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on Urban and Real Estate Economics |
| By: | Alberto Musso (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Stefano Neri (Banca d’Italia, Economic Outlook and Monetary Policy Department, Via Nazionale, 91, 00184 Roma, Italy.); Livio Stracca (European Central Bank, DG International and European Relations, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.) |
| Abstract: | The paper provides a systematic empirical analysis of the role of the housing market in the macroeconomy in the US and in the euro area. First, it establishes some stylised facts concerning key variables in the housing market, such as the real house price, residential investment and mortgage debt on the two sides of the Atlantic. Then, it presents evidence from Structural Vector Autoregressions (SVAR) by focusing on the effects of three structural shocks, (i) monetary policy, (ii) credit supply and (iii) housing demand shocks on the housing market and the broader economy. We find that similarities overshadow differences as far as the role of the housing market is concerned. We find evidence pointing in the direction of a stronger role for housing in the transmission of monetary policy shocks in the US, while the evidence is less clearcut for housing demand shocks. We also find that credit supply shocks matter more in the euro area. JEL Classification: E22, E44, E52. |
| Keywords: | Residential investment, House prices, Credit, Monetary Policy. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20101161&r=ure |
| By: | David Johnson (Wilfrid Laurier University) |
| Abstract: | This study compares student outcomes at Alberta elementary schools where students come from similar socio-economic backgrounds, thus revealing “good” schools where principals, teachers and staff are making a positive difference in student performance. The study screens out the influence of socio-economic factors on how a school’s students perform on Alberta’s Provincial Achievement Tests for grades 3, 6 and 9. This identifies those schools that perform better or worse than other schools with students of similar backgrounds. |
| Keywords: | Education Papers, Alberta elementary schools, Provincial Achievements Tests (PATs), socio-economic factors |
| JEL: | I21 L33 I28 H75 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdh:ebrief:96&r=ure |
| By: | Martin Koning (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | The aim of this article was to assess specific problems concerning traffic congestion access to the city of Paris. First, we attempted to evaluate the evolution of the congestion cost for the Paris Ring-Road (PRR), the major urban highway surrounding the French capital, during the period from 2000-2007. A speed-density methodology was implemented which enabled us to differentiate the external costs of road congestion between speed-classes of 5 km/h. These results were useful to subsequently propose the order of magnitude of time losses at national and regional scales, as well as marginal pricing schemes which could potentially be used in order to correct road congestion externality on the PRR. Our empirical investigation concluded that, in 2007, the PRR was more costly for central Paris area (130 M€) compared to that of seven years earlier (117 M€). The deterioration of traffic conditions, symbolized by the mean speed fall (- 5.2 %), dominates the infrastructure least used (- 2.2 %). Based on these figures, the social cost of road congestion is thought to reach about 0.2 % of the French GDP. This ratio becomes three times higher once reported on a regional scale and underlines that road congestion is an important issue for Ile-de-France. Finally, despite their analytical limitations, the proposed taxes clearly illustrate the challenges related to road-pricing strategies. |
| Keywords: | Paris Ring-Road, Road Congestion, Speed-Density Relationship, Road-Pricing |
| Date: | 2010–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00467888_v1&r=ure |
| By: | Stephen Calabrese (Carnegie Mellon University); Dennis Epple (Carnegie Mellon University) |
| Abstract: | We study the political economy of state limitations on the taxing powers of local governments, investigating the effects of such restriction on housing markets, community composition, and types of taxes and expenditures undertaken by local governments. We characterize equilibrium when voters choose values of multiple policy (tax and expenditure) instruments, finding that tax limitations have very substantial effects on housing prices and the composition of communities. Political support for tax limits comes from suburban voters and from a subset of central-city voters. Support for tax limits come even from residents of communities that are not constrained by the limits. |
| Keywords: | Tax limits, redistribution, public goods, property tax, income tax, head tax |
| JEL: | D72 D78 H30 H42 H72 H73 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/3/doc2010-14&r=ure |
| By: | Akamatsu, Takashi; Takayama, Yuki; Ikeda, Kiyohiro |
| Abstract: | We provide an analytical approach that facilitates understanding the bifurcation mechanism of a wide class of economic models involving spatial agglomeration of economic activities. The proposed method overcomes the limitations of the Turing (1952) approach that has been used to analyze the emergence of agglomeration in the multi-regional core-periphery (CP) model of Krugman (1993, 1996). In other words, the proposed method allows us to examine whether agglomeration of mobile factors emerges from a uniform distribution and to analytically trace the evolution of spatial agglomeration patterns (i.e., bifurcations from various polycentric patterns as well as a uniform pattern) that these models exhibit when the values of some structural parameters change steadily. Applying the proposed method to the multi-regional CP model, we uncover a number of previously unknown properties of the CP model, and notably, the occurrence of “spatial period doubling bifurcation” in the CP model is proved. |
| Keywords: | economic geography; agglomeration; stability; bifurcation; gravity laws |
| JEL: | F15 F22 R13 C65 F12 R12 C62 |
| Date: | 2009–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21738&r=ure |
| By: | Akamatsu, Takashi; Takayama, Yuki |
| Abstract: | This paper shows that the evolutionary process of spatial agglomeration in multi-regional core-periphery models can be explained analytically by a much simpler method than the continuous space approach of Krugman (1996). The proposed method overcomes the limitations of Turing's approach which has been applied to continuous space models. In particular, it allows us not only to examine whether or not agglomeration of mobile factors emerges from a uniform distribution, but also to trace the evolution of spatial agglomeration patterns (i.e., bifurcations from various polycentric patterns as well as from a uniform pattern) with decreases in transportation cost. |
| Keywords: | agglomeration; core-periphery model; multi-regional; stability; bifurcation |
| JEL: | F22 F15 R13 R12 C62 |
| Date: | 2009–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21739&r=ure |
| By: | Carl Gaigné (INRA-ESR - Unité d'économie et de sociologie rurales - INRA); Stéphane Riou (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Jacques-François Thisse (CORE - Université Catholique de Louvain) |
| Abstract: | There is a large consensus among international institutions and national governments to favor urban-containment policies - the compact city - as a way to reduce the ecological footprint of cities. This approach overlooks the following basic trade-off: the concentration of activities decreases the ecological footprint stemming from commodity shipping between cities, but it increases emissions of greenhouse gas by inducing longer worktrips. What matters for the ecological footprint of cities is the mix between urban density and the global pattern of activities. As expected, when both the intercity and intraurban distributions of activities are given, a higher urban density makes cities more environmentally friendly and raises global welfare. However, once we account for the fact that cities may be either monocentric or polycentric as well as for the relocation of activities between cities, the relationship between density and the ecological footprints appears to be much more involved. Indeed, because changes in urban density affect land rents and wages, firms are incited to relocate, thus leading to new commuting patterns. We show policies that favor the decentralization of jobs in big cities may reduce global pollution and improve global welfare. |
| Keywords: | greenhouse gas; commuting costs; transport costs; cities; urban containment policy |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00456610_v2&r=ure |
| By: | de Bandt, O.; Barhoumi, K.; Bruneau, C. |
| Abstract: | In order to assess transmission mechanisms between global and domestic house prices, and possibly contagion effects, we use a large database of macroeconomic variables for OECD countries. We extract common factors to summarize the comovements of the variables and include them in stationary FAVAR models. We mainly focus on the "pandemic" view of contagion where local shocks, originating from a country or a local housing market, spread out to other domestic housing markets. An interesting finding is that, even allowing for other channels of international transmission (through global interest rates, or activity), the US real house price, which appears to be exogenous in the US dynamics, unidirectionally causes the international house price factor, which in turn causes the domestic real house price growth for several countries. The channels of contagion from the US appears therefore to be either direct, through house prices (in particular in the UK or Spain), or indirect through other variables. |
| Keywords: | housing, factor models, Vector Autoregressive model. |
| JEL: | G33 E32 D21 C41 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:274&r=ure |
| By: | C. Kirabo Jackson; Emily Greene Owens |
| Abstract: | We exploit arguably exogenous train schedule changes in Washington DC to investigate the relationship between public transportation provision, the risky decision to consume alcohol, and the criminal decision to engage in alcohol–impaired driving. Using a triple differences strategy, we provide evidence that overall there was little effect on DUI arrests, alcohol related fatal traffic and alcohol related arrests. However, we find that these overall effects mask considerable heterogeneity across geographic areas and spatial shifting. Specifically, we find that areas close to bars that are within walking distance to Metro stations experience increases in alcohol related arrests and decreases in DUI arrests. |
| JEL: | I18 R49 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15872&r=ure |
| By: | Dimitris Georgarakos (Goethe University Frankfurt, House of Finance, Grüneburgplatz 1, PF H32, 60323 Frankfurt am Main, Germany.); Adriana Lojschova (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany and IMF.); Melanie Ward-Warmedinger (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany and IZA.) |
| Abstract: | Using comparable survey data from twelve European countries from 1994 to 2001 we investigate households’ attitudes towards mortgage indebtedness. We find that a given debt burden creates much higher distress in countries with fewer mortgage holders relative to countries where a significant part of households uses mortgage debt. This effect is net of ppp-adjusted income levels, various socioeconomic characteristics, housing traits, country-specific constant terms, and household unobserved heterogeneity. We show that households evaluate their own debt burden partly in comparison with the debt position of their peer group and in a way consistent with social stigma considerations which lessen in significance as markets expand. JEL Classification: D12, D14, G21. |
| Keywords: | Mortgage debt, credit markets, financial distress, household finance, peer effects. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20101156&r=ure |
| By: | Jordi Jofre-Monseny (University of Barcelona & IEB) |
| Abstract: | Several theoretical papers that examine tax competition with agglomeration effects have stressed the possibility that the governments of jurisdictions in which economic activity is concentrated may tax firms more heavily (taxable agglomeration rents). In this paper, we examine the tax rate setting decisions taken with regard to the Spanish municipal business tax (Impuesto sobre Actividades Económicas). The analysis, carried out with a sample of 2,772 municipalities, focuses on the effect that urbanization economies, localization economies and the market potential of municipalities have on their business tax rates. High urbanization economies and high localization economies are found to increase the business tax rate. Although the evidence is weaker, the results also indicate that municipalities with better access to demand (of consumers) set higher tax rates |
| Keywords: | Local taxes, agglomeration economies, tax competition |
| JEL: | H3 H7 R |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/3/doc2010-15&r=ure |
| By: | Ferrara, L.; Koopman, S J. |
| Abstract: | The 2007 sub-prime crisis in the United States, prolonged by a severe economic recession spread over many countries around the world, has led many economic researchers to focus on the recent fluctuations in housing prices and their relationships with macroeconomics and monetary policies. The existence of common housing cycles among the countries of the euro zone could lead the European Central Bank to integrate more specifically the evolution of such asset prices in its assessment. In this paper, we implement a multivariate unobserved component model on housing market variables in order to assess the common euro area housing cycle and to evaluate its relationship with the economic cycle. Among the general class of multivariate unobserved component models, we implement the band-pass filter based on the trend plus cycle decomposition model and we allow the existence of two cycles of different periods. The dataset consists of gross domestic product and real house prices series for four main euro area countries (Germany, France, Italy and Spain). Empirical results show a strong relationship for business cycles in France, Italy and Spain. Moreover, French and Spanish house prices cycles appear to be strongly related, while the German one possesses its own dynamics. Finally, we find that GDP and house prices cycles are related in the medium-term for fluctuations between 4 and 8 years, while the housing market contributes to the long-term economic growth only in Spain and Germany. |
| Keywords: | House prices, Business cycles, Euro area, Unobserved components model. |
| JEL: | C13 C32 E32 R21 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:275&r=ure |
| By: | Alejandro Gaviria; Carlos Medina; Jorge Tamayo |
| Abstract: | We use data of neighborhoods of Bogotá to assess the causal relation between their adolescent fertility and their homicide rates. We find that neighborhoods with high adolescent fertility rates, and that have low secondary enrollment and high crime rates at the moment the children of their teen mothers become teenagers, are more likely to have higher homicide rates in the future, when those children reach their peak crime ages, estimated to be between 18 to 26 years old in violent cities of Colombia. The result is robust to various specifications, and to modeling the spatial autocorrelation of homicides. |
| Date: | 2010–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000094:006860&r=ure |
| By: | Manuel Adelino; Kristopher Gerardi; Paul S. Willen |
| Abstract: | In this note we discuss the findings in Piskorski, Seru, and Vig (2010), as well as the authors' interpretation of their results. First, we find that small changes to the set of covariates used by PSV significantly reduce the magnitude of the differences in foreclosure rates between securitized and nonsecuritized loans. Second, we argue that early payment defaults (EPD) are not a valid instrument for the securitization status of the loans and that the empirical implementation chosen by the authors for using EPD is not a valid instrumental variables approach. Finally, we discuss the use of foreclosure rates as a measure of renegotiation and argue that explicitly using modification rates of delinquent mortgages is a better way of studying renegotiation activity. On balance, the evidence in PSV indicates that there are at most small differences in the outcomes of delinquent loans, but whether those differences reflect accounting issues, willingness to renegotiate, or unobserved heterogeneity remains an open question. |
| Keywords: | Foreclosure ; Mortgage-backed securities ; Mortgage loans |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:10-2&r=ure |
| By: | Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University) |
| Abstract: | Heterogeneity in firm productivity affects the location patterns of firm and agglomeration. Here we provide an economic geography model, involving forward and backward linkages driven by the migration of a footloose entrepreneur (capital owner) with different productivity. As a result we find a sorting equilibrium characterised by co-agglomeration of similar productivity firms, however, in contrast to previous studies, unproductive firms are more likely to agglomerate than their more productive counterparts. This is due to the increasingly severe competition induced by productive firms. Productive firms prevent severe local competition through their co-agglomeration. In terms of social welfare, although the sorting equilibrium involves higher social welfare than a perfectly symmetric pattern of firm location, the market outcome is sub-optimal and induces too much agglomeration. |
| Keywords: | heterogeneous firms, footloose entrepreneurs, competition, productivity, economic geography |
| JEL: | F15 F23 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2010-11&r=ure |
| By: | Peter Franz |
| Abstract: | As scientists and policymakers tend to interpret changes in the economy as a trend towards an increasingly knowledge-based economy, their recommendations and strategies for regional economic development frequently contain elements how to intensify the knowledge flows in the region concerned. Knowledge flows come into existence from intentional action, but also in an unintended way as externalities or knowledge spillovers. This paper reviews the ways regional and urban economics has dealt with the concept of knowledge spillovers. Knowledge spillovers are defined within a conceptual framework that points out different uses of knowledge in economics. The concept’s operationalisations in diverse empirical studies are systematised and discussed. After a critical review of the current state of research, policy strategies aiming to intensify knowledge spillovers are classified. The paper concludes with an outlook on promising new approaches to research knowledge spillovers and on the elaboration of more efficient policy strategies. |
| Keywords: | knowledge spillovers; tacit knowledge; codified knowledge; transfer mechanisms; related variety |
| JEL: | D83 R11 R12 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:5-10&r=ure |
| By: | Stone, Joe; Bania, Neil; Gray, Jo Anna |
| Abstract: | We find region-specific complementarity between investments in public infrastructure and education, both k-12 and postsecondary. The complementarity helps to explain how regions capture returns to investments in education even when residents are mobile, and is strong enough for the effect of tax-financed expenditures on either public infrastructure or education to be significantly positive when spending on the other is high, even though the independent effect of either one is negative. Effects are identified using a recursive structure, very long lags, GMM-instrumental variables, and multiple controls for heterogeneity. Estimates are robust across identification strategies, estimators, and instruments. |
| Keywords: | infrastructure; education complementarity economic growth |
| JEL: | J00 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21697&r=ure |
| By: | Hasan, Amer |
| Abstract: | This paper considers the effects of a gender-targeted conditional cash transfer program for girls in classes 6 to 8. It finds that the program is successful in increasing the enrollment of girls in classes 6 to 8 as intended. It also finds evidence to suggest that the program generated positive spillover effects on the enrollment of boys. This success does, however, appear to be poised to come at a cost. The student-teacher ratio in treated districts is also climbing. This suggests that in the absence of active steps to address these increasing student-teacher ratios, instructional quality is likely to suffer. The success of the program appears to be driven by enrollment increases in urban schools. This suggests the need for a reassessment of the targeting criteria in rural schools. |
| Keywords: | Primary Education,Tertiary Education,Education For All,Teaching and Learning,Education Reform and Management |
| Date: | 2010–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5257&r=ure |
| By: | Alexander Plekhanov (European Bank of Reconstruction and Development); Lev Freinkman (World Bank) |
| Abstract: | The paper provides empirical analysis of the relationship between fiscal decentralisation and the quality of public services in the Russian regions. The analysis suggests that fiscal decentralisation has no significant effect on the key inputs into secondary education, such as schools, computers, or availability of pre-schooling, but has a significant positive effect on average examination results, controlling for key observable inputs and regional government spending on education. Decentralisation also has a positive impact on the quality of municipal utilities provision. Both effects can be attributed to strengthened fiscal incentives rather than to superior productive efficiency of municipal governments. |
| Keywords: | decentralisation, education, utilities, public services, Russian regions |
| JEL: | H72 H73 H75 H77 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ebd:wpaper:111&r=ure |
| By: | Yoshitsugu Kitazawa (Faculty of Economics, Kyushu Sangyo University) |
| Abstract: | In this paper, the investigation is conducted on the relationship between the number of fatalities by dint of traffic accidents and the gross municipal product, by using the panel data whose crosssectional units are composed of municipalities in Fukuoka Prefecture in Japan. It turns out that the conventional quasi-differenced GMM estimator gives unconvincing results, while some of the GMM estimators proposed by Kitazawa (2007) give convincing results. The convincing results suggest that the diseconomy of scale is recognized in the occurrence of traffic fatalities. |
| Keywords: | traffic accident, number of fatalities, gross municipal product, count panel data, GMM, diseconomy of scale |
| JEL: | C23 I12 R41 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:kyu:dpaper:41&r=ure |
| By: | Jorge Baldrich (Department of Economics, Universidad de San Andres) |
| Abstract: | This paper analyzes the determinants of local government revenues and the incentives faced by politicians in the design of tax policy. The decision of deepening local tax collections carries costs and benefits for local politicians. Balancing in the margin these costs and benefits allows for an endogenous determination of the taxing level. The paper stresses the role of markets size in determining politicians’ incentives to enact a tax regime. In addition, we provide a rationale for the central government-local government tax ratio as a key tax effort variable. Furthermore, local levels of income inequality are relevant in explaining tax collections. |
| Keywords: | tax, sub-national revenues |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:sad:wpaper:100&r=ure |
| By: | Martin Koning (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Rémy Prud'Homme (Université Paris XII - Université Paris XII Val de Marne); Pierre Kopp (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | On the southern part of the Parisian Maréchaux' boulevards, the old bus line Petite Ceinture has been replaced by a modern tramway (T3). Simultaneously, the road-space has been narrowed by about a third. A survey conducted on 1,000 users of the T3 shows that the tramway hardly generated any modal report from the private cars (PC) towards the public transit (PT). However, it did generate important intra-modal transfers: from bus and subways towards tramway concerning the PT, surely from Maréchaux' boulevards towards the Parisian Ring-Road (boulevard périphérique, PRR) and/or adjacent streets for the PC. The various benefits and costs of these changes are evaluated in this research. The welfare gains made by PT users are more than compensated by the time losses of the motorists, and in particular, by the additional cost of road congestion on the PRR. The same conclusion applies with regard to CO2 emissions: the reductions saved with the replacement of the busses and some (few) PC are less important than the increased pollution induced by the lengthening of the automobile trips and the increased congestion on the PRR. Even if one ignores the initial investment of 350 M€, the social impact of the T3 project, illustrated by its Clear Discount Value (CDV), is strongly negative. This is especially true for suburbanites. Concerning the lonely inhabitants (electors) of Paris, our analysis shows that they pocket the main part of the benefits while supporting a weak fraction of the costs. |
| Keywords: | Tramway, Costs-Benefits Analysis, Road Congestion, CO2 Emissions |
| Date: | 2010–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00467896_v1&r=ure |
| By: | Junichi Suzuki |
| Abstract: | I empirically examines the anticompetitive effects of land use regulation by using microdata on midscale chain hotels in Texas. I construct a dynamic entry-exit model of midscale hotel chains. By endogenizing their entry decisions, the model explicitly considers hotel chains' reactions to the stringency of land use regulation. Estimation results indicate that imposing stringent regulation increases cost enough to affect hotel chains' entry decisions. Although hotel chains are the immediate payers of the increased entry cost, incumbents shift a part of their cost increase onto consumers by exploiting their increased market power. (JEL: R3, L1, L5) |
| Keywords: | Land use regulation, zoning, barrier to entry, lodging industry |
| JEL: | R3 L1 L5 |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-400&r=ure |
| By: | Lorenzo Boetti (Catholic University of Milan); Massimiliano Piacenza (Department of Economics and Public Finance "G. Prato", University of Torino); Gilberto Turati (Department of Economics and Public Finance "G. Prato", University of Torino) |
| Abstract: | In Italy, as in other countries around the world, recent reforms share the goal of increasing the fiscal autonomy of lower tiers of governments, from Regions to Municipalities, in order to align spending with funding responsibilities and increase the efficiency in the provision of essential public services. The purpose of this paper is to assess spending efficiency of local governments and to investigate the effects of tax decentralization, focusing on the role played by incumbent politicians’ accountability. The analysis relies on a sample of Italian municipalities and exploits both parametric (SFA) and nonparametric (DEA) techniques to study spending inefficiency and its main determinants. Consistently with modern fiscal federalism theories, our results show that more fiscally autonomous municipalities exhibit less inefficient behaviours. We also find that the shorter is the distance from new elections, the higher is excess spending, thus giving further support to the traditional “electoral budget cycle” agument. Other political features of governing coalition, such as age and gender of the mayor, do not seem to exert any significant impact on inefficiency levels. |
| Keywords: | Local governments, Fiscal autonomy, Political accountability, Spending efficiency, Parametric and nonparametric frontiers |
| JEL: | D72 D78 H71 H72 H77 R51 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpaper:11&r=ure |
| By: | Chauvin, V.; Damette, O. |
| Abstract: | This paper studies the relationship between consumption and wealth based on the concept of cointegration. The analysis focuses on French data over the 1987 - 2006 period. This relationship is expressed in two ways: in terms of Marginal Propensity to Consume out of wealth (MPC) and in terms of Elasticity of consumption to wealth. Three concepts of consumption are investigated: total households consumption expenditure, consumption excluding financial services and consumption excluding durable goods. Different estimators are also considered. Based on the MPC approach, when considered as permanent by households, an increase (decrease) in total wealth of one euro would lead to an increase (decrease) of 1 cent in total consumption. In terms of elasticity, an increase (de- crease) of 10% in wealth would imply also a relatively small impact of 0.8 to 1.1% on consumption depending on the concept of consumption considered. In most cases, the effect of a change in financial wealth is bigger than of a change in housing wealth. The results indicate that the wealth effects are smaller in France than in the UK and US but close to what is observed in Italy. In addition, any deviation of the variables from their common trends is corrected at first by adjustments in disposable income in line with what has been uncovered by studies on Germany and consistent with the "saving for the rainy days" approach of Campbell (1987). But our results contrast with the seminal study of Lettau and Ludvigson (2004) in the US where asset prices make the bulk of the adjustment. |
| Keywords: | consumption, wealth effect, France. |
| JEL: | E21 E32 C22 G12 G20 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:276&r=ure |