|
on Urban and Real Estate Economics |
| By: | Kristian Behrens; Frédéric Robert-Nicoud |
| Abstract: | Empirical studies consistently report that labour productivity and TFP rise with city size. The reason is that cities attract the most productive agents, select the best of them, and make the selected ones even more productive via various agglomeration economies. This paper provides a microeconomically founded model of vertical city differentiation in which the latter two mechanisms (`agglomeration' and `selection') operate simultaneously. Our model is both rich and tractable enough to allow for a detailed investigation of when cities emerge, what determines their size, and how they interact through the channels of trade. We then uncover stylised facts and suggestive econometric evidence that are consistent with the most distinctive equilibrium features of our model. We show, in particular, that larger cities are both more productive and more unequal (`polarised'), that inter-city trade is associated with higher income inequalities, and that the proximity of large urban centres inhibits the development of nearby cities. |
| Keywords: | entrepreneur heterogeneity, firm selection, agglomeration, income inequalities, urbanization, urban systems |
| JEL: | F12 R12 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0894&r=ure |
| By: | Kramarz, Francis (CREST-INSEE); Machin, Stephen (University College London); Ouazad, Amine (CREST-INSEE) |
| Abstract: | This study develops an analytical framework for evaluating the respective contributions of pupils, peers, and school quality in affecting educational achievement. We implement this framework using rich data from England that matches pupils to their primary schools. The dataset records all English pupils and their test scores in Key Stage 1 (age 7) and Key Stage 2 (age 11) national examinations. The quality of the data source, coupled with our econometric techniques, allows us to assess the respective importance of different educational inputs. We can distinguish school effects, that affect all pupils irrespective of their year and grade of study, from school-grade-year effects. Identification of pupil effects separately from these school-grade-year effects is achieved because students are mobile across schools. Peer effects are identified assuming variations in school-grade-year group composition in adjacent years are exogenous. We estimate three different specifications, the most general allowing Key Stage 2 results to be affected by the Key Stage 1 school(-grade-year) at which the pupil studied. We discuss the validity of our various exogeneity assumptions. Estimation results show statistically significant pupil ability, school and peer effects. Our analysis suggests the following ranking: pupils' ability and background are more important than school time-invariant inputs. Peer effects are significant, but small. |
| Keywords: | education, peer effects, school effects, school quality |
| JEL: | I21 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3866&r=ure |
| By: | Daniel Albalate (PPRE-IREA, Universitat de Barcelona); Germà Bel (PPRE-IREA, Universitat de Barcelona) |
| Abstract: | Scholars and local planners are increasingly interested in tourism contribution to economic and social development. To this regard, several European cities lead the world rankings on tourist arrivals, and their governments have promoted tourism activity. Mobility is an essential service for tourists visiting large cities, since it is a crucial factor for their comfort. In addition, it facilitates the spread of benefits across the city. The aim of this study is to determine whether city planners respond to this additional urban transport demand pressure by extending supply services. We use an international database of European cities. Our results confirm that tourism intensity is a demand enhancing factor on urban transport. Contrarily, cities do not seem to address this pressure by increasing service supply. This suggests that tourism exerts a positive externality on public transport since it provides additional funding for these services, but it imposes as well external costs on resident users because of congestion given supply constraints. |
| Keywords: | Tourism, Urban Transport, Local government |
| JEL: | H70 J68 L83 L98 R41 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2008-14&r=ure |
| By: | Guido Buenstorf; Matthias Geissler |
| Abstract: | Entry into an industry often clusters in regions where the industry is already concentrated, which is suggestive of agglomeration economies. Regional public research activities may exert another attracting force on entrants into science-based industries. Empirically these proximity effects are confounded by other influences on where entrants originate and locate. This paper begins to disentangle the effects of agglomeration, public research, and the supply of capable entrants for the German laser industry. Our findings indicate that the industry’s geography was shaped by the local availability of potential entrants rather than localization economies. The impact of public research increased over time. |
| Keywords: | Industry clusters, agglomeration economies, public research, entry, heritage Length 29 pages |
| JEL: | L26 M13 R30 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2008-14&r=ure |
| By: | Mayor, Karen (ESRI); Lyons, Seán (ESRI); Duffy, David (ESRI); Tol, Richard S. J. (ESRI) |
| Abstract: | We use a hedonic house price model to estimate the value of transport networks to homeowners in the Dublin area. Using a dataset of house sales between 2001 and 2006 and combining it with available geographical information system data on the train and tram lines in Dublin, it is possible to assess the values assigned to different transport links by homeowners. We find that the value of transport depends on how far from the property it is located and is also affected by the availability of alternative transport options in the area. There are differences in the values assigned to recently constructed tramlines compared to the traditional rapid transit train stations. The study also takes into account house characteristics and other environmental amenities. |
| Keywords: | Geographical Information System/Hedonic Regression/Train/Tram/Transport Network |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp264&r=ure |
| By: | Pierre-Philippe Combes (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Miren Lafourcade (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); Jacques-François Thisse (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); Jean-Claude Toutain (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : FRE2887 - Université Panthéon-Assas - Paris II) |
| Abstract: | This paper uses a unique database that provides value-added, employment, and population levels for the entire set of French departments for the years 1860, 1930, and 2000. These data cover three sectors: agriculture, manufacturing, and services. This allows us to study the evolution of spatial inequalities within France and to test the empirical relevance of economic geography predictions over the long run. The evidence confirms the existence of a bell-shaped evolution of the spatial concentration of manufacturing and services. In contrast, labor productivity has been converging across departments. Last, our study also confirms the presence of strong agglomeration economies during the full time-period. Market potential during the first sub-period (1860-1930), and higher education during the second (1930-2000), together with sectoral diversity, account for the spatial distribution of these gains. |
| Keywords: | Economic geography, agglomeration economies, human capital, economic history |
| Date: | 2008–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00349293_v1&r=ure |
| By: | Pierre-Philippe Combes (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Gilles Duranton (Department of Economics - University of Toronto); Laurent Gobillon (INED - INED); Sébastien Roux (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique) |
| Abstract: | Does productivity increase with density? We revisit the issue usingFrench wage and TFP data. To deal with the ‘endogenous quantity of labour’ bias (i.e., urban agglomeration is consequence of high local productivity rather than a cause), we take an instrumental variable approach and introduce a new set of geological instruments in addition to standard historical instruments. To dealwith the ‘endogenous quality of labour’ bias (i.e., cities attract skilled workers so that the effects of skills and urban agglomeration are confounded), we take a worker fixed-effect approach with wage data. We find modest evidence about theendogenous quantity of labour bias and both sets of instruments give a similar answer. We find that the endogenous quality of labour bias is quantitatively more important. |
| Keywords: | agglomeration economies, instrumental variables, wages, TFP |
| Date: | 2008–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00347451_v1&r=ure |
| By: | Climent Quintana (Universidad de Alicante); Marco González (Princeton University) |
| Abstract: | We analyze the reliability of homeowners¿ estimates of the value of their houses, in a household survey (of poor suburbs) of a developing country. We show that non-response to the home value question by the owner is uncorrelated with the appraised value of the house and other demographic characteristics of the respondent. We also document that homeowners with long tenure largely overestimate the value of their home. Moreover, both the bias and the lack of precision in homeowners¿ estimates are correlated with tenure, but not with socioeconomic characteristics. However, we also show that self-reported home values from short-tenure homeowners can be used to obtain unbiased and precise estimates of the average house value at the census tract level. |
| Keywords: | bias, inaccuracy, housing prices, owners¿ estimates, appraised values. |
| JEL: | R21 R31 R14 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2008-18&r=ure |
| By: | Anthony Briant (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); Pierre-Philippe Combes (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Miren Lafourcade (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris) |
| Abstract: | This paper evaluates, in the context of economic geography estimates, the magnitude of the distortions arising from the choice of zoning system, which is also known as the Modifiable Areal Unit Problem (MAUP). We consider three standard economic geography exercises (the analysis of spatial concentration, agglomeration economies, and trade determinants), using various French zoning systems differentiated according to the size and shape of spatial units, which are the two main determinants of the MAUP. While size matters a little, shape does so much less. Both dimensions seem to be of secondary importance compared to specification issues. |
| Keywords: | MAUP, concentration, agglomeration, wage equations, gravity |
| Date: | 2008–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00349294_v1&r=ure |
| By: | Grönqvist, Erik (IFAU); Vlachos, Jonas (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Teachers are increasingly being drawn from the lower parts of the general ability distribution, but it is not clear how this affects student achievement. We track the position of entering teachers in population-wide cognitive and non-cognitive ability distributions using school grades and draft records from Swedish registers. The impact on student achievement caused by the position of teachers in these ability distributions is estimated using matched student-teacher data. On average, teachers’ cognitive and non-cognitive social interactive abilities do not have a positive effect on student performance. However, social interactive ability turns out to be important for low aptitude students, whilst the reverse holds for cognitive abilities. In fact, while high performing students benefit from high cognitive teachers, being matched to such a teacher can even be detrimental to their lower performing peers. Hence, the lower abilities among teachers may hurt some students, whereas others may even benefit. High cognitive and non-cognitive abilities thus need not necessarily translate into teacher quality. Instead, these heterogeneities highlight the importance of the studentteacher matching process. |
| Keywords: | Cognitive and non-cognitive ability; Teacher quality: Student achievement |
| JEL: | H40 I21 J40 |
| Date: | 2008–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0779&r=ure |
| By: | Thomas J. Kane; Douglas O. Staiger |
| Abstract: | We used a random-assignment experiment in Los Angeles Unified School District to evaluate various non-experimental methods for estimating teacher effects on student test scores. Having estimated teacher effects during a pre-experimental period, we used these estimates to predict student achievement following random assignment of teachers to classrooms. While all of the teacher effect estimates we considered were significant predictors of student achievement under random assignment, those that controlled for prior student test scores yielded unbiased predictions and those that further controlled for mean classroom characteristics yielded the best prediction accuracy. In both the experimental and non-experimental data, we found that teacher effects faded out by roughly 50 percent per year in the two years following teacher assignment. |
| JEL: | I21 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14607&r=ure |
| By: | Binz, Hanna L.; Czarnitzki, Dirk |
| Abstract: | This study investigates how local milieus foster innovation success in firms. We complement the common practice of linking firm performance indicators to regional characteristics with survey evidence on the perceived importance of locational factors. While the former approach assumes that location characteristics affect all firms in the same way, the survey allows us to model how firms judge the attractiveness of locations using a heterogeneous set of criteria. It turns out that the availability of highly skilled labor and the proximity to suppliers matter for firms’ innovation performance. Interestingly, location factors obtained from the survey provide a more accurate explanation of how local milieus facilitate innovation. |
| Keywords: | Innovation performance, R&D, location factors, Flanders |
| JEL: | O31 O38 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7440&r=ure |
| By: | Koetter, Michael; Poghosyan, Tigran |
| Abstract: | We investigate the relationship between real estate markets and bank distress among German universal and specialized mortgage banks between 1995 and 2004. Higher house prices increase the value of collateral, which reduces the probability of bank distress (PDs). But higher prices at given rents may also indicate excessive expectations regarding the present value of real estate assets, which can increase PDs. Increasing price-to-rent ratios are positively related to PDs and larger real estate exposures amplify this effect. Rising real estate price levels alone reduce bank PDs, but only for banks with large real estate market exposure. This suggests a positive, but relatively small 'collateral' eect for banks with more expertise in specialized mortgage lending. Likewise, lower price-to-rent ratios are estimated to reduce the riskiness of banks. The multilevel logit model used here further shows that real estate markets are regionally segmented and location-specific effects contribute significantly to predicted bank PDs. |
| Keywords: | Real estate, distress, universal vs. specialized banks |
| JEL: | C25 G21 G3 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:7449&r=ure |
| By: | Michael Haliassos (Goethe University, Frankfurt); Pany Karamanou (Economic Research Department, Central Bank of Cyprus); Constantinos Ktoris (Financial Markets Department, Central Bank of Cyprus); George Syrichas (Economic Research Department, Central Bank of Cyprus) |
| Abstract: | Although housing can be a powerful channel of monetary policy transmission, this channel can be weakened by social customs and financial liberalization and accompanying innovation that create alternatives to bank mortgages controlled by the Central Bank. This paper utilizes some unique questions in the 1999 and 2002 Cyprus Surveys of Consumer Finances, as well as data from the 1998 and 2001 US Surveys of Consumer Finances, in order to study the role of social customs (in the form of parental housing gifts) and financial liberalization for the incidence of homeownership rates, mortgage debt, and borrowing constraints. Unlike existing studies for financially developed countries, the data from the Cyprus Surveys suggest that only a very small proportion of Cyprus households are credit constrained and that a number of important economic characteristics of the household are irrelevant for homeownership and for the use of mortgages. Besides illustrating the importance of social customs for the mortgage market, our findings suggest that the presence of such customs may interfere with the monetary transmission mechanism by limiting the sensitivity of housing investment to changes in credit market conditions, such as mortgage interest rates and availability of mortgages. Financial liberalization leading to innovation could work in the opposite direction if it leads to increased household participation in formal loans controlled by the Central Bank. |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cyb:wpaper:2008-2&r=ure |
| By: | Gerlach, Heiko A.; Rønde, Thomas; Stahl, Konrad |
| Abstract: | We investigate the interplay between firms’ R&D decisions and labor market competition, and how this influences equilibrium location choices and welfare. Firms engage in risky R&D activities and thus create stochastic product and implied labor demand. Spatial agglomeration is more likely in situations where the innovation step is large and the probability for a firm to be the only innovator is high. When firms agglomerate, they tend to invest more in R&D compared to spatially dispersed firms. Agglomeration is welfare maximizing, because expected labor productivity is higher and firms choose a more efficient, diversified portfolio of R&D projects at the industry level. The latter aspect is ascertained by data from German firms in R&D intensive industries. |
| JEL: | L13 O32 R12 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7417&r=ure |
| By: | Chen, Jie (nstitute for Housing and Urban Research, Uppsala University); Zhu, Aiyong (Department of Word Economy) |
| Abstract: | In this paper we investigate the long-run and short-run relationship between housing investment and economic growth in China using the quarterly province-level panel data for the period 1999 q1 to 2007 q4. Recently developed econometric techniques for panel unit root testing and heterogeneous panel cointegration analysis are employed. The empirical results provide clear support of a stable long-run relationship between housing investment, non-housing investment and GDP in China. We then estimate the long-run elasticity of GDP with respect to housing investment for the whole country as well as three sub regions. The variations across regions are detected and reasons for this fact are discussed. Based on the panel ECM, we show that there is bidirectional Granger causality between housing investment and GDP in both short run and long run for the whole country, while the impacts of housing investment on GDP behave strikingly differently in the three sub-regions of China. |
| Keywords: | Housing investment; Economic growth; Panel cointegration; Granger causality |
| JEL: | E22 L74 R31 |
| Date: | 2008–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2008_017&r=ure |
| By: | Christopher P. Barrington-Leigh; John F. Helliwell |
| Abstract: | Departures from self-centred, consumption-oriented decision making are increasingly common in economic theory and are well motivated by a wide range of behavioural data from experiments, surveys, and econometric inference. A number of studies have shown large negative externalities in individual subjective well-being due to neighbours' incomes. These reflect the role of nearby households as comparison groups acting in individuals' reference-dependent preferences over income or consumption. At the same time, there are many reasons to expect positive spillovers from having prosperous neighbours. We combine high-resolution geographic data from three Canada-wide social surveys and the 2001 census to disentangle the spatial pattern of reference groups in urban areas and to identify channels of positive and negative spillovers on life satisfaction. We find evidence of significant effects of others' income at different scales and are able to reject a number of alternative explanations for the findings. |
| JEL: | D6 H0 J0 R0 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14593&r=ure |
| By: | Jang Ping Thia |
| Abstract: | This paper explains why capital does not flow from the North to the South - the LucasParadox - with a New Economic Geography model that incorporates mobile capital,immobile labour, and productively heterogeneous firms. In contrast to neoclassical theories,the results show that even a small difference in the ex-ante productivity distribution betweenNorth and South can a have significant impact on the location of firms. Despite differences inaggregate capital to labour ratios, wage and rental rates continue to be the same in bothlocations. The paper also analyses the effects of risk on industrial locations, and shows why'low-tech' industries tend to migrate to the South, while 'high-tech' industries continue tolocate in the North. |
| Keywords: | Firm heterogeneity, capital mobility, economic geography |
| JEL: | F12 F15 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0895&r=ure |
| By: | Carmen M. Reinhart; Kenneth S. Rogoff |
| Abstract: | The historical frequency of banking crises is quite similar in high- and middle-to-low-income countries, with quantitative and qualitative parallels in both the run-ups and the aftermath. We establish these regularities using a unique dataset spanning from Denmark's financial panic during the Napoleonic War to the ongoing global financial crisis sparked by subprime mortgage defaults in the United States. Banking crises dramatically weaken fiscal positions in both groups, with government revenues invariably contracting, and fiscal expenditures often expanding sharply. Three years after a financial crisis central government debt increases, on average, by about 86 percent. Thus the fiscal burden of banking crisis extends far beyond the commonly cited cost of the bailouts. Our new dataset includes housing price data for emerging markets; these allow us to show that the real estate price cycles around banking crises are similar in duration and amplitude to those in advanced economies, with the busts averaging four to six years. Corroborating earlier work, we find that systemic banking crises are typically preceded by asset price bubbles, large capital inflows and credit booms, in rich and poor countries alike. |
| JEL: | E6 F3 N0 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14587&r=ure |
| By: | Guy Michaels; Ferdinand Rauch; Stephen Redding |
| Abstract: | This paper presents new evidence on urbanization using sub-county data for the United Statesfrom 1880-2000 and municipality data for Brazil from 1970-2000. We show that the twocentral stylized features of population growth for cities - Gibrat's Law and a stablepopulation distribution - are strongly rejected when both rural and urban areas are considered.Population growth exhibits a U-shaped relationship with initial population density, and onlybecomes uncorrelated with initial population density at the high densities found inpredominantly urban areas. We provide evidence that the explanation for these patterns lies indifferent employment growth dynamics in the agricultural and non-agricultural sectors andthe process of structural transformation away from the agricultural sector. |
| Keywords: | urbanisation, economic development, urban population, rural population |
| JEL: | R11 R51 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0892&r=ure |
| By: | Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Neil Foster (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | In this paper we extend the agglomeration model of Ciccone (2002) to the level of industry. We then test this model using panel data for six sectors on regional level data for 27 EU member states. Our results for the aggregate economy confirm the estimates of Ciccone (2002). For our full sample of countries the sectoral level results also indicate significant agglomeration effects, with the exception of agriculture. Considering differences in the extent of agglomeration effects between new and old EU member states, however, leads to the conclusion that agglomeration effects tend to be stronger at both the aggregate and the sectoral level for new member states. |
| Keywords: | agglomeration, employment density, productivity, European regions |
| JEL: | R10 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:47&r=ure |
| By: | Jia Yan; Xiaowen Fu; Tae Oum (School of Economic Sciences, Washington State University) |
| Abstract: | This paper explores network effects in Point-to-Point airline networks by examining the spatial entry patterns of Southwest airlines during the 1990-2006 period. Estimation results from a spatial probit model reveal clear spatial dependence in profitability across different routes served by the carrier. Detailed investigation suggests two main sources of network effects, namely: (1) airport and regional presence, and (2) substitutability of markets. Findings of the paper suggest also that the network effects embedded in Southwest’s Point-to-Point network have many distinguishing features as compared to those identified in a typical Hub-and-Spoke network. This study brings some fresh insights on airline network effects in general, as well as explaining the pattern of aggressive network expansions of LCCs in particular. |
| Keywords: | Point-to-Point Networks, spatial entry patterns, Southwest airlines, spatial probit model |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:wsu:wpaper:yan-3&r=ure |
| By: | Jesus Crespo Cuaresma; Gernot Doppelhofer; Martin Feldkircher |
| Abstract: | We use Bayesian Model Averaging (BMA) to evaluate the robustness of determinants of economic growth in a new dataset of 255 European regions in the 1995-2005 period. We use three different specifications based on (1) the cross-section of regions, (2) the cross-section of regions with country fixed effects and (3) the cross-section of regions with a spatial autoregressive (SAR) structure. We investigate the existence of parameter heterogeneity by allowing for interactions of potential explanatory variables with geographical dummies as extra regressors. We find remarkable differences between the determinants of economic growth implied by differences between regions and those within regions of a given country. In the cross-section of regions, we find evidence for conditional convergence with speed around two percent. The convergence process between countries is dominated by the catching up process of regions in Central and Eastern Europe (CEE), whereas convergence within countries is mostly a characteristic of regions in old EU member states. We also find robust evidence of positive growth of capital cities, a highly educated workforce and a negative effect of population density. |
| Keywords: | Model uncertainty, spatial autoregressive model, ddterminants of economic growth, European regions. |
| JEL: | C11 C15 C21 R11 O52 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2008-26&r=ure |
| By: | Tomohiko Inui; Toshiyuki Matsuura; Sandra Poncet |
| Abstract: | We examine the location choices of the foreign affiliates of Japanese manufacturing firms, using a new data set that matches parents to the affiliates they created over the 1995-2003 period. The analysis is based on new economic geography theory, and thus focuses on the effect of market and supplier access, as well as production and trade costs. Our aim is twofold. First, we investigate the importance of agglomeration and spillover effects on firms’ decisions via variables showing the presence of Japanese affiliates in the host countries, and Japanese multinational firms at home. Our results confirm the economic importance of information-sharing and network effects, both at home and in the host country, in addition to traditional factors relating to production and transaction costs, and market and supply access. Second, we explore whether the effects of the key determinants of location choice vary according to the characteristics of the investing firm and the affiliate. We find that less productive and smaller parents are more likely to create an affiliate in China rather than in Western Europe or an OECD country. Moreover lessproductive firms seem more sensitive to distance-related costs and low institutional quality, but are more responsive to the presence of Japanese firms and the presence of a Japanese External Trade Organization (JETRO) agency in the host country. |
| Keywords: | Location choice; multinational firms; conditional logit model |
| JEL: | F12 F15 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2008-24&r=ure |
| By: | Andrew Caplin; John Leahy |
| Abstract: | We construct a model of trade with matching frictions. The model provides a simple characterization for the joint proces of prices, sales and inventory. We compare the implications of the model to certain properties of housing markets. The model can generate the large price changes and the positive correlation between prices and sales that we see in the data. Unlike the data, prices are negatively autocorrelated and high inventory predicts price appreciation. We investigate several amendments to the model. |
| JEL: | D83 E3 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14605&r=ure |
| By: | Markus K. Brunnermeier |
| Abstract: | This paper summarizes and explains the main events of the liquidity and credit crunch in 2007-08. Starting with the trends leading up to the crisis, I explain how these events unfolded and how four different amplification mechanisms magnified losses in the mortgage market into large dislocations and turmoil in financial markets. |
| JEL: | E4 E5 G2 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14612&r=ure |
| By: | Florian Ploeckl (Department of Economics, Yale University) |
| Abstract: | Changes in trade institutions, such as the abolishment of tariff barriers, have a potentially strong impact on economic development. The Zollverein, the 1834 customs union between German states, erased borders in much of central Europe. This paper investigates the Zollverein's economic impact through a study of urban population and its growth in the German state of Saxony. A model of the effect of market access on urban growth is combined with an extensive data set on town populations in Saxony and its neighbors as well as an improved distance measure based on GIS techniques, which take into account elevation patterns, roads, and rivers. The results show that Zollverein membership led to significantly higher growth for towns close to the border with fellow Zollverein member Thuringia. They also illustrate that natural resources affect town size but not the growth pattern after the Zollverein. The effects of changes in market access were reinforced through the impact on market access in other towns and they were stronger for larger towns as well. Migration was the predominant source of the differential growth pattern. |
| Keywords: | Zollverein, Saxony, Customs Union, Market Access, Economic Geography, GIS, Distance measurement |
| JEL: | F15 N93 R12 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:966&r=ure |
| By: | Bressoux, Pascal (Université de Grenoble); Kramarz, Francis (CREST-INSEE); Prost, Corinne (EHESS, Paris) |
| Abstract: | This paper studies the impact of different teacher and class characteristics on third graders' outcomes. It uses a feature of the French system in which some novice teachers start their jobs before receiving any training. Three categories of teachers are included in the sample: experienced teachers, trained novice teachers and untrained novice teachers. To identify the effects, we use administrative mistakes in forecasting the number of teachers. We find that trained and untrained novice teachers are assigned to similar classes, whereas experienced teachers have better students located in better environments. Hence, in order to match similar students and classes, we focus on pupils with novice teachers and discard those with experienced teachers. In addition, we show that the same sample can be used to estimate the causal effect of class size on students' outcomes. Our findings are: (1) teachers' training substantially improves students' test scores in mathematics; (2) this training effect does not rely on different teaching practices, but mainly on subject matter competence; untrained teachers who majored in sciences at university improve their students' achievement as much as trained teachers do; (3) the class size effect is substantial and significant; class size does not seem to be correlated with instructional practices; (4) teachers' training does not improve the scores of initially low-achieving students and classes; on the contrary, a smaller class is more beneficial to low-achieving students within classes and to all students in low-achieving classes. |
| Keywords: | teachers' training, class size |
| JEL: | I21 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3871&r=ure |
| By: | Alex Trew |
| Abstract: | That financial matters did not constrain industrial takeoff in the UK is generally accepted in the historical literature; in contrast, contemporary empirical analyses have found evidence that financial development can be a causal determinant of economic growth. We look to reconcile these findings by concentrating on a particular aspect of industrialising UK where inefficiencies in finance could have had bite: The finance of physical infrastructures. We document the historical record and develop the importance of spatial disaggregation and spillovers in both technological and financial development. We develop a simple model that captures the nature of infrastructure finance within a theory of endogenous growth where financial costs are endogenous. We argue that the conception of the finance-growth nexus as a largely static, aggregative phenomenon misses out a good deal of complexity and we relate that complexity to a number of implications for regulation of both financial systems and the emergence of infrastructures. |
| Keywords: | Finance and growth, economic history, infrastructure, economic integration. |
| JEL: | O11 O16 O40 N23 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:0809&r=ure |
| By: | Jorge González (Universidad de Alicante) |
| Abstract: | This paper studies whether the increase in home-workplace separation observed among U.S. older male workers in the last decades of the 20th century can partly account for earlier retirement. We first extend a conventional residential location-labor supply model in order to examine potential mechanisms linking commuting and retirement. After showing that, as a consequence of the urban residential equilibrium, it is possible that workers residing further from the workplace retire earlier, PSID data and an instrumental variables approach are combined in order to assess the nature and strength of the relation. |
| Keywords: | Retirement. Commuting. Instrumental variables. |
| JEL: | J26 R22 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2008-19&r=ure |
| By: | Heather Antecol; Deborah A. Cobb-Clark |
| Abstract: | This paper contributes to the emerging literature on racial and ethnic tension by analyzing the relationship between local socio-economic conditions and the propensity for outsiders to have threatening racial encounters with insiders. We use unique data for a sample of active-duty Army personnel that allow us to first, link personnel to the local communities in which they are located and second, to avoid any selectivity bias associated with endogenous community selection. We find at best mixed evidence that racial hostility is related to economic vulnerability within a community and no evidence that racial conflict can be linked the level of public expenditure. Crime rates, however, are closely related to the incidence of threatening racial encounters and while a community’s demographic profile is also clearly linked to racial tension, these relationships cannot be easily generalized across minority groups or type of threatening racial encounter. |
| Keywords: | racial and ethnic tension; U.S. military; economics of minorities |
| JEL: | D74 J15 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:589&r=ure |
| By: | Rongili Biswas (CSH, Delhi); Nicolas Gravel (University of the Mediterranean,Idep-Greqam); Rémy Oddou (University of the Mediterranean,Idep-Greqam) |
| Abstract: | This paper examines the segregative properties of endogenous processes of jurisdiction formation à la Tiebout in the presence of a central government who redistributes income across jurisdictions by maximizing a welfarist objective. Choice of location by households, of local public good provision by jurisdiction, and of redistribution by the central government are assumed to be made simultaneously, taking the choices of others as given. Two welfarist objectives for the central government are considered in turn: Leximin and Utilitarianism. If the central government pursues a Leximin objective, it is easily shown that the only stable jurisdiction structure that can emerge is essentially the trivial one in which all households live in the same jurisdiction. A richer class of stable jurisdiction structures are compatible with a central utilitarian government. Yet, it happens that, if individual preferences are additively separable, the class of preferences that garantee the segregation of any stable jurisdiction structure remains unchanged by the presence of a central government. |
| Date: | 2008–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:iep:wpidep:0802&r=ure |
| By: | Plachta, Robert |
| Abstract: | This paper assesses the interactions of horizontal fiscal equalisation schemes with debt policy by sovereign regional governments. Local public goods are either financed by debt or taxation. A horizontal equalisation scheme eleviates regional public revenue disparities under horizontal and vertical tax competition. We show that fiscal equalisation schemes have no impact on the optimal central government grant whereas they can either soften or harden the regional budget constraint depending on the specific formulae. Revenue equalisation softens the budget constraint whereas tax base equalisation hardens the budget constraint of poor states. |
| Keywords: | Fiscal federalism, public debt, soft budget constraint, fiscal equalisation, tax competition |
| JEL: | E62 H7 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:uoccpe:7451&r=ure |
| By: | Stefano Usai |
| Abstract: | This work reflects an initial analysis employing a pioneering new OECD database; it is among the first systematic attempts to analyse comparatively the distribution of innovative activity across regions in OECD economies with a set of homogenous measures for both input and output in the process of knowledge production and dissemination. The descriptive analysis shows that there are important differences in the inventive performance of regions in OECD economies, as measured by indicators for one of the key types of intellectual assets (i.e., patents). Inventive performance is concentrated in some regions in continental Europe, in North America and Japan. Highly inventive regions tend to cluster together. This spatial dependence is found to have increased over time. The inventive performance of regions is directly influenced by the availability of human capital and R&D expenditure. Local agglomeration factors (proxied by the density of population) are also found to have a significant impact while some negative effects appear when regions are mainly rural or when they are mainly service-oriented. Cross-country differences point to the importance of national innovation systems which shape the institutional framework within which innovation takes form and diffuses. <P>La Géographie des activités d'invention dans les régions de l’OCDE <BR>Ce travail est le fruit d’une première analyse à partir d’une base de données OCDE nouvelle et novatrice. Il correspond à l’une des premières tentatives d’effectuer de manière systématique des analyses comparatives de la distribution de l’activité d’innovation entre les régions, dans les économies de l’OCDE, et comporte une batterie d’indicateurs homogènes du processus de production et de diffusion du savoir (facteurs de production et produits). L’analyse descriptive montre que, dans les économies de l’OCDE, l’inventivité des régions, telle que mesurée par les indicateurs de l’un des principaux types d’actifs intellectuels (les brevets, par exemple), n’est absolument pas homogène. L’inventivité se concentre dans quelques régions du continent européen, d’Amérique du Nord et du Japon. Les régions à forte inventivité ont tendance à se constituer en réseaux. On a d’ailleurs constaté que cette dépendance spatiale a augmenté au fil du temps. La disponibilité de capital humain et les dépenses de R-D influent directement sur l’inventivité des régions. On observe également que des facteurs d’agglomération locaux (dont la variable indicatrice est la densité de la population) ont un impact significatif alors que certains effets négatifs se font sentir quand les régions sont principalement rurales ou principalement orientées vers les services. Les disparités transnationales mettent en exergue l’importance des systèmes nationaux d’innovation qui façonnent le cadre institutionnel au sein duquel l’innovation prend forme et se diffuse. |
| Date: | 2008–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaaa:2008/3-en&r=ure |
| By: | António Afonso; Ricardo M. Sousa |
| Abstract: | This paper investigates the link between fiscal policy shocks and movements in asset markets using a Fully Simultaneous System approach in a Bayesian framework. Building on the works of Blanchard and Perotti (2002), Leeper and Zha (2003), and Sims and Zha (1999, 2006), the empirical evidence for the U.S., the U.K., Germany, and Italy shows that it is important to explicitly consider the government debt dynamics when assessing the macroeconomic effects of fiscal policy and its impact on asset markets. In addition, the results from a VAR counter-factual exercise suggest that: (i) fiscal policy shocks play a minor role in the asset markets of the U.S. and Germany; (ii) they substantially increase the variability of housing and stock prices in the U.K..; and (iii) government revenue shocks have apparently contributed to an increase of volatility in Italy. |
| Keywords: | Bayesian Structural VAR; fiscal policy; housing prices; stock prices. |
| JEL: | C32 E62 G10 H62 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp582008&r=ure |
| By: | Li, Nan |
| Abstract: | The U.S. subprime loan crisis in 2007 has caused astonishing domestic and international financial turmoil, both directly and indirectly. Being a main factor in facilitating mortgage securitization, credit derivative market is now under the blame of underestimating credit risk and aggregating the impact of credit risk. It is worthy of revisiting the contribution of credit derivative products to their underlying bond markets in discovering the true level of credit risk. In this paper, I use sampled Credit Default Swap (CDS) contracts written on sovereign borrowers, to investigate the pricing relationship between sovereign CDS and bond markets. My purpose is to find whether the newly innovated derivative market can help bond market to reveal more pricing information on credit risk, or just add more noise to it. Applying Vector Error Correction Model (VECM) to a data sample ranging from 1999 to 2002, I find no statistical evidences with regard to the pricing contribution of sovereign CDS market. Instead, sovereign bond market advances in price discovery process by at least one week. Moreover, there exists a significant price gap between the two measures of credit risk: CDS rate and the yield spread of its underlying bond. This further reduces the effectiveness of using sovereign CDS in credit risk hedge. |
| Keywords: | sovereign bond; sovereign CDS; yield spread; price discovery process |
| JEL: | G15 G13 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12294&r=ure |
| By: | Anbarci, Nejat (Deakin University); Lee, Jungmin (Florida International University) |
| Abstract: | Law enforcement officers are allowed to exercise a significant amount of street-level discretion in a variety of ways. In this paper, we focus on a particular prominent kind of discretionary behavior by traffic officers when issuing speeding tickets, speed discounting. Officers partially forgive motorists by writing a lower speed level than the speed that officers observe. Verifying the level of speed discounting by different groups of officers and motorists and ascertaining the presence of racial disparities in this lenient policing are the main objectives of this paper. We find that minority officers, particularly African-Americans, are harsher on all motorists but even harsher on minority motorists regarding speed discounting. The minority-on-minority disparity appears to be stronger in situations involving Hispanic officers, infrequently ticketing officers, male motorists, those driving old vehicles, and minority neighborhoods. |
| Keywords: | police discretion, disparate treatment, racial bias, speeding tickets |
| JEL: | J70 K42 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3903&r=ure |
| By: | Ejermo, Olof; Gråsjö,Urban |
| Abstract: | This paper examines the effects of regional R&D on patenting for Sweden within an accessibility framework. We use two measures of patenting: number of patents granted per capita and a composite of quality-adjusted patents which we regard as an innovation indicator, respectively. Three conclusions emerge. First, we find that the specification where innovations per capita is used as a dependent variable performs much better than with granted patents per capita for capturing relationships with regional R&D. In fact, quantile regressions over the distribution of different patenting and innovation levels per capita show that R&D efforts within regions affect innovations per capita positively, except for the regions with the lowest levels of R&D. The effects on granted patents per capita are less robust and depend inconsistently on the level of R&D. Secondly, accessibility to inter-regional R&D do not affect innovation significantly in our results, which suggests that effects are locally bounded. This implies that studies of the R&D-innovation relationship are plagued by misspecification, since studies tend to show that R&D-effects diffuse to other regions. This is also the case in our study; the inter-regional effects are an important factor for granted patents. Third, the share of university R&D of all regional R&D has no effect on patenting, which suggests that the two types of R&D are substitutes. In view of these results the recommendation must be to use quality-adjusted patents for regional innovation studies rather than patent grants. |
| Keywords: | R&D, patenting, innovations, regions, spatial dependence. |
| JEL: | O31 O32 O33 O34 O38 N5 O47 R58 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:cil:wpaper:136&r=ure |
| By: | King, David (David N.) |
| Abstract: | This paper puts forward and tests a simple model of how the median voter in a local authority (LA) may determine the level of its expenditure in relation to its needs, to see what lessons may be learned. For Scottish LAs, variations in spending in relation to need are very small, but the model explains these variations well; it also suggests that the Scottish National Party leads to the lowest spending levels, and that the island LAs receive over-generous needs allowances. For England, the model explains variations in service levels very well for LAs with relatively low spending but very poorly for LAs with relatively high spending: this suggests that the latter are prevented by capping from providing the high service levels that their median voters want. Also, it is found that among underspenders, increased efficiency reduces spending. Finally, no evidence was found to suggest that the 2002 downward revisions in the relative spending needs of the English shire counties were inappropriate. |
| Keywords: | Local authority spending; Overspending; Tax capping; Tax price; Value for money |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2008-29&r=ure |
| By: | Raffaella Sadun |
| Abstract: | Entry regulations against big-box retailers have been introduced in many countries to protectsmaller independent stores. Using a new dataset from the UK, I show that in fact these entryregulations have been associated with greater employment declines in independent storesthey were meant to protect. The reason is that when large retail chains are prevented fromentering a new area with a big-box store, they typically enter instead using a smaller in-townstore format. These smaller format stores compete more directly with independent stores. Tocausally identify this impact I use the changing nature of local political control in the UKfrom 1993 to 2003. Since local politicians directly control planning regulation in the UK, andpolitical parties have very different views on the ideal amount of planning control, thisprovides exogenous variation in the ease of entry for big-box retailers. I estimate that 15% ofthe employment decline experienced by independent retailers between 1998 and 2004 can beattributed to the perverse effect of planning regulation. |
| Keywords: | Zoning, Location, Retail, Regulation |
| JEL: | K2 L10 L81 L51 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0888&r=ure |
| By: | Natasha T. Duncan; Brigitte S. Waldorf (Department of Agricultural Economics, College of Agriculture, Purdue University) |
| Abstract: | The United States provides a path to citizenship for its newcomers. Unlike other immigration countries, however, the United States does not have policies that ease assimilation or directly promote naturalization such as easily accessible and widely advertised language and civic instruction courses. Immigrants are by and large left on their own when facing legal and financial barriers or seeking instruction to pass the citizenship test. Not surprisingly, thus, we find that immigrants’ attributes such as educational attainment, English language proficiency, and income affect naturalization rates. This paper analyzes whether naturalization rates are also affected by neighborhood characteristics and informal networks for assistance and information. Towards that end, we estimate a binary model of immigrants’ citizenship status specifying the size of the immigrant enclave and its level of assimilation as key explanatory variables. The study uses 2005 ACS data, and focuses on immigrants from the Caribbean islands in the New York area. The results suggest that who they are and where they live has substantial impacts on immigrants’ propensities to have acquired US citizenship. Citizenship is unlikely for recent arrivals, those who do not speak English well, are poorly educated, and have a low income. Moreover, living in a neighborhood with a well assimilated immigrant enclave enhances the chance of acquiring US citizenship. This effect is stronger for highly educated than for poorly educated immigrants and thus misses the more vulnerable segments of the immigrant population. |
| Keywords: | US Immigration, Assimilation, Caribbean Immigrants |
| JEL: | J15 J61 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pae:wpaper:08-14&r=ure |
| By: | Steven Cantrell; Jon Fullerton; Thomas J. Kane; Douglas O. Staiger |
| Abstract: | The National Board for Professional Teaching Standards (NBPTS) assesses teaching practice based on videos and essays submitted by teachers. We compared the performance of classrooms of elementary students in Los Angeles randomly assigned to NBPTS applicants and to comparison teachers. We used information on whether each applicant achieved certification, along with information on each applicant's NBPTS scaled score and subscores, to test whether the NBPTS score was related to teacher impacts on student achievement. We found that students randomly assigned to highly-rated applicants performed better than students assigned to comparison teachers, while students assigned to poorly-rated applicants performed worse. Estimates were similar using data on pairs of teachers that were not randomly assigned. Our results suggest a number of changes that would improve the predictive power of the NBPTS process. |
| JEL: | I21 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14608&r=ure |
| By: | Brounen, D. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | Real estate markets around the world have earned a complicated reputation. On the one hand, real estate markets offer investors a wide spectrum of profitable investments opportunities, investments that nowadays can be executed by simply buying shares of stock listed by real estate investment companies. In the first half of this inaugural address, the boom of these real estate stocks is discussed. In less than three decades, the listed real estate market developed into a sector with almost 400 listed firms worldwide, representing a sum aggregate market capitalization of around one trillion dollars by the end of 2007. Three relevant lessons regarding these international real estate stocks are discussed in the first fifteen pages of this booklet, lessons offered by real estate research from the Rotterdam School of Management. On the other hand, real estate markets are notorious for attracting entrepreneurs with bad intentions, seeking for opportunities to circumvent the strong arm of the law. These activities have yielded many headlines in the daily press and have given real estate a gloomy reputation. The dynamics of foreclosure auction of homes is an example of a source of negative headlines, stressing that the suboptimal organization of these auctions prohibits distressed sellers from earning a fair price for their home. In the second part of this address, I focus on an empirical test of the matter. By analyzing over 700 auctioned homes the dynamics of the auction system is discussed objectively. This offers a fair view on the problems at hand and searches for way to improve the system in the near future. |
| Keywords: | real estate;foreclosure auctions;real estate stocks |
| Date: | 2008–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:euriar:1765014001&r=ure |
| By: | Clifford Winston; Jia Yan (School of Economic Sciences, Washington State University) |
| Abstract: | U.S. highways are experiencing a “perfect storm:” traffic congestion and delays are imposing ever greater costs on motorists and shippers; poorly maintained roads and bridges continue to damage vehicles and pose threats to travelers’ safety; and for the first time since the Highway Trust Fund was created in 1956, the portion that finances federal highway expenditures is running a deficit. |
| Keywords: | Security Breach Costs; Financial Distress; Insurance; Resource Allocation. |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:wsu:wpaper:yan-2&r=ure |
| By: | Volodymyr Bilotkach (University of California Irvine); Xavier Fageda (PPRE-IREA, Universitat de Barcelona); Ricardo Flores-Fillol (Universitat Rovira i Virgili) |
| Abstract: | This paper analyzes both theoretically and empirically the relationship between distance and frequency of scheduled transportation services. We study the interaction between a monopoly firm providing high-speed scheduled service and personal trans- portation (i.e., car). Most interestingly, the carrier chooses to increase frequency of service on longer routes when competing with personal transportation because provid- ing a higher frequency (at extra cost) it can also charge higher fares that can boost its profits. However, when driving is not a relevant option, frequency of service de- creases for longer flights consistently with prior studies. An empirical application of our analysis to the European airline industry con?rms the predictions of our theoretical model. |
| Keywords: | Short-haul routes, long-haul routes, flight frequency, distance |
| JEL: | L13 L2 L93 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2008-13&r=ure |
| By: | Hilde C. Bjørnland (Norwegian School og Management and Norges Bank (Central Bank of Norway)); Dag Henning Jacobsen (Norges Bank (Central Bank of Norway)and The World Bank) |
| Abstract: | We analyze the role of house prices in the monetary policy transmission mechanism in the U.S. using structural VARs. The VAR is identified using a combination of short-run and long-run (neutrality) restrictions, allowing for a contemporaneous interaction between monetary policy and various asset prices. By allowing the interest rate and asset prices to react simultaneously to news, we find the role of house prices in the monetary transmission mechanism to increase considerably. In particular, following a monetary policy shock that raises the interest rate by one percentage point, house prices fall immediately by 1 percent, for then to decline by a total of 4-5 percent after three years. Furthermore, the fall in house prices enhances the negative response in output and consumer price inflation that has traditionally been found in the conventional literature. |
| Keywords: | VAR, monetary policy, house prices, identification. |
| JEL: | C32 E52 F31 F41 |
| Date: | 2008–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2008_24&r=ure |
| By: | Becker, Sascha O.; Egger, Peter H.; Merlo, Valeria |
| Abstract: | Most existing empirical evidence on the impact of profit taxation on multinational firm activity is based on cross-country data. One major drawback of such data is that countries differ not only with regard to taxes but along other dimensions which might be hard to capture by means of observable characteristics. We compile a database of more than 11,000 municipalities in Germany to analyze the sensitivity of the location decisions of foreign MNEs with respect to business tax rates which are levied directly by the municipalities. Using count data models suited for cross-sectional and panel data, we find that higher business tax rates have a negative effect on the number of foreign MNE headquarters, after controlling for other determinants of firm location decisions. On average, a one-percent reduction of the municipal business tax rate (equivalent to a decline by about 0.14 percentage points) leads to an increase in the number of headquarters of foreign MNEs by about 0.05. Hence, the average municipality needs to reduce its business tax rate by 20% to attract one foreign MNE. |
| Keywords: | Multinational firms; Profit taxation; Regional public finance; Count d ata |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2008-30&r=ure |