nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2016‒03‒23
forty-nine papers chosen by
Steve Ross
University of Connecticut

  1. What is Different About Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States By Juan Pablo Chauvin; Edward Glaeser; Yueran Ma; Kristina Tobio
  2. Partners in Crime: Schools, Neighborhoods and the Formation of Criminal Networks By Stephen B. Billings; David J. Deming; Stephen L. Ross
  3. Teacher supply and the quality of schooling in South Africa. Patterns over space and time By Martin Gustafsson
  4. Non-Linearities in the Relationship between House Prices and Interest Rates: Implications for Monetary Policy By Guay Lim; Sarantis Tsiaplias
  5. Teacher Turnover, Teacher Quality, and Student Achievement in DCPS By Melinda Adnot; Thomas Dee; Veronica Katz; James Wyckoff
  6. The Aggregate Implications of Regional Business Cycles By Martin Beraja; Erik Hurst; Juan Ospina
  7. Labor markets, academic performance and the risk of school dropout: evidence for Spain By Juan Guio; Álvaro Choi; Josep-Oriol Escardíbul
  8. Housing Inequality By David Albouy; Mike Zabek
  9. Election, Implementation, and Social Capital in SchoolBased Management: Evidence from a Randomized Field Experiment on the COGES Project in Burkina Faso By Sawada, Yasuyuki; Aida, Takeshi; Griffen, Andrew S; Kozuka, Eiji; Noguchi, Haruko; Todo, Yasuyuki
  10. The mobility of displaced workers: How the local industry mix affects job search strategies By Frank Neffke; Anne Otto; César Hidalgo
  11. Networks and the macroeconomy: an empirical exploration By Acemoglu, Daron; Akcigit, Ufuk; Kerr, William R.
  12. The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI By Elias Einiö; Overman; Henry
  13. The Evolution of the Chinese Housing Market and Its Impact on Base Metal Prices By Mark Kruger; Kun Mo; Benjamin Sawatzky
  14. The Effect of the Increasing Demand for Elite Schools on Stratification By Estrada, Ricardo
  15. The more, the better? The impact of instructional time on student performance By Maria A. Cattaneo; Chantal Oggenfuss; Stefan C. Wolter
  16. The Economic Consequences of Social Network Structure By Jackson, Matthew O.; Rogers, Brian; Zenou, Yves
  17. Effective Tax Rates and Effective Progressivity in a Fiscally Decentralized Country By Roller, Marcus; Schmidheiny, Kurt
  18. School Quality and the Gender Gap in Educational Achievement By David H. Autor; David N. Figlio; Krzysztof Karbownik; Jeffrey Roth; Melanie Wasserman
  19. Alternative Approaches to Housing Services and Japanese CPI: -Bias from Nominal Rigidity of Rents- By Shimizu, Chihiro; Imai, Satoshi; Diewert, Erwin
  20. What Drives Racial and Ethnic Differences in High Cost Mortgages? The Role of High Risk Lenders By Patrick Bayer; Fernando Ferreira; Stephen L. Ross
  21. Hedonic Regression Models for Tokyo Condominium Sales By Diewert, W. Erwin; Shimizu, Chihiro
  22. Law enforcement, municipal budgets and spillover effects: evidence from a quasi-experiment in Italy By Sergio Galletta
  23. Lending Pro-Cyclicality and Macro-Prudential Policy: Evidence from Japanese LTV Ratios By Ono, Arito; Uchida, Hirofumi; Udell, Gregory F.; Uesugi, Iichiro
  24. Functional outlier detection with a local spatial depth By Lillo, Rosa E.; Galeano, Pedro; Sguera, Carlo
  25. Raising the Bar for College Admission: North Carolina’s Increase in Minimum Math Course Requirements By Charles T. Clotfelter; Steven W. Hemelt; Helen Ladd
  26. Is congestion pricing fair? Consumer and citizen perspectives on equity effects By Eliasson, Jonas
  27. Game of zones: The political economy of conservation areas By Ahlfeldt, Gabriel; Möller, Kristoffer; Waights, Sevrin; Wendland, Nicolai
  28. The Residency Discount for Rents in Germany and the Tenancy Law Reform Act 2001: Evidence from Quantile Regressions By Bernd Fitzenberger; Benjamin Fuchs
  29. The Incentive Effects of Conditional and Unconditional Transfers on Local Own Revenue Generation: Empirical Evidence from Moroccan Municipalities By Maria EL KHDARI; Jean-François BRUN
  30. Subprime Borrowers, Securitization and the Transmission of Business Cycles By Grodecka, Anna
  31. Agglomeration Patterns in a Long Narrow Economy of a New Economic Geography Model: Analogy to a racetrack economy By IKEDA Kiyohiro; MUROTA Kazuo; AKAMATSU Takashi; TAKAYAMA Yuki
  32. "Peer Effects on Vaccination: Experimental Evidence from Rural Nigeria" By RyokoSato; Yoshito Takasaki
  33. Simulating the Effects of the Tax Credit Program of the Michigan Economic Growth Authority on Job Creation and Fiscal Benefits By Timothy J. Bartik; George Erickcek
  34. How Effects of Local Labor Demand Shocks Vary with the Initial Local Unemployment Rate By Timothy J. Bartik
  35. How Does Access to Health Care Affect Teen Fertility and High School Dropout Rates? Evidence from School-based Health Centers By Michael F. Lovenheim; Randall Reback; Leigh Wedenoja
  36. Management by good intentions and best wishes: on sustainability, tourism and transport investment planning in Sweden By Nerhagen, Lena
  37. Learning Job Skills from Colleagues at Work: Evidence from a Field Experiment Using Teacher Performance Data By John P. Papay; Eric S. Taylor; John H. Tyler; Mary Laski
  39. Score Card Survey on Rating of Real Estate Market Institute By Ò. A. Strelnikova
  40. Constructing Social Division to Support Cooperation By Choy, James P.
  41. Teaching Practices and the Management of Student Motivation, Effort and Achievement By Gunnes, Trude; Donze, Jocelyn
  42. Network externalities across financial institutions By Carlos Castro; Juan S. Ordoñez; Sergio Preciado
  43. Just-in-time vehicle scheduling with capacity constraints By Boysen, Nils; Briskorn, Dirk; Emde, Simon
  44. ESPON FOCI: Future Orientation for Cities By Moritz Lennert
  45. How do regional labor markets adjust to immigration? A dynamic analysis for post-war Germany By Braun, Sebastian; Weber, Henning
  46. Infrastructure, Incentives and Institutions By Nava Ashraf; Edward L. Glaeser; Giacomo A.M. Ponzetto
  47. Mothers, Peers and Gender Identity By Claudia Olivetti; Eleonora Patacchini; Yves Zenou
  48. Credit-fuelled bubbles By Doblas-Madrid, Antonio; Lansing, Kevin J.
  49. Cities, Data, and Digital Innovation By Mark Kleinman

  1. By: Juan Pablo Chauvin; Edward Glaeser; Yueran Ma; Kristina Tobio
    Abstract: Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with comparable geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that the spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.
    JEL: O15 O18 R12 R23
    Date: 2016–02
  2. By: Stephen B. Billings; David J. Deming; Stephen L. Ross
    Abstract: Why do crime rates differ greatly across neighborhoods and schools? Comparing youth who were assigned to opposite sides of newly drawn school boundaries, we show that concentrating disadvantaged youth together in the same schools and neighborhoods increases total crime. We then show that these youth are more likely to be arrested for committing crimes together – to be “partners in crime”. Our results suggest that direct peer interaction is a key mechanism for social multipliers in criminal behavior. As a result, policies that increase residential and school segregation will – all else equal – increase crime through the formation of denser criminal networks.
    JEL: I21 I24
    Date: 2016–02
  3. By: Martin Gustafsson (Department of Economics, University of Stellenbosch)
    Abstract: The paper addresses policy questions in South Africa’s education system using a newly merged 1999 to 2013 panel of data that includes school enrolments by grade, staff details from the payroll system, examination and test results and the geo-coordinates of schools. This combination of data, which is seldom used, at least in developing countries, permits new and important knowledge about a schooling system to be uncovered. Whilst policy conclusions are South Africa-specific, the methods would be largely transferable to other contexts. It is shown that school data can complement official population data with respect to the monitoring of within-country migration and in determining the rate of urbanisation. An approach for calculating the viability of small schools in a context of migration out of rural areas is presented, using assumptions around maximum distance to be travelled by pupils and the degree to which multi-grade teaching by teachers should be permitted. Cost reductions associated with a reduced presence of small schools, and greater economies of scale associated with larger schools are found to be smaller than what is generally assumed. Correlations between pupil under-performance and the under-staffing of schools are found to be higher at the primary than the secondary level, apparently confirming the greater importance of personal interaction with a teacher for younger pupils. Between-school movements of pupils other than those associated with urbanisation are found to be high, and highly variable across districts. This further complicates the allocation of publicly paid teachers. An approach to gauging whether teachers avoid moving to schools on the other side of provincial boundaries is presented. It is confirmed that movement across provinces, which are the employers of teachers, is restricted, creating further obstacles to efficient teacher allocation. It is confirmed that teachers tend to move to better performing schools, but that the performance signals that influence this movement are often inaccurate and a few years old.
    Keywords: South Africa, teacher supply, education planning, spatial analysis
    JEL: C21 D73 I28
    Date: 2016
  4. By: Guay Lim (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Sarantis Tsiaplias (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: Understanding the impact of changes in interest rates on house prices is important for managing house price bubbles and ensuring housing affordability. This paper investigates the effect of interest rates on regional house price to income measures based on a non-linear smooth transition VAR model of inter-regional house price dynamics. To minimize the impact of housing mix changes on estimated effects, we apply the model to an Australian dataset of regional hedonic house price indices that account for both changes in housing mix and quality over time. The empirical analysis provides evidence that house price to income ratios depend non-linearly on interest rates, and moreover that there is an interest rate ‘transition point’ below which a house price bubble is probable. We investigate the implications for monetary policy of stable and unstable house price regimes and propose a housing lending rate lower bound that achieves long-run house price stability in the presence of regime uncertainty. To check the generality of the result, we also apply the model to aggregate Australian and US data. Classification-C30, E43, E52, G21, R10, R31
    Keywords: House prices, interest rates, monetary policy, nonlinear VAR, housing affordability, bubbles
    Date: 2016–01
  5. By: Melinda Adnot; Thomas Dee; Veronica Katz; James Wyckoff
    Abstract: In practice, teacher turnover appears to have negative effects on school quality as measured by student performance. However, some simulations suggest that turnover can instead have large, positive effects under a policy regime in which low-performing teachers can be accurately identified and replaced with more effective teachers. This study examines this question by evaluating the effects of teacher turnover on student achievement under IMPACT, the unique performance-assessment and incentive system in the District of Columbia Public Schools (DCPS). Employing a quasi-experimental design based on data from the first year years of IMPACT, we find that, on average, DCPS replaced teachers who left with teachers who increased student achievement by 0.08 SD in math. When we isolate the effects of lower-performing teachers who were induced to leave DCPS for poor performance, we find that student achievement improves by larger and statistically significant amounts (i.e., 0.14 SD in reading and 0.21 SD in math). In contrast, the effect of exits by teachers not sanctioned under IMPACT is typically negative but not statistically significant.
    JEL: I2
    Date: 2016–01
  6. By: Martin Beraja; Erik Hurst; Juan Ospina
    Abstract: We argue that it is difficult to make inferences about the drivers of aggregate business cycles using regional variation alone because (i) the local and aggregate elasticities to the same type of shock are quantitatively different and (ii) purely aggregate shocks are differenced out when using cross-region variation. We highlight the importance of these confounding factors by contrasting the behavior of U.S. aggregate time-series and cross-state patterns during the Great Recession. In particular, using household and scanner data for the US, we document a strong relationship across states between local employment growth and local nominal and real wage growth. These relationships are much weaker in US aggregates. In order to identify the shocks driving aggregate (and regional) business cycles we develop a semi-structural methodology that combines regional and aggregate data within a model of a monetary union. The methodology uses theoretical restrictions implied by a wage setting equation with nominal wage rigidities. Taking this methodology to the data, we find that a combination of both "demand" and "supply" shocks are necessary to account for the joint dynamics of aggregate prices, wages and employment during the 2007-2012 period in the US while only "demand" shocks are necessary to explain most of the observed cross-state variation. We conclude that the wage stickiness necessary to get demand shocks to be the primary cause of aggregate employment declines during the Great Recession is inconsistent with the flexibility of wages estimated from cross-state variation.
    JEL: E24 E31 E32 R12 R23
    Date: 2016–02
  7. By: Juan Guio (University of Barcelona & Universidad Central); Álvaro Choi (University of Barcelona & IEB); Josep-Oriol Escardíbul (University of Barcelona & IEB)
    Abstract: Labor market dynamics and the expectations of finding a job are believed to be strong determinants of individuals’ educational decisions. Thus, the academic performance and permanency of students in the school system are closely related to their perceptions of unemployment. The impact of high unemployment rates on schooling decisions may operate through, at least, two effects: a “family” effect, which urges individuals to dropout owing to limited access to educational resources, and a “local labor market” effect that encourages them to remain in school. In this paper we, specifically, analyze the impact of a household’s labor market situation and the effect of local labor unemployment on i) the risk of early school dropout and ii) academic performance, which typically declines before the decision to dropout is taken. These relations are assessed via a set of multilevel linear and logistic regression analyses using PISA 2006, 2009 and 2012 microdata. Results suggest that both parental unemployment and local labor market unemployment increase the risk of school dropout by reducing student academic performance. However, the negative “family” and “local labor market” effects seem to decrease as labor market conditions worsen.
    Keywords: School dropout, multilevel logistic regression, PISA, labor market
    JEL: J64 I21 E32
    Date: 2016
  8. By: David Albouy; Mike Zabek
    Abstract: Inequality in U.S. housing prices and rents both declined in the mid-20th century, even as home-ownership rates rose. Subsequently, housing-price inequality has risen to pre-War levels, while rent inequality has risen less. Combining both measures, we see inequality in housing consumption equivalents mirroring patterns in income across both space and time, according to an income elasticity of housing demand just below one. These patterns occur mainly within cities, and are not explained by observed changes in dwelling characteristics or locations. Instead, recent increases in housing inequality are driven most by changes in the relative value of locations, seen especially through land.
    JEL: D63
    Date: 2016–01
  9. By: Sawada, Yasuyuki; Aida, Takeshi; Griffen, Andrew S; Kozuka, Eiji; Noguchi, Haruko; Todo, Yasuyuki
    Abstract: In this paper, we investigate the role of School Management Committees (COGES) in Burkina Faso. These committees include elected members of each community, and are tasked with setting and implementing annual school plans. The study adopted a hybrid evaluation method incorporating a randomized controlled trial and a large-scale artefactual field experiment a la Levitt and List (2007) on public goods with monetary rewards, to closely examine unexplored issues impacting on the sustainability of community-driven projects, and to identify at least partially the mechanisms of this sustainability. We found that the COGES project significantly increased social capital in the form of voluntary contributions to public goods, especially by linking those that people can be connected to vertically. On average, the direct increase in voluntary contributions to public goods from the implementation of the COGES project was between 8.0 and 10.2%. For groups composed of school principals, teachers, and parents, the average contribution increased by between 12.7 and 24.1% through the democratic election of school management committee members, and by between 11.0 and 17.2% through the implementation of the COGES project. These results suggest that community management projects can improve local cost recovery by increasing local contributions of public goods, potentially leading to better fiscal sustainability in community-driven projects. Moreover, the results based on our hybrid experiments are largely in line with real-world decisions observed in the schools under our investigation. As a byproduct, our findings are supportive of models of other-regarding preferences.
    Keywords: school-based management , randomized controlled trials , artefactual field experiments , public goods game , social capital , sustainability of development project
    Date: 2016–03–10
  10. By: Frank Neffke; Anne Otto; César Hidalgo
    Abstract: Establishment closures leave many workers unemployed. Based on employment histories of 20 million German workers, we find that workers often cope with their displacement by moving to different regions and industries. However, which of these coping strategies is chosen depends on the local industry mix. A large local presence of predisplacement or related industries strongly reduces the rate at which workers leave the region. Moreover, our findings suggest that a large local presence of the predisplacement industry induces workers to shift search efforts toward this industry, reducing the spatial scope of search for jobs in alternative industries and vice versa.
    Keywords: Displacement, local industry mix, agglomeration externalities, matching, mobility
    JEL: J24 J61 J64 R12
    Date: 2016–03
  11. By: Acemoglu, Daron; Akcigit, Ufuk; Kerr, William R.
    Abstract: The propagation of macroeconomic shocks through input-output and geographic networks can be a powerful driver of macroeconomic fluctuations. We first exposit that in the presence of Cobb-Douglas production functions and consumer preferences, there is a specific pattern of economic transmission whereby demand-side shocks propagate upstream (to input-supplying industries) and supply-side shocks propagate downstream (to customer industries) and that there is a tight relationship between the direct impact of a shock and the magnitudes of the downstream and the upstream indirect effects. We then investigate the short-run propagation of four different types of industry-level shocks: two demand-side ones (the exogenous component of the variation in industry imports from China and changes in federal spending) and two supply-side ones (TFP shocks and variation in knowledge/ideas coming from foreign patenting). In each case, we find substantial propagation of these shocks through the input-output network, with a pattern broadly consistent with theory. Quantitatively, the network-based propagation is larger than the direct effects of the shocks. We also show quantitatively large effects from the geographic network, capturing the fact that the local propagation of a shock to an industry will fall more heavily on other industries that tend to collocate with it across local markets. Our results suggest that the transmission of various di¤erent types of shocks through economic networks and industry interlinkages could have first-order implications for the macroeconomy.
    Keywords: economic fluctuations, geographic collocation, input-output linkages, networks, propagation, shocks
    JEL: E32
    Date: 2015–12–09
  12. By: Elias Einiö; Overman; Henry
    Abstract: We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits.
    Keywords: Place-based policy, Programme evaluation, Displacement, Employment
    JEL: J20 O40 R11 H25
    Date: 2016–03–07
  13. By: Mark Kruger; Kun Mo; Benjamin Sawatzky
    Abstract: The Chinese housing market has grown rapidly following its liberalization in the 1990s, generating significant economic activity and demand for base metals. In this paper, we discuss the evolution of the Chinese housing market and quantify its importance for the overall Chinese economy and its linkages to base metal prices. We estimate that the housing boom was responsible for roughly a quarter of the 85 per cent increase in base metal prices from 2002 to 2010. Since 2014, however, a substantial inventory overhang has led to a steep correction in the housing market, which in turn has contributed up to a third of the 25 per cent decline in base metal prices. While the drag on metal prices should ease as the Chinese housing market stabilizes, the level of support from this sector will likely remain minimal compared with the experience of the past decade.
    Keywords: International topics
    JEL: Q31 R31
    Date: 2016
  14. By: Estrada, Ricardo
    Abstract: I use detailed applications data to document a case in which, contrary to prevailing concerns, increasing school stratification by ability co-existed with stable stratification by family income: Mexico City public high schools. To understand this puzzle, I develop a model that shows that the effect of an overall increase in the demand for elite schools on school stratification by family income is a horse race between the correlations of family income and ability, and family income and demand. My empirical analysis reveals an initial (and decreasing) demand gap by family income that explains the observed stability in stratification.
    Keywords: School Choice, Stratification, Elite Schools, Aspirations Gap
    JEL: I21 I24 D59
    Date: 2016
  15. By: Maria A. Cattaneo (Swiss Coordination Center for Research in Education); Chantal Oggenfuss (Swiss Coordination Center for Research in Education); Stefan C. Wolter (University of Bern; Swiss Coordination Center for Research in Education; CESifo and IZA)
    Abstract: Although instruction time is an important and costly resource in education production, there is a remarkable scarcity of research examining the effectiveness of its use. We build on the work of Lavy (2015) using the variance of subject-specific instruction time within Switzerland to determine the causal impact of instruction time on student test scores, as measured by the international PISA test (2009). We extend the analyses in two ways and find that students must differ considerably in the time needed to learn. This difference is supported by our findings that the effectiveness of instructional time varies substantially between different school (ability) tracks and that additional instruction time significantly increases the within-school variance of subject-specific test scores.
    Keywords: instruction time, PISA, fixed-effect models, tracking
    JEL: C21 I21 I25
    Date: 2016–03
  16. By: Jackson, Matthew O. (Stanford University); Rogers, Brian (Washington University); Zenou, Yves (Monash University,, Department of Economics,)
    Abstract: We survey the literature on the economic consequences of the structure of social networks. We develop a taxonomy of `macro' and `micro' characteristics of social interaction networks and discuss both the theoretical and empirical findings concerning the role of those characteristics in determining learning, diffusion, decisions, and resulting behaviors. We also discuss the challenges of accounting for the endogeneity of networks in assessing the relationship between the patterns of interactions and behaviors.
    Keywords: Social networks; Social economics; Homophily; Diffusion; Social learning contagion; Centrality measures; Endogeneity; Network formation
    JEL: C72 D85 L14 Z13
    Date: 2016–03–07
  17. By: Roller, Marcus; Schmidheiny, Kurt
    Abstract: This paper proposes measures to quantify the effective level and the effective progressivity of taxation in a fiscally decentralized country taking income sorting into account. Using data on the universe of Swiss taxpayers, we find that rich households effectively face significantly lower average and marginal tax rates and lower progressivity than in the benchmark case that does not consider income sorting. This is because high-income households systematically avoid high taxation by locating in low-tax jurisdictions. The results are stronger for singles than for families, indicating that singles are more sensitive to spatial tax differentials than families. Although income tax schedules of the Swiss federation, the 26 cantons and the more than 2,600 municipalities are all strictly progressive, the effectively paid country-wide average tax rate is regressive for households with very high incomes and without children. The proposed measure of the effective average and marginal tax rates also allows us to adequately describe the evolution of the country-wide tax burden over time. We document that about half of the reduction in the tax burden on top incomes between 1975 and 2009 is due to reductions in statutory tax rates and about half to stronger income sorting of the population. Our results also hold when we account for the disutility from housing prices into which tax rates capitalize.
    Keywords: Effective Tax Rates; Fiscal Decentralization; Income Segregation; Progressive Taxation
    JEL: H71 H73 R23
    Date: 2016–03
  18. By: David H. Autor; David N. Figlio; Krzysztof Karbownik; Jeffrey Roth; Melanie Wasserman
    Abstract: Recent evidence indicates that boys and girls are differently affected by the quantity and quality of family inputs received in childhood. We assess whether this is also true for schooling inputs. Using matched Florida birth and school administrative records, we estimate the causal effect of school quality on the gender gap in educational outcomes by contrasting opposite-sex siblings who attend the same sets of schools—thereby purging family heterogeneity—and leveraging within-family variation in school quality arising from family moves. Investigating middle school test scores, absences and suspensions, we find that boys benefit more than girls from cumulative exposure to higher quality schools.
    JEL: I21 J12 J13
    Date: 2016–01
  19. By: Shimizu, Chihiro; Imai, Satoshi; Diewert, Erwin
    Abstract: Despite the significant decrease in housing prices during the collapse of the Japanese bubble in the first half of the 1990s, housing rents hardly changed at all. Why is it that housing rents do not change? Why are housing prices and housing rents not linked? In this paper, in order to address these questions, we conducted an alternative indicators for housing services in CPI. First, we found that the annual proportion of residential units whose rent changed was no more than about 5%. This is extremely low, representing 1/20 of the figure for the U.S. and 1/6 of the figure for Germany. The underlying reason for this high degree of rigidity is the specific circumstances of the Japanese housing market, where opportunities to change rents are inherently limited due to the fact that tenant turnover is low while the duration of rental contracts is two years. Even more important, however, is the fact that rents are not changed even when opportunities to change them arise such as tenant turnover or contract renewals, thereby significantly lowering the probability of rents changing. Based on analysis using the adjustment hazard function technique proposed by Caballero and Engel (2007)[3], we found that whether or not a given unit's rent was adjusted mostly did not depend on how much its current rent diverged from the market conditions. In addition, it has been pointed out that the high depreciation rate characteristic of the Japanese market is a problem. Addressing this problem is extremely important when it comes to estimating housing rent indexes.
    Keywords: housing rent, price rigidity, time-dependent model, state-dependent model, adjustment hazard function, user cost, opptunuty cost
    JEL: E30 R20
    Date: 2016–02
  20. By: Patrick Bayer; Fernando Ferreira; Stephen L. Ross
    Abstract: This paper examines racial and ethnic differences in high cost mortgage lending in seven diverse metropolitan areas from 2004-2007. Even after controlling for credit score and other key risk factors, African-American and Hispanic home buyers are 105 and 78 percent more likely to have high cost mortgages for home purchases. The increased incidence of high cost mortgages is attributable to both sorting across lenders (60-65 percent) and differential treatment of equally qualified borrowers by lenders (35-40 percent). The vast majority of the racial and ethnic differences across lender can be explained by a single measure of the lender’s foreclosure risk and most of the within-lender differences are concentrated at high-risk lenders. Thus, differential exposure to high-risk lenders combined with the differential treatment by these lenders explains almost all of the racial and ethnic differences in high cost mortgage borrowing.
    JEL: G21 I28 J15 J71 R21
    Date: 2016–02
  21. By: Diewert, W. Erwin; Shimizu, Chihiro
    Abstract: The paper fits a hedonic regression model to the sales of condominium units in Tokyo over the period 2000-2015. The problem is complicated by the need to decompose the selling price of a unit into a component that can be attributed to the structure area of the unit and another component that can be attributed to the unit's share of land value. There is very little information on the value of condominium land and so this paper develops a methodology for reducing this knowledge gap. The paper extends the builder's model which was developed in Eurostat (2013)[11]. Characteristics which prove to be important in explaining condominium prices are: the floor space area of the unit, the total land area of the building, the number of units in the building, the total number of stories in the building, the height of the sold unit, the age of the structure and the amount of excess land. The paper also derives an estimate for the annual geometric structure depreciation rate for condominiums in Tokyo.
    Keywords: Condominium property price indexes, System of National Accounts, Balance Sheets, methods of depreciation, land and structure price indexes, hedonic regressions
    JEL: C2 C23 C43 E31 R21
    Date: 2016–01
  22. By: Sergio Galletta (Institute of Economics (IdEP), University of Lugano)
    Abstract: In this paper, I empirically investigate the presence of spillover effects resulting from the strengthening of law enforcement against corruption and organized crime in local governments. Specifically, I take advantage of an Italian law that gives power to the central government to replace democratically elected municipal officials who are potentially connected with mafia with a commission of non-elected administrators. Fixed effects model estimates that focus on a sample of municipalities from three Italian regions (Campania, Calabria and Sicilia) for the period 1998 to 2013 show that the city council dismissal of a municipality fosters a reduction in public investments in neighboring municipalities. Additional empirical evidence suggests that this result could be explained by the presence of law enforcement spillovers potentially reducing misconducts in neighboring municipalities.
    Keywords: Horizontal interaction, Italy, mafia, corruption
    JEL: D73 E62 K42
    Date: 2016
  23. By: Ono, Arito; Uchida, Hirofumi; Udell, Gregory F.; Uesugi, Iichiro
    Abstract: Using a unique micro dataset compiled from the real estate registry in Japan, we examine more than 400,000 loan-to-value (LTV) ratios for business loans to draw implications for the efficacy of caps on LTV ratios as a macro-prudential policy measure. We find that the LTV ratio exhibits counter-cyclicality through the business cycle. We also find that borrowers obtaining high-LTV loans performed no worse ex-post than those with lower LTV loans. Our findings imply that a fixed cap on LTV ratios might not only be ineffective in curbing loan volume in boom periods but also inhibit well-performing firms from borrowing.
    Keywords: loan-to-value (LTV) ratios, pro-cyclicality, macro-prudential policy, bubble
    JEL: G28 R33 G21 G32
    Date: 2016–02
  24. By: Lillo, Rosa E.; Galeano, Pedro; Sguera, Carlo
    Abstract: This paper proposes methods to detect outliers in functional datasets. We are interested in challenging scenarios where functional samples are contaminated by outliers that may be difficult to recognize. The task of identifying a typical curves is carried out using the recently proposed kernelized functional spatial depth (KFSD). KFSD is a localdepth that can be used to order the curves of a sample from the most to the least central. Since outliers are usually among the least central curves, we introduce three new procedures that provide a threshold value for KFSD such that curves with depth values lower than the threshold are detected as outliers. The results of a simulation study show that our proposals generally out perform a battery of competitors. Finally, we consider areal application with environmental data consisting in levels of nitrogen oxides
    Keywords: Smoothed resampling; Nitrogen oxides; Kernelized functional spatial depth; Functional outlier detection; Functional depths
    Date: 2014–06
  25. By: Charles T. Clotfelter; Steven W. Hemelt; Helen Ladd
    Abstract: We explore the effects of a statewide policy change that increased the number of high school math courses required for admission to any of North Carolina’s 15 public four-year institutions. Using administrative data on cohorts of 8th grade students from 1999 to 2006, we document and exploit variation by district over time in the math course-taking environment encountered by students. Within an instrumental variables setup, we examine effects of the policy change on students grouped into deciles defined by their 8th grade math test scores. First, we find that students took more math courses in high school following the state’s announcement, with relatively larger increases in the middle and bottom deciles of students. Second, we conclude that increased math course-taking in high school led to increases in college enrollment rates that were not uniform across the 15 branch campuses. In particular, we observe the largest increases in the deciles of student achievement from which universities were already drawing the bulk of their enrollees. Finally, for upper-middle decile students, we find limited and noisy evidence that increased math course-taking in high school boosts post-enrollment college performance as measured by a student’s GPA or the likelihood of majoring in a STEM field.
    JEL: I21
    Date: 2016–01
  26. By: Eliasson, Jonas (KTH)
    Abstract: This paper discusses and analyses whether congestion charges can be considered to be “fair” in different senses to the word. Two different perspectives are distinguished: the consumer perspective and the citizen perspective. The consumer perspective is the traditional one in equity analyses, and includes changes in travel costs, travel times and so on. Using data from four European cities, I show that highincome groups pay more than lowincome groups, but lowincome groups pay a larger share of their income. I argue that which of these distributional measures is most appropriate depends on the purpose(s) of the charging system. The citizen perspective is about individuals’ views of social issues such as equity, procedural fairness and environmental issues. I argue that an individual can be viewed as a “winner” from a citizen perspective if a reform (such as congestion pricing) is aligned with her views of what is socially desirable. Using the same data set, I analyse to what extent different income groups “win” or “lose” from a citizen perspective – i.e., to what extent congestion pricing is aligned with the societal preferences of high and lowincome groups. It turns out that these differences are small, but overall, middleincome groups “win” the most in this sense.
    Keywords: Distributional effects; Equity effects; Consumer vs. citizen; Congestion charges; Congestion pricing; Fairness
    JEL: R48
    Date: 2016–03–11
  27. By: Ahlfeldt, Gabriel; Möller, Kristoffer; Waights, Sevrin; Wendland, Nicolai
    Abstract: We develop and test a simple theory of the conservation area designation process in which we postulate that the level of designation is chosen to comply with interests of local homeowners. Conservation areas provide benefits to local homeowners by reducing uncertainty regarding the future of their area. At the same time, the restrictions impose a cost by limiting the degree to which properties can be altered. In line with our model predictions we find that an increase in preferences for historic character by the local pop-ulation increases the likelihood of a designation, and that new designations at the margin are not associat-ed with significant house price capitalisation effects.
    Keywords: Designation; Difference-in-Differences; England; Gentrification; Heritage; Property Value
    JEL: H23 H31 R40 R58
    Date: 2016–03
  28. By: Bernd Fitzenberger; Benjamin Fuchs
    Abstract: Most countries show a residency discount in rents for sitting tenants. In the wake of strong rent increases and housing shortages, Germany implemented a reform in 2001 to curtail rent increases. Based on linked housing-tenant data for Germany, this paper estimates panel OLS and quantile regressions of rents within tenancies. The results show that rents deflated by the CPI increase strongly from 1984 until the reform in 2001, and there is a reversal in the trend afterwards. Before the reform, there is a significant residence discount which decreases in absolute value with tenure. The reform reduces rents, in particular for expensive apartments and for new leases. There is no residency discount after the reform.
    Keywords: Linked housing-tenant data, rent regression, length of residency discount, rent control, quantile regression
    JEL: R31 C21 C23
    Date: 2016
  29. By: Maria EL KHDARI; Jean-François BRUN (Centre d'Etudes et de Recherches sur le Développement International(CERDI))
    Abstract: The fiscal incentives literature emphasizes how the design of transfer systems has a significant implication on the behavior of local governments within decentralized systems. The empirical findings on the relationship between intergovernmental transfers and the incentives they create for local revenue generation are inconclusive and differ from country to country. Given the lack of data on local public finances, this type of study rarely involves developing countries. Using a unique and rich socio-economic and public finance data covering a large set of Moroccan municipalities over the period 2005 to 2009, this paper contributes to the new generation of fiscal federalism literature by assessing the fiscal incentive effects of two types of transfers: general purpose transfers (unconditional) defined by a formula and specific purpose transfers (conditional) allocated on an ad-hoc basis. After correcting for the endogeneity problem, our findings support the existence of a significant incentive effect of unconditional transfers and a less robust effect of conditional transfers. Suggesting that transfers from the central government complement local own revenues by encouraging Moroccan municipalities to collect more revenues.
    Keywords: Decentralization; Local public finance; Fiscal incentives; Intergovernmental transfers; Morocco; Pan
    JEL: O12 H77 H71 H30
    Date: 2016–03
  30. By: Grodecka, Anna (Financial Stability Department, Central Bank of Sweden)
    Abstract: A growing literature (i.e. Jaffee, Lynch, Richardson, and Van Nieuwerburgh, 2009, Acharya and Schnabl, 2009) argues that securitization improves financial stability if the securitized assets are held by capital market participants, rather than financial intermediaries. I construct a quantitative macroeconomic model with a novel specification for mortgage-backed securities (MBS) to evaluate this claim for subprime securitization during the Great Recession. I find that output in the U.S. would have dropped by only about a third and house prices by only a half of what we actually observed, if subprime MBS had been purchased by non-financial agents, rather than held by banks. This is because banks are subject to capital requirements and if MBS remain within the banking system, the fall in their value puts a strain on banks’ balance sheets. The subsequent deleveraging amplifies business cycles. My findings suggest that the existence of the securitization market stabilizes the economy under the condition that financial intermediaries do not engage in the acquisition of securitized assets.
    Keywords: Subprime Borrowers; Securitization; Financial Intermediation; Great Recession
    JEL: E32 E44 G01 G13 G21 R21
    Date: 2016–03–01
  31. By: IKEDA Kiyohiro; MUROTA Kazuo; AKAMATSU Takashi; TAKAYAMA Yuki
    Abstract: Narrow industrial belts comprising a system of cities are prospering worldwide. The self-organization of a system of cities in a long narrow economy of a new economic geography model is demonstrated through a comparative study with a racetrack economy, which is an idealized uniform trading space. A spatially repeated core-periphery pattern a la Christaller and Lösch emerges when agglomeration forces are large. Peripheral zones of this pattern are enlarged recursively to engender agglomeration shadow en route to an atomic mono-center. A megalopolis emerges when agglomeration forces are small.
    Date: 2016–03
  32. By: RyokoSato (Global Asia Institute, National University of Singapore); Yoshito Takasaki (Faculty of Economics, The University of Tokyo)
    Abstract: Understanding how and why social interactions matter for people's vaccination behavior is important for disease control. This paper conducts the first causal analysis of peer effects on vaccination in developing countries. We created exogenous variations in peers' vaccination behaviors by randomizing cash incentives for tetanus vaccine take-up among Nigerian women. Vaccine take-up among friends strongly increased women's take-up; having a friend getting vaccinated increases the likelihood that one receives a vaccination by 18.9 percentage points. The peer effects among friends are heterogeneous by one's belief about vaccine safety and access to health clinics in a way that is consistent with whether or not a woman visits a clinic with her friend. This provides evidence for collective action as a mechanism underlying the positive peer effect.
  33. By: Timothy J. Bartik (W.E. Upjohn Institute for Employment Research); George Erickcek (W.E. Upjohn Institute for Employment Research)
    Keywords: State and local economic development policy, tax incentives, fiscal impact analysis,labor market benefits, regional multipliers
    JEL: R11 R23 R28 R30 R58 H70
  34. By: Timothy J. Bartik (W.E. Upjohn Institute for Employment Research)
    Keywords: Local labor markets, labor demand, social benefits of job creation
    JEL: R23 H43 J64
  35. By: Michael F. Lovenheim; Randall Reback; Leigh Wedenoja
    Abstract: Children from low-income families face persistent barriers to accessing high-quality health care services. Previous research studies have examined the importance of expanding children's health insurance coverage, but there is little prior evidence concerning the impacts of directly expanding primary health care access to this population. We address this gap in the literature by exploring whether teenagers' access to primary health care influences their fertility and educational attainment. We study how the significant expansion of school-based health centers (SBHCs) in the United States since the early 1990's has affected teen fertility and high school dropout rates. Our results indicate that school-based health centers have a negative effect on teen birth rates: adding services equivalent to the average SBHC reduces the 15-18 year old birth rate by 5%. The effects are largest among younger teens and among African Americans and Hispanics. However, primary care health services do not reduce high school dropout rates by very much despite the sizable reductions in teen birth rates
    JEL: H75 I14 I21 J13
    Date: 2016–02
  36. By: Nerhagen, Lena (VTI)
    Abstract: The Swedish government, despite a possible value conflict with the ambitious Swedish climate mitigation objectives, has stated that tourism development is an important basis for economic growth, not least in rural areas. This paper explores how the Swedish policy making system, and ambitious environmental and traffic safety objectives, influence transport investment planning at the regional level. Our point of reference for evaluating the system is the work with good regulatory policy advocated by the OECD and used by the EU. The main finding is that the Swedish government and parliament lack a strategic “whole-of-government approach” to sustainable transport development. There are many principles and objectives with good intentions established at the national level that are incompatible in practice. The conflicts that follow are handed down to lower government levels to solve with best wishes. The problem with this type of management is the “tragedy of the commons.” Without clear guidance, individuals (and administrations) acting independently and rationally based on self-interests are likely to behave contrary to the best interests of the whole group (society). Making choices based on a more holistic assessment of impacts and benefits and costs could help to prevent this kind of outcome. However, from the data collected it appears that many investments are undertaken without being assessed due to the lack of government instructions on regulatory impact assessment. Other investments are undertaken despite having a negative net benefit. One reason for this is specific instructions given by the government that points to certain investments. Another reason seems to be the Vision Zero policy established by the parliament. In recent years this policy has been a strong driver of improvements of the road system. Seen from an environmental perspective, the unwanted consequence of the priorities made is that state roads become faster and safer and thereby a more attractive alternative to other travel modes. Seen from a regional development and tourism perspective, this may have diverted resources away from investments that would have yielded a greater benefit to the tourism industry in “rural” areas.
    Keywords: Sustainable transport; Tourism; Multi-level-governance; Regulatory impact assessment
    JEL: H77 R42
    Date: 2016–03–04
  37. By: John P. Papay; Eric S. Taylor; John H. Tyler; Mary Laski
    Abstract: We study on-the-job learning among classroom teachers, especially learning skills from coworkers. Using data from a new field experiment, we document meaningful improvements in teacher job performance when high- and low-performing teachers working at the same school are paired and asked to work together on improving the low-performer’s skills. In particular, pairs are asked to focus on specific skills identified in the low-performer’s prior performance evaluations. In the classrooms of low-performing teachers treated by the intervention, students scored 0.12 standard deviations higher than students in control classrooms. These improvements in teacher performance persisted, and perhaps grew, in the year after treatment. Empirical tests suggest the improvements are likely the result of low-performing teachers learning skills from their partner.
    JEL: I2 J24 M53
    Date: 2016–02
  38. By: Stijn Baert; Bart Cockx; Matteo Picchio (-)
    Abstract: A dynamic discrete choice model is set up to estimate the effects of grade retention in high school, both in the short- (end-of-year evaluation) and long-run (drop-out and delay). In contrast to regression discontinuity designs, this approach captures treatment heterogeneity and controls for grade-varying unobservable determinants. A method is proposed to deal with initial conditions and with partial observability of the track choices at the start of high school. Forced track downgrading is considered as an alternative remedial measure. In the long-run, grade retention and its alternative have adverse effects on schooling outcomes and, more so, for less able pupils.
    Keywords: Education, grade retention, track mobility, dynamic discrete choice models, heterogeneous treatment effects.
    JEL: C33 C35 I21
    Date: 2015–12
  39. By: Ò. A. Strelnikova (Russian Presidential Academy of National Economy and Public Administration - Stolypin Volga Region Institute of Administration)
    Abstract: The scorecard is interactive and it allows identifying the dynamics of the key indicators for rating of real estate market institutions in the RF since 2012 to 2014. The research was focused on the essential element of the real estate market - property right. The aim of the research was to investigate the level of legal protection of property right.
    Keywords: Scorecard, rating, international real estate markets, institutions of real estate market, legal system on property right protection, Global Competitiveness report, property right, guarantee ownership, registry, cadastral information, registration of property right, business environment.
    Date: 2015
  40. By: Choy, James P. (University of Warwick)
    Abstract: Many societies are divided into multiple smaller groups. Certain kinds of interaction are more likely to take place within a group than across groups. I model a reputation effect that enforces these divisions. Agents who interact with members of different groups can support lower levels of cooperation with members of their own groups. A hierarchical relationship between groups appears endogenously in equilibrium. Group divisions appear without any external cause, and improvements in formal contracting institutions may cause group divisions to disappear. Qualitative evidence from the anthropological literature is consistent with several predictions of the model.
    Keywords: Cooperation, Caste, Social Institution JEL Classification: C73, O12, O17
    Date: 2016
  41. By: Gunnes, Trude; Donze, Jocelyn
    Abstract: Student motivation is primordial for educational success. We develop a theoretical model in which a teacher manages student motivation through the choice of teaching practices. We show that only high-ability students can be motivated by extrinsically-oriented teaching practices. For low-ability or myopic students, intrinsically-oriented teaching practices are more effective in fostering student achievement. Furthermore, the choice of teaching practices depends on their relative costs, the teacher's objective function (utilitarian or Rawlsian), and the teacher's time preferences. We draw important policy implications regarding teacher effectiveness, the harmfulness of not tailoring teaching practices to student types, and how to limit student dropouts.
    Keywords: Teaching practices; cognitive and non-cognitive skills; student achievement; utilitarian and Rawlsian maximizers; achievement goal theory
    JEL: A12 C70 D03 I24
    Date: 2016
  42. By: Carlos Castro; Juan S. Ordoñez; Sergio Preciado
    Abstract: We propose and estimate a financial distress model that explicitly accounts for the interactions or spill-over effects between financial institutions, through the use of a spatial continuity matrix that is build from financial network data of interbank transactions. Such setup of the financial distress model allows for the empirical validation of the importance of network externalities in determining financial distress, in addition to institution specific and macroeconomic covariates. The relevance of such specification is that it incorporates simultaneously micro-prudential factors (Basel 2) as well as macro-prudential and systemic factors (Basel 3) as determinants of financial distress. Results indicate network externalities are an important determinant of financial health of a financial institutions. The parameter that measures the effect of network externalities is both economically and statistical significant and its inclusion as a risk factor reduces the importance of the firm specific variables such as the size or degree of leverage of the financial institution. In addition we analyse the policy implications of the network factor model for capital requirements and deposit insurance pricing.
    Keywords: systemic risk, network models, spatial econometrics
    JEL: C21 C58 G32
    Date: 2016–02–28
  43. By: Boysen, Nils; Briskorn, Dirk; Emde, Simon
    Date: 2016
  44. By: Moritz Lennert
    Keywords: cities; scenarios; networks; competitiveness; environment; social inequality
  45. By: Braun, Sebastian; Weber, Henning
    Abstract: We draw on two decades of historical data to analyze how regional labor markets in West Germany adjusted to one of the largest forced population movements in history, the mass inflow of eight million German expellees after World War II. The expellee inflow was distributed very asymmetrically across two West German regions. A dynamic two-region search and matching model of unemployment, which is exposed to the asymmetric expellee inflow, closely fits historical data on the regional unemployment differential and the regional migration rate. Both variables increase dramatically after the inflow and decline only gradually over the next decade. We show that despite the large and long-lasting dynamics following the expellee inflow, native workers experience only a modest loss in expected discounted lifetime labor income of 1.38%. Per-period losses in native labor income, however, are up to four times as large. The magnitude of income losses also depends on the initial location and labor market status of native workers. In counterfactual analyses, we furthermore show that economic policy interventions that affect the nature of the immigration inflow can effectively reduce native income losses and dampen adjustment dynamics in regional labor markets. One such intervention is to distribute the inflow more evenly over time. Smaller immigration inflows, similar in magnitude to the refugee inflow that Germany is experiencing today, also reduce native income losses markedly but decrease the duration of labor market adjustment only modestly.
    Keywords: Immigration,labor market adjustments,dynamic search and matching model of unemployment,asymmetric labor supply shock,post-war Germany
    JEL: J61 F22
    Date: 2016
  46. By: Nava Ashraf; Edward L. Glaeser; Giacomo A.M. Ponzetto
    Abstract: Cities generate negative, as well as positive, externalities; addressing those externalities requires both infrastructure and institutions. Providing clean water and removing refuse requires water and sewer pipes, but the urban poor are often unwilling to pay for the costs of that piping. Standard welfare economics teaches us that either subsidies or Pigouvian fines can solve that problem, but both solution are problematic when institutions are weak. Subsidies lead to waste and corruption; fines lead to extortion of the innocent. Zambia has attempted to solve its problem with subsidies alone, but the subsidies have been too small to solve the “last-mile problem” and so most poor households remain unconnected to the water and sewer system. In nineteenth-century New York, subsidies also proved insufficient and were largely replaced by a penalty-based system. We present a model that illustrates the complementarity between infrastructure and institutions and provides conditions for whether fines, subsidies or a combination of both are the optimal response. One point of the model is that the optimal fine is often not a draconian penalty, but a mild charge that is small enough to avoid extortion.
    JEL: H41 I18 N91 O18 O21 R53
    Date: 2016–01
  47. By: Claudia Olivetti (Boston College; NBER); Eleonora Patacchini (Cornell University; IZA; EIEF; CEPR); Yves Zenou (Monash University; IFN; CEPR)
    Abstract: We study the formation of gender identity by looking at the labor-market decisions of young women. Specifically, we investigate whether and how a woman's work behavior depends on the work behavior of her mother and that of her friends' mothers. Using a representative sample of U.S. teenagers and their schoolmates followed over time, we find that both intergenerational channels positively affect a woman's work hours in adulthood. The peers' mother role model effect operates independently from the presence of peers' influence. Our evidence is consistent with the presence of behavioral effects of social norms about mothers.
    Keywords: Intergenerational transmission, role models, labor force participation, peer effects
    JEL: J22 Z13
    Date: 2016–03–10
  48. By: Doblas-Madrid, Antonio (Michigan State University); Lansing, Kevin J. (Federal Reserve Bank of San Francisco)
    Abstract: In the context of recent housing busts in the United States and other countries, many observers have highlighted the role of credit and speculation in fueling unsustainable booms that lead to crises. Motivated by these observations, we develop a model of credit-fuelled bubbles in which lenders accept risky assets as collateral. Booming prices allow lenders to extend more credit, in turn allowing investors to bid prices even higher. Eager to profit from the boom for as long as possible, asymmetrically informed investors fuel and ride bubbles, buying overvalued assets in hopes of reselling at a profit to a greater fool. Lucky investors sell the bubbly asset at peak prices to unlucky ones, who buy in hopes that the bubble will grow at least a bit longer. In the end, unlucky investors suffer losses, default on their loans, and lose their collateral to lenders. In our model, tighter monetary and credit policies can reduce or even eliminate bubbles. These findings are in line with conventional wisdom on macro prudential regulation, and stand in contrast with those obtained by Galí (2014) in an overlapping generations context.
    JEL: G01 G12
    Date: 2016–03–01
  49. By: Mark Kleinman (University of Toronto)
    Abstract: Developments in digital innovation and the availability of large-scale data sets create opportunities for new economic activities and new ways of delivering city services while raising concerns about privacy. This paper defines the terms Big Data, Open Data, Open Government, and Smart Cities and uses two case studies – London (U.K.) and Toronto – to examine questions about using data to drive economic growth, improve the accountability of government to citizens, and offer more digitally enabled services. The paper notes that London has been one of a handful of cities at the forefront of the Open Data movement and has been successful in developing its high-tech sector, although it has so far been less innovative in the use of “smart city” technology to improve services and lower costs. Toronto has also made efforts to harness data, although it is behind London in promoting Open Data. Moreover, although Toronto has many assets that could contribute to innovation and economic growth, including a growing high-technology sector, world-class universities and research base, and its role as a leading financial centre, it lacks a clear narrative about how these assets could be used to promote the city. The paper draws some general conclusions about the links between data innovation and economic growth, and between open data and open government, as well as ways to use big data and technological innovation to ensure greater efficiency in the provision of city services.
    Keywords: cities, data, innovation
    JEL: H70 O38
    Date: 2016–02

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