing dispersion in average wages paid by the employers of these individuals. In contrast, pay differences within employers have remained virtually unchanged, a finding that is robust across industries, geographical regions, and firm size groups. Furthermore, the wage gap between the most highly paid employees within these firms (CEOs and high level executives) and the average employee has increased only by a small amount, refuting oft-made claims that such widening gaps account for a large fraction of rising inequality in the population.
    Keywords: Inequality, productivity and firms
    JEL: O2 M1
    Date: 2015–05
  41. By: Abhimanyu Gupta
    Abstract: Autoregressive spectral density estimation for stationary random fields on a regular spatial lattice has the advantage of providing a guaranteed positive-definite estimate even when suitable edge-effect correction is employed.We consider processes with a half-plane infinite autoregressive representation and use truncated versions of this to estimate the spectral density. The truncation length is allowed to diverge in all dimensions in order to avoid the potential bias which would accrue due to truncation at a fixed lag-length. Consistency and strong consistency of the proposed estimator, both uniform in frequencies, are established. Under suitable conditions the asymptotic distribution of the estimate is shown to be zero-mean normal and independent at fixed distinct frequencies, mirroring the behaviour for time series. The key to the results is the covariance structure of stationary random fields defined on regularly spaced lattices. We study this in detail and show the covariance matrix to satisfy a generalization of the Toeplitz property familiar from time series analysis. A small Monte Carlo experiment examines finite sample performance.
    Date: 2015–05–01
  42. By: Alexander Tatarko (National Research University Higher School of Economics); Anna Mironova (National Research University Higher School of Economics); Segey Chuvashov (National Research University Higher School of Economics)
    Abstract: The research considers the impact of ethnic diversity on social capital in the Russian context. The theoretical study is based on Putnam’s hypothesis related to the impact of ethnic diversity on social capital. The empirical basis of a representative survey was compiled in two multicultural regions of Russia (N = 2061). To assess the level of ethnic diversity an Ethnic Diversity Index (EDI) was calculated based on the results of the latest National Population Census. Data were processed using two-level structural equitation modelling. The results showed that ethnic diversity did not affect adversely the social capital of Russia, as assumed in Putnam’s hypothesis. In particular, Russia's ethnic diversity positively influences ethnic tolerance and informal sociability and does not affect social trust and community organizational life. The article also suggests reasons for these results
    Keywords: social capital, ethnic diversity, social trust, community organizational life, informal sociability, ethnic tolerance
    JEL: D85 Z13
    Date: 2015
  43. By: Christelis, Dimitris; Georgarakos, Dimitris; Jappelli, Tullio
    Abstract: Data from the 2009 Internet Survey of the Health and Retirement Study show that many U.S. households experienced large capital losses in housing and financial wealth, and that 5% of respondents lost their job during the Great Recession. As a consequence of these shocks, many households reduced substantially their expenditures. For every 10% loss in housing and financial wealth, the estimated drop in household expenditure is about 0.56% and 0.9%, respectively. In addition, those who became unemployed reduced spending by 10%. We also distinguish the effect of perceived transitory and permanent wealth shocks, splitting the sample between households who think that the stock market is likely to recover in a year’s time, and those who do not. In line with the predictions of standard models of intertemporal choice, we find that the latter group adjusted much more than the former its spending in response to financial wealth shocks. JEL Classification: E21, D91
    Keywords: Consumption, Great Recession, unemployment, Wealth Shocks
    Date: 2015–03
  44. By: Spolaore, Enrico (Tufts University, NBER, CESIfo, and CAGE); Wacziarg, Romain (UCLA, NBER, and CEPR)
    Abstract: We explore the interrelationships between various measures of cultural distance. We first discuss measures of genetic distance, used in the recent economics literature to capture the degree of relatedness between countries. We next describe several classes of measures of linguistic, religious, and cultural distances. We introduce new measures of cultural distance based on differences in average answers to questions from the World Values Survey. Using a simple theoretical model we hypothesize that ancestral distance, measured by genetic distance, is positively correlated with linguistic, religious, and cultural distance. An empirical exploration of these correlations shows this to be the case. This empirical evidence is consistent with the view that genetic distance is a summary statistic for a wide array of cultural traits transmitted intergenerationally.
    Date: 2015
  45. By: María Florencia Aráoz; Esteban A. Nicolini
    Abstract: The economic performance of Argentina in the long run is quite usually divided in two periods: in the first one (1870-1914) we observe openness, low levels of public intervention and rapid growth in relative terms, while in the second (1914-1970) we observe relative economic slowdown together with inward looking policies and higher levels of public intervention. While there are many reconstructions of the evolution of main macroeconomic variables at a national aggregate level since the second half of the nineteenth century and many descriptions of the sectorial dimensions of this process, the available information about its provincial or regional dimensions is very scarce. In this paper we present an estimation of the GDPs of the twenty four provinces in Argentina in 1914 which is the first consistent and comparable estimation of this variable for any period before the 1950s. Our results confirm the standard view that most of the economic activity at the end of the period of the first globalization is located in the central area of the country and, in particular, in the province and city of Buenos Aires which seems to have been a quite important pole of economic activity; however, we also show that some peripheral areas in Patagonia, with very low population density, are quite affluent in per capita terms suggesting that resource abundance was an important factor to explain levels of income per capita. The comparison of the relative incomes per capita of the provinces in 1914 with the available data for 1953 suggest a remarkable stability and indicates that in this period there were no signs of reversal of income but rather persistence or even divergence.
    Keywords: regional development , inequality , Argentina , convergence , reversal
    JEL: E01 R11 R12
    Date: 2015–05
  46. By: Hartmann, Philipp
    Abstract: Boom-bust cycles in real estate markets have been major factors in systemic financial crises and therefore need to be at the forefront of macroprudential policy. The geographically differentiated nature of real estate market fluctuations implies that these policies need to be granular across regions and countries. Before the financial crisis that started in 2007 property markets were overvalued in a range of European countries, but much like in other constituencies active policies addressing this were an exception. An increasing number of studies suggest that borrower-based regulatory policies, such as reductions in loan-to-value or debt-to-income limits, can be effective in leaning against real estate booms. But many of the new macroprudential policy authorities in Europe do not have clear powers to determine them. Moreover, the cross-border spillovers they may give rise to suggest the establishment of a well-defined macroprudential coordination mechanism for the single European market. European System of Central Banks Macroprudential Research Network (MaRs) suggests, first, that policies adjusting loan-to-value ratios in a countercyclical way and combining them with debt-to-income limits can be expected to be more effective than traditional approaches. Second, cross-border regulatory spillovers may be significant. Much like in other constituencies, before the crisis active regulatory policies leaning against burgeoning real estate markets were the exception in Europe rather than the rule. A lesson from this experience is that going forward policy makers need be bold enough to lean against booming real estate markets that imply systemic risks. In terms of completing the regulatory setup in European Union (EU) countries for this purpose, it is important to note that only a subset of countries have the necessary legislation in place to actively use loan-to-value or debt-to-income limits. And among those who have, not all allocate their use to macroprudential authorities. Finally, the Single Supervisory Mechanism for banks, which started at the European Central Bank in November 2014, has a coordinating role for some lender based regulatory instruments (as included in the Capital Requirements Directive IV and the Capital Requirements Regulation implementing Basel III) in that it can tighten relevant bank regulations in countries that joined but not relax them. A more complete macroprudential policy framework for supporting the EU single market for financial services would probably require a legal basis for the use of borrower based instruments by macroprudential policy authorities in all member countries, including a well-defined cross-border coordination mechanism for both lender and borrower based instruments. JEL Classification: G01, G28, R39, G17, E5
    Keywords: bubbles, financial crises, financial regulation, financial stability indicators, macroprudential policy, real estate markets, systemic risk
    Date: 2015–05
  47. By: Rakesh N R Gupta (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, Essec Business School)
    Abstract: This paper, on the one hand, goes a step closer to demonstrate the causality of social capital on economic performance. On the other hand, we confirm a continued role of social capital effects on economic performance in this paper by using a much larger sample, spanning three decades and increasing the scope of countries. This paper is unique in the sense that it contributes to revisiting questions of economic performance, social capital and institutions with a clearly better and updated dataset from the last 28 years building upon existing empirical evidence. We employ a longitudinal analysis (pooled unbalanced multiple cross-section datasets) with fixed effects in this study. Our sample includes both the World Values Survey and European Values Study dating back to the 1980s. Our results are twofold: Firstly, to confirm that trust has a significant positive effect on growth. And more importantly, they have a significant effect on growth for at least 5 years (for growth at 5, 7 and 10 years following a period of trust measure). Secondly, associational activities – another measure in the overarching definitions of social capital, along with institutions, inequality, and education are consistently significant determinants of trust.
    Date: 2015–01
  48. By: Ryohei Hisano; Tsutomu Watanabe; Takayuki Mizuno; Takaaki Ohnishi; Didier Sornette
    Abstract: The interfirm buyer-seller network is important from both macroeconomic and microeconomic perspectives. From a macroeconomic perspective, this network represents a form of interconnectedness that allows firm-level idiosyncratic shocks to be propagated to other firms. This propagation mechanism interferes with the averaging out process of shocks, having a possible impact on aggregate fluctuation. From a microeconomic perspective, the interfirm buyer-seller network is a result of a firm's strategic link renewal processes. There has been substantial research that models strategic link formation processes, but the economy-wide consequences of such strategic behaviors are not clear. We address these two questions using a unique dataset for the Japanese interfirm buyer-seller network. We take a structural equation modeling, and show that a large proportion of fluctuation in the average log growth rate of firms can be explained by the network and that link renewal by firms decreases the standard deviation of the log growth rate.
    Date: 2015–05
  49. By: Robert J R Elliott; Eric Strobl; Puyang Sun
    Abstract: We examine the impact of typhoons on local economic activity in coastal China. To capture potential damages from an individual typhoon we use historical typhoon track data in conjunction with a detailed wind-field model. We then combine our damage proxy with satellite derived nightlight intensity data to contact a panel data set that allows us to estimate the impact of typhoons at a spatially highly disaggregated level (approx. 1km). Our results show that typhoons have a negative and significant, but short term, impact on local activity - a typhoon that is estimated to destroy 50% of the property reduces local economic activity by 20% for that year. Over our period of analysis (1992-2010) total net economic losses are estimated to be in the region of US$28.34 billion. To assess the damage risk from future typhoons we use simulated probability distributions of typhoon occurrence and intensity and combine these with our estimated effects. Results suggest that expected annual losses are likely to be around US$0.54 billion.
    Keywords: China, typhoons, wind field model, economic impact, nightlight imagery
    JEL: O17 O44 Q54
    Date: 2015–05
  50. By: Maria Masood; ;
    Abstract: In spite of the growing evidence about the bipolarization of cinema markets around national and American movies, little is known about the formation of preferences at the individual level. No microeconomic analysis has investigated the determinants explaining why a consumer might prefer watching a foreign movie rather than a local one, supposedly closer to his sociocultural context. Relying on an augmented social interaction model, the present study investigates the influence of two, usually separated, determinants of preference for a given origin of a movie: a liking by consuming capital and the preferences of other individuals through social interactions. More specifically, prior exposure to the different varieties, comprised in the liking by consuming capital, is a crucial ingredient when it comes to movie preferences: through its direct impact but also because it dampens the social interaction effect.
    Keywords: Addictive goods, Social Interactions, Determinants of preferences, Cultural diversity
    Date: 2015–05
  51. By: Laura Južnik Rotar (Faculty of Business and Management Sciences Novo mesto)
    Abstract: The paper deals with the problem of youth unemployment and entrepreneurship as a way out of unemployment. The battle against youth unemployment is a top European priority, since the youth unemployment rate is more than twice as high as the adult one, because the chances for a young unemployed person of finding a job are low, because their jobs tend to be less stable, because there are significant skills mismatches on the labor market. Entrepreneurship is a powerful driver of economic growth and job creation; it makes economies more competitive and innovative. The motivation for entrepreneurial career is different with different age cohorts. Youth represent a group with the highest entrepreneurial potential. In the empirical study, we analyze entrepreneurial tendencies among Slovene students of business schools and with factor analysis approach we try to define underlying entrepreneurial tendency dimensions as the literature suggests that entrepreneurial characteristics play an important role in influencing the individual’ decision to become entrepreneurs. We defined four such entrepreneurial tendency dimensions: need for independence and achievement, problem solving, planning, and dealing with uncertain situations. However, the need for independence and achievement and problem solving are the strongest drivers of entrepreneurial tendency. The results of the study can be of help to policymakers when updating labor market policy measures in connection with the educational policy.
    Keywords: youth unemployment, entrepreneurship, competitiveness, self-employment, entrepreneurial characteristics.
    JEL: J21 J23 C38 L26
    Date: 2015–01
  52. By: Beyer, Robert C. M.; Smets, Frank
    Abstract: We compare the labour market response to region-specific shocks in Europe and the US and to national shocks in Europe and investigate changes over time. We employ a multi-level factor model to decompose regional labour market variables and then estimate the dynamic response of the employment level, the employment rate and the participation rate using the region-specific variables and the country factors. We find that both in Europe and the US labour mobility accounts for about 50% of the long run adjustment to region-specific labour demand shocks and only a little more in the US than in Europe, where adjustment takes twice as long. In Europe labour mobility is a less important adjustment mechanism in response to country-specific labour demand shocks that cause stronger and more persistent reactions of the employment and the participation rate. However, we detect a convergence of the adjustment processes in Europe and the US, reflecting both a fall in interstate migration in the US and a rise in the role of migration in Europe. Finally, we show that part of the difference between Europe and the US in previous studies may be due to the use of different data sources. JEL Classification: F2, J6, R23, R30
    Keywords: European integration, labour mobility, migration, regional labour markets
    Date: 2015–03
  53. By: Marie-Laure Cabon-Dhersin (CREAM - CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - Université de Rouen); Emmanuelle Taugourdeau (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: This paper investigates the factors underlying the emergence of Research Cluster (RC), i.e. cooperation (or coordination of research efforts) through spatial proximity between public and private research teams. A ‘public lab’ and a ‘private lab’ interact in a two-stage game to decide on ‘location’ and ‘research effort’. A high level of public subsidies associated to a low asymmetry in the ‘valorisation capability’ between both labs is necessary for the formation of a cluster. We find that RC performs better than non-cooperation in terms of research efforts in a ‘public lab’ (but not in a ‘private lab’) and output gains that can be appropriated by each lab.
    Abstract: Cet article étudie les facteurs sous-jacents de l'émergence de Clusters de recherche. Un Cluster de recherche est ici caractérisé par une proximité géographique et une coopération entre des laboratoires de recherche publique et privée. Nous modélisons un jeu à deux dans lequel un laboratoire public et un laboratoire privé interagissent pour déterminer leur localisation et leur effort de recherche. Une subvention publique élevée versée au laboratoire public associée à une valorisation de la recherche dans le public proche de celle du privé est nécessaire pour la réalisation d'un Cluster. Nous montrons que le Cluster de recherche est préférable à la non-coopération en termes d'efforts de recherche dans le laboratoire public et de gains retirés par chaque laboratoire. En revanche le Cluster est préjudiciable en termes d'efforts de recherche dans le laboratoire privé.
    Date: 2015–02
  54. By: Agnes Baeker; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: Recent research has shown that the presence of peers can increase individual output both in the lab and the eld. This paper tests for negative side effects of peer settings. We investigate whether peer settings are particularly prone to cheating even if they do not provide additional monetary benets of cheating. Participants in our real effort experiment had the opportunity to cheat when declaring their output levels. Although cheating did not have different monetary consequences when working alone than when working in the presence of a peer, we find that cheating is a more severe problem in peer settings.
    Keywords: cheating, peer effects, organizational design, personnel economics, experimental economics
    JEL: J20 J30 M50
    Date: 2015–06

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