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on Urban and Real Estate Economics |
| By: | Ernest Miguelez (World Intellectual Property Organization, Economics and Statistics Division, Geneva, Switzerland) |
| Abstract: | The goal of this paper is to assess the influence of spatial mobility of knowledge workers on the formation of ties of scientific and industrial collaboration across European regions. Co-location has been traditionally invoked to ease formal collaboration between individuals and firms, since tie formation costs increase with physical distance between partners. In some instances, highly-skilled actors might become mobile and bridge regional networks across separate locations. This paper estimates a fixed effects logit model to ascertain precisely whether there exists a ‘previous co-location premium’ in the formation of networks across European regions. |
| Keywords: | inventors’ mobility, technological collaborations, co-location, European regions, panel data |
| JEL: | C8 J61 O31 O33 R0 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:wip:wpaper:7&r=ure |
| By: | Anundsen, André Kallåk (Dept. of Economics, University of Oslo); Heebøll, Christian (Department of Economics, University of Copenhagen) |
| Abstract: | This paper analyzes the recent boom-bust cycle in the US housing market from a regional perspective. Particular attention is paid to supply side restrictions and financial accelerator effects related to subprime lending. Considering 248 Metropolitan Statistical Areas across the entire US, we estimate a simultaneous boom-bust system for housing prices and supply. The model includes non-linear regional specific supply elasticities, determined by geographical and regulatory supply restrictions. In contrast to the predictions of a supply-demand framework, our results suggest that tighter supply restrictions lead to both a larger housing price boom and bust following a temporary increase in subprime lending. Extending the model to include a financial accelerator, our results indicate that supply restricted areas are significantly more exposed to this mechanism, which explains the greater housing price volatility in these areas over the course of a boom-bust cycle. |
| Keywords: | Regional Boom-Bust Cycles; Housing Supply Restrictions; Subprime Lending; Financial Accelerator |
| JEL: | E32 E44 G21 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2013_004&r=ure |
| By: | Sueli Moro (Cedeplar-UFMG); Reginaldo J. Santos (Cedeplar-UFMG) |
| Abstract: | In this paper we use spatial analysis and spatial econometrics methods to assess some empirical issues on the size distribution of the Brazilian Urban System. The main novelty is the long historical period of analysis which includes all the demographic censuses from 1940. More specifically, we describe the spatial distribution of the Brazilian cities, as well as its temporal evolution; we test test Zipf’s Law in its original and spatial version, and we use Markov Chains analysis in order to shed some light on the dynamics of the cities within the urban system. We introduce spatial dependence in both Zipf’s law estimation and Markov chain framework in order to capture the influence of the geographical environment on the relative position and mobility of the cities within the urban system. Our estimates for the Pareto coefficient were quite different for OLS and spatial models suggesting the inconsistency of OLS estimates in the non-spatial models. For the full sample of municipalities the Pareto coefficient is much smaller than 1, which features a polarized urban structure. Municipalities with urban population above the average show a less concentrated urban structure and seem to confirm Zipf law. Traditional Markov chain analysis indicates a high stability and low mobility inter-class over time confirming that, with rare exceptions, radical changes in urban population size are uncommon. Results for the Spatial Markov matrix show that municipalities with more populous neighbors are more likely to grow. |
| Keywords: | Brazilian Urban System, Zipf's Law, Markov Chains, Spatial Econometrics. |
| JEL: | R11 R12 R15 C21 C23 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td474&r=ure |
| By: | Shaofeng Xu |
| Abstract: | This paper examines the contributions of population aging, mortgage innovation and historically low interest rates to the sharp rise in U.S. house prices and mortgage debt between 1994 and 2005. I construct an overlapping generations general equilibrium housing model and find that these three factors together account for over half of the increase in house prices and most of the increase in mortgage debt during this period. Population aging contributes to rising house prices and mortgage debt, but it accounts for only a small portion of their observed changes. Meanwhile, mortgage innovation significantly increases the mortgage borrowing of various age cohorts, but it has a trivial effect on house prices because interest rates rise due to higher demand for mortgage loans. This increases households’ savings in financial assets and leaves their housing assets nearly unchanged. The observed run-up in house prices can, however, be justified in an open-economy setting where interest rates fall due to a global saving glut. Declining interest rates force households at prime saving ages to reallocate their wealth from financial assets to housing assets, which dramatically drives up house prices. |
| Keywords: | Asset Pricing; Credit and credit aggregates; Economic models |
| JEL: | E21 E44 G11 R21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:13-9&r=ure |
| By: | Wenjie Wu |
| Abstract: | Development of urban transport infrastructures is a key policy focus---particularly in countries like China which have experienced fast urbanisation over the past decade. While existing studies provide marginal values for rail access on the real estate market, little is known about the consequences of local public goods improvements for homeowners' subjective wellbeing using reported happiness data. This paper uses a difference-in-difference method to empirically measure the impact of rail access on homeowners' happiness. My identification strategy takes advantage of micro happiness survey data conducted before-and-after the opening of new rail stations in 2008 Beijing. I deal with the potential concern about the endogeneity in sorting effects by focusing on "stayers" and using non-market (fang gai) housings with pre-determined locations. I find the significantly heterogeneity in the effects from better rail access on homeowners' happiness with respect to different dimensions of residential environment. The welfare estimates suggest that better rail access provided substantial benefits to homeowners' happiness, but these benefits have strong social-spatial differentiations. These findings add to the evidence that transport improvement has an important role to play in influencing local residents' subjective wellbeing. |
| Keywords: | Happiness, transport improvement, Geographical Information System, Wellbeing, China |
| JEL: | D60 H41 R41 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0134&r=ure |
| By: | Antonio Accetturo (Bank of Italy); Valter Di Giacinto (Bank of Italy); Giacinto Micucci (Bank of Italy); Marcello Pagnini (Bank of Italy) |
| Abstract: | Two main hypotheses are usually put forward to explain the productivity advantages of larger cities: agglomeration economies and firm selection. Combes et al. (2012) propose an empirical approach to disentangle these two effects and fail to find any impact of selection on local productivity differences. We theoretically show that selection effects do emerge when asymmetric trade and entry costs and different spatial scale at which agglomeration and selection may work are properly taken into account. The empirical findings confirm that agglomeration effects play a major role. However, they also show a substantial increase in the importance of the selection effect when asymmetric trade costs and a different spatial scale are taken into account. |
| Keywords: | agglomeration economies, firm selection, market size, entry costs, openness to trade |
| JEL: | C52 R12 D24 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_910_13&r=ure |
| By: | Norifumi Yukutake |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd12-291&r=ure |
| By: | Susana Katherine Chacón Espejo (Master in Regional Sciences - Department of Economics, Universidad Católica del Norte - Chile); Dusan Paredes Araya (IDEAR - Department of Economics, Universidad Católica del Norte - Chile) |
| Abstract: | The spatial income inequality in Latin American countries is a recent academic affair. Particularly, the case of Chile highlights around the world because it has one of the highest individual and spatial inequality rates. This article analyzes the spatial income inequality in Chile during 1992 2011 evaluating the role of the spatial labor sorting through multilevel models. The findings show that human capital doesn't allocate randomly across the space but its spatial concentration at the biggest urban centers impacts significantly the income inequality between counties. These findings motivate the discussion about spatial dimension of the inequality and suggest that policymakers should consider ways to spread human capital throughout the nation as an alternative to reduce spatial inequality. |
| Keywords: | Spatial income inequality, spatial labor sorting, human capital, multilevel regression. |
| JEL: | O15 O18 R12 R23 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cat:dtecon:dt201315&r=ure |
| By: | John Tang |
| Abstract: | Railroads in Meiji Japan are credited with facilitating factor mobility as well as access to human and financial capital, but the impact on firms is unclear. Using a newly developed firm-level dataset and a difference-in-differences model that exploits the temporal and spatial variation of railroad expansion, I assess the relationship between railways and firm activity across Japan. Results indicate that railroad expansion corresponded with increased firm activity, particularly in manufacturing, although this effect is mitigated in less populous regions. These findings are consistent with industrial agglomeration in areas with larger markets and earlier development among both new and existing establishments. |
| Keywords: | agglomeration, entrepreneurship, firm genealogy, late development |
| JEL: | L26 N75 O53 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:csg:ajrcwp:1302&r=ure |
| By: | V. Rekers, Josephine (CIRCLE, Lund University) |
| Abstract: | The design and construction of ESS is portrayed as an enormous injection of scientific infrastructure in the (innovation-based) economy of Lund, Skåne and the Øresund region. Innovation processes are however, inherently uncertain, unanticipated and non-linear, where investments do not directly and predictably lead to successful outputs. This chapter presents the theoretical underpinnings of localized knowledge spillovers, and demonstrates that the prospected local benefits associated with ESS are tied to the degree of embeddedness of the facility in regional knowledge networks that facilitate localized learning. This future scenario is challenged by the level of absorptive capacity of university and industry partners in the region, the presence of institutions that support an innovative milieu, and the multiplicity of ambitions set for ESS by the local, multi-national and global bodies. If actors in the regional economy are to take advantage of the opportunity that is associated with the technical design and construction of ESS in Lund, organizational and institutional features of an innovation milieu need to be prioritized. |
| Keywords: | Large research facilities; big science; agglomeration economies; knowledge spillovers; European Spallation Source (ESS) |
| JEL: | O31 R11 |
| Date: | 2012–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2012_009&r=ure |
| By: | Anundsen, André Kallåk (Dept. of Economics, University of Oslo) |
| Abstract: | Using aggregate quarterly data for the period 1975q1–2010q4, I find that the US housing market changed from a stable regime with prices determined by fundamentals, to a highly unstable regime at the beginning of the previous decade. My results indicate that these imbalances could have been detected with the aid of real time econometric modeling. These results are based on the detection of huge parameter non-constancies and a loss of equilibrium correction in two theory derived cointegrating relationships shown to be stable for earlier periods.With reference to Stiglitz’s general conception of a bubble, I use the econometric results to construct two bubble indicators, which clearly demonstrate the transition to an unstable regime in the early 2000s. Such indicators can be part of an early warning system and are shown to Granger cause a set of coincident indicators and financial (in)stability measures. Finally, it is shown that the increased subprime exposure during the 2000s can explain the econometric breakdown, i.e. the housing bubble may be attributed to the increased borrowing to a more risky segment of the market, which may have allowed for a latent frenzy behavior that previously was constrained by the lack of financing. |
| Keywords: | Cointegration; Regime Shifts; US Housing Bubble; Subprime Lending; Bubble Indicator |
| JEL: | C22 C32 C51 C52 G01 R21 |
| Date: | 2013–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2013_005&r=ure |
| By: | Iwata, Shinichiro; Yukutake, Norifumi |
| Abstract: | Children may receive monetary transfers from their parents to realize the dream of homeownership. This raises the question of whether transfers received decrease if governments also provide a homeownership-related subsidy. The purpose of this paper is to empirically examine this question, using a sample of the Japanese home-buying households that are subsidized by a mortgage tax deduction (MTD) as a model case. In the empirical stage, we offer a test of the effect of the MTD on both the extensive (the probability of receiving transfers) and the intensive (the amount of transfers received) margins using the overall sample as well as subsample groups. The empirical results, which use the full sample, appear to indicate that the MTD has a tendency to crowd out transfers on both the extensive and the intensive margins. Subsample analysis demonstrates that the crowding-out effect is strengthened when parents' behavior is influenced by a relatively strong altruistic motive and a relatively weak exchange motive. |
| Keywords: | intergenerational transfer, crowding out, mortgage tax deduction |
| JEL: | D12 R21 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46647&r=ure |
| By: | Ludovica Gambaro; Kitty Stewart; Jane Waldfogel |
| Abstract: | This paper examines how the quality of formal early childhood education and care is associated with children's background. By using different indicators of quality, the research also explored how the relationship varies depending on the way quality is measured. The analysis combines information from three administrative datasets - the Early Years Census, the Schools Census and the Office for Standards in Education, Children's Services and Skills (Ofsted) dataset on inspections (2010-11). The results suggest that children from disadvantaged background have access to better qualified staff. However, services catering for more disadvantaged children are more segregated and receive poorer quality ratings from Ofsted, the national inspectorate. |
| Keywords: | Early childhood, Pre-school, childcare, Quality, Disadvantaged families |
| JEL: | I24 I38 J13 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:/171&r=ure |
| By: | Elizabeth Davidson; Randall Reback; Jonah E. Rockoff; Heather L. Schwartz |
| Abstract: | The No Child Left Behind (NLCB) Act required states to adopt accountability systems measuring student proficiency on state administered exams. Based on student test score performance in 2002, states developed initial proficiency rate targets and future annual benchmarks designed to lead students to 100% proficiency on state exams by 2014. Any year a school fails to meet these targets, either across all students or by various subgroups of students, the school does not make Adequate Yearly Progress. While the federal government’s legislation provided a framework for NCLB implementation, it also gave states flexibility in their interpretation of many NCLB components, and school failure rates ranged from less than 1% to more than 80% across states. In this paper, we explore how states’ NCLB implementation decisions affected their schools’ failure rates. Wide cross-state variation in failure rates resulted from how states’ decisions (e.g., confidence intervals applied to proficiency rates, numerical thresholds for a student subgroup to be held accountable) interacted with each other and with school characteristics like enrollment size, grade span, and ethnic diversity. Subtle differences in policy implementation led to dramatic differences in measured outcomes. |
| JEL: | H7 H75 I21 I28 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18988&r=ure |
| By: | Asheim, Bjørn (CIRCLE and the Department of Human Geography, Lund University; Nordic Institute for Studies in Innovation, Research and Education (NIFU), Norway); M. Bugge, Markus (Nordic Institute for Studies in Innovation, Research and Education, Norway); Coenen, Lars (CIRCLE, Lund University; Nordic Institute for Studies in Innovation, Research and Education (NIFU), Norway); Herstad, Sverre (NIFU, Oslo Norway) |
| Abstract: | The article discusses the strategic roles of public policy and institutions and the way this effect to the efficiency of regional innovation systems in the landscape of evolutionary economic geography. It argues that the current emphasis on path dependency historically contingent preconditions has provided important insights into the interdependencies between industrial knowledge bases and routines, regional system dynamics and long-term development paths. Yet, it falls short of capturing the scope of policy intervention which follows logically from the evolutionary framework itself. Anchored in a renewed regional innovation systems approach, the article presents a policy intervention framework for constructing regional advantage in different contexts. |
| Keywords: | evolutionary economic geography; institutions; regional innovation policy; clusters; regional innovation systems |
| JEL: | B52 O33 O38 |
| Date: | 2013–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2013_005&r=ure |
| By: | Larry Cordell; Liang Geng; Laurie Goodman; Lidan Yang |
| Abstract: | In this study, we make use of a massive database of mortgage defaults to estimate REO liquidation timelines and time-related costs resulting from the recent post-crisis interventions in the mortgage market and the freezing of foreclosures due to “robo-signing” revelations. The cost of delay, estimated by comparing today’s time-related costs to those before the start of the financial crisis, is eight percentage points, with enormous variation among states. While costs are estimated to be four percentage points higher in statutory foreclosure states, they are estimated to be 13 percentage points higher in judicial foreclosure states and 19 percentage points higher in the highest-cost state, New York. We discuss the policy implications of these extraordinary increases in time-related costs, including recent actions by the GSEs to raise their guarantee fees 15-30 basis points in five high-cost judicial states. Combined with evidence that foreclosure delays do not improve outcomes for borrowers and that increased delays can have large negative externalities in neighborhoods, the weight of the evidence is that current foreclosure practices merit the urgent attention of policymakers. |
| Keywords: | Mortgages ; Foreclosure |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:13-15&r=ure |
| By: | Carl Gaigné (INRA Rennes - INRA Rennes - Institut national de la recherche agronomique (INRA) : RENNE); Stéphane Riou (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Jacques-François Thisse (CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique, CREA - Center for Research in Economic Analysis - Université du Luxembourg, CEPR - Center for Economic Policy Research - CEPR) |
| Abstract: | We study how political boundaries and fiscal competition interact with the labor and land markets to determine the economic structure and performance of metropolitan areas. Contrary to general belief, institutional fragmentation need not be welfare-decreasing, and commuting from the suburbs to the central city is not wasteful. Thus, the institutional and economic limits of the central city are not the same. With tax competition, the central business district is too small. The dispersion of jobs is increased when suburbanite workers are allowed to consume the public services supplied by the central city. This indicates the need for some metropolitan governance. |
| Keywords: | metropolitan area; fiscal competition; local labor markets; suburbanization; administrative boundary; economic boundary |
| Date: | 2013–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00816405&r=ure |
| By: | R. Jason Faberman; Matthew Freedman |
| Abstract: | We use longitudinal micro data to estimate the urban density premium for U.S. establishments, controlling for observed establishment characteristics and dynamic establishment behavior. We find that a doubling of urban density increases the average earnings of establishments by between 6 and 10 percent. The result holds after controlling for endogeneity issues and with the use of alternative measures of density. We find strong evidence against accumulated knowledge spillovers over time at the establishment level—that is, the density premium is realized at birth and is constant over the life of establishments. We find little evidence that the endogenous entry or exit of establishments can account for any of the estimated density premium. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2013-01&r=ure |
| By: | Elena Lasarte Navamuel (REGIOlab - University of Oviedo - Oviedo, Spain.); Fernando Rubiera Morollón (REGIOlab - University of Oviedo - Oviedo, Spain.); Dusan Paredes Araya (IDEAR - Department of Economics, Universidad Católica del Norte - Chile) |
| Abstract: | Empirical evidence on consumer behavior is of major importance in the formulation and analysis of economic policies. Changes in prices, income level, or decisions regarding taxes or other structural reforms that effect relative prices may produce very different effects depending on family income distribution or also across space. The aim of this paper is to estimate expenditure and own-price elasticities for ten aggregated food product groups using the Spanish Household Budget Survey for the year 2010. These products are the ones for which the survey provides information regarding prices and quantities, thus allowing the application of the Almost Ideal Demand System model (AIDS). This stimation procedure allows comparisons to be made not only among different levels of income, but also how relevant could be the place of residence characteristics. The results confirm that the size of the city in which the household resides has a similar significant and relevant effect on consumption patterns as family income level. This is especially clear with own-price elasticities. In Spain, large cities show a greater response to price changes tan small cities or rural areas. |
| Keywords: | Almost Ideal Demand Systems (AIDS), food elasticities, Spain and municipality size. |
| JEL: | D12 R12 R22 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cat:dtecon:dt201303&r=ure |
| By: | Giacomo Degli Antoni (University of Parma, Department of Law); Fabio Sabatini (Sapienza University of Rome, Department of Economics and Law) |
| Abstract: | We use a unique dataset to study how participation in two specific types of nonprofit organizations, i.e. social welfare associations and social cooperatives, affects individual social capital. A descriptive analysis shows that both the types of organization have a positive impact. The econometric analysis reveals that social welfare associations play a significantly greater role in the development of volunteers' networks of cooperative relationships, favouring the creation of weak ties which are used to exchange information and advice, and offering the opportunity to establish stronger ties entailing concrete mutual support. Within social cooperatives, workers develop their individual social capital to a greater extent than volunteers. |
| Keywords: | volunteering, nonprofit organizations, cooperative enterprises, social cooperatives, social capital, social networks |
| JEL: | L31 L33 P13 Z1 Z13 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp48&r=ure |
| By: | Dusan Paredes Araya (IDEAR - Department of Economics, Universidad Católica del Norte - Chile); Iván Jamett Sasonov (IDEAR - Department of Economics, Universidad Católica del Norte - Chile) |
| Abstract: | This paper suggests that long distance commuters obtain a wage compensation of 10% on average. With respect to the length of the trip, wages increase 5.7% per commuted hour. Regions with the highest influx of commuters are simultaneously those with higher wage compensations. This research suggests that the labor market alone does not seem to present evidence which foreshadows a reduction in LDC flows Moreover, this paper display how the labor market offers workers higher incentives in order to maintain the flow of long distance commuting. |
| Keywords: | Long Distance Commuting, Coarsened Exact Marching, wage compensation, wage distance gradient. |
| JEL: | J61 R23 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cat:dtecon:dt201302&r=ure |
| By: | Luke Haywood; Martin Koning |
| Abstract: | Preferences for transport activities are often considered only in terms of time and money. Whilst congestion in automobile traffic increases costs by raising trip durations, the same is less obvious in public transport (PT), especially rail-based. This has lead many economic analyses to conclude that there exists a free lunch by reducing the attractiveness of automobile transport at no (or little) cost for PT users. This article argues that congestion in PT - crowding - is also costly. Using survey data from the Paris metro we estimate the degree to which users value comfort in terms of less crowding. Using a contingent valuation method (CVM) we describe marginal willingness to pay over different parts of the distribution of in-vehicle crowding and consider moderating factors. We conclude that the total welfare cost for a trip rises from e2.42 for a seated passenger to e3.69 under the most congested conditions. We apply our results to the cost-benefit analysis of a recent investment in PT in Paris and consider broader implications for transport policy. In particular, we highlight that PT congestion is a first-order urban externality. |
| Keywords: | Evaluation of non-market goods, travel comfort, crowding costs, contingent valuation method, Paris subway |
| JEL: | D6 H8 R4 L9 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1293&r=ure |
| By: | Erkan Goeren (University of Oldenburg - Department of Economics) |
| Abstract: | This paper investigates the empirical relationship between the two concepts of ethnicity and economic growth. Ethnicity is assumed to affect economic growth through a number of possible transmission channels that are generally included in crossâ€country growth regressions by proposing an extended econometric system of equations to describe growth and the channel variables. The system incorporates new channel variables for the potential indirect effects of ethnicity that are important in the process of economic development. The results, based on a sample of 95 countries for the period 1960-1999, suggest that the concept of ethnic fractionalization is a strong predictive measure for the direct effect of ethnicity on growth, whereas the concept of ethnic polarization has nonâ€negligible indirect economic effects through the specified channel variables. |
| Keywords: | ethnic diversity, fractionalization, polarization, transmission channels, economic growth |
| JEL: | O5 O11 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:zen:wpaper:14&r=ure |
| By: | Tatiana Damjanovic (Department of Economics, University of Exeter); Sarunas Girdenas (Department of Economics, University of Exeter) |
| Abstract: | We study optimal policy in a New Keynesian model at zero bound interest rate where households use cash alongside with house equity borrowing to conduct transactions. The amount of borrowing is limited by a collateral constraint. When either the loan to value ratio declines or house prices fall we observe decrease in the money multiplier. We argue that the central bank should respond to the fall in the money multiplier and therefore to the reduction in house prices or in the loan to collateral value ratio. We also find that optimal monetary policy generates large and more persistent fall in the money multiplier in response to drop in the loan to collateral value ratio. |
| Keywords: | optimal monetary policy, money supply, money multiplier, loan to value ratio, collateral constraint, house prices, zero bound interest rate. |
| JEL: | E44 E51 E52 E58 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:exe:wpaper:1303&r=ure |
| By: | Elizabeth Ananat; Anna Gassman-Pines; Christina M. Gibson-Davis |
| Abstract: | We estimate the effects of economic downturns on the birth rates of 15- to 19-year-olds, using county-level business closings and layoffs in North Carolina over 1990-2010 as a plausibly exogenous source of variation in the strength of the local economy. We find little effect of job losses on the white teen birth rate. For black teens, however, job losses to 1% of the working-age population decrease the birth rate by around 2%. Birth declines start five months after the job loss and then last for over a year. Linking the timing of job losses and conceptions suggests that black teen births decline due to increased terminations and perhaps also changes in pre-pregnancy behaviors; national data on risk behaviors also provide evidence that black teens reduce sexual activity and increase contraception use in response to job losses. Job losses seven to nine months after conception do not affect teen birth rates, indicating that teens do not anticipate job losses and lending confidence that job losses are “shocks” that can be viewed as quasi-experimental variation. We also find evidence that relatively advantaged black teens disproportionately abort after job losses, implying that the average child born to a black teen in the wake of job loss is relatively more disadvantaged. |
| JEL: | J13 J65 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19003&r=ure |
| By: | Gerald Carlino; Robert Inman |
| Abstract: | Using a sample of the 48 mainland U.S. states for the period 1973-2009, we study the ability of U.S. states to expand their own state employment through the use of state deficit policies. The analysis allows for the facts that U.S. states are part of a wider monetary and economic union with free factor mobility across all states and that state residents and firms may purchase goods from “neighboring” states. Those purchases may generate economic spillovers across neighbors. Estimates suggest that states can increase their own state employment by increasing their own deficits. There is evidence of spillovers to employment in neighboring states defined by common cyclical patterns among state economies. For large states, aggregate spillovers to its economic neighbors are approximately two-thirds of the large state’s job growth. Because of significant spillovers and possible incentives to free-ride, there is a potential case to actively coordinate (i.e., centralize) the management of stabilization policies. Finally, when these deficits are scheduled for repayment the job effects of a temporary increase in state own deficits persist for at most one to two years and there is evidence of a negative impact of state jobs. |
| Keywords: | Local finance ; Deficit financing |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:13-11&r=ure |
| By: | Daron Acemoglu; Ufuk Akcigit; Nicholas Bloom; William R. Kerr |
| Abstract: | We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A key feature is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using detailed US Census micro data on firm-level output, R&D and patenting. The model provides a good fit to the dynamics of firm entry and exit, output and R&D, and its implied elasticities are in the ballpark of a range of micro estimates. We find industrial policy subsidizing either the R&D or the continued operation of incumbents reduces growth and welfare. For example, a subsidy to incumbent R&D equivalent to 5% of GDP reduces welfare by about 1.5% because it deters entry of new high-type firms. On the contrary, substantial improvements (of the order of 5% improvement in welfare) are possible if the continued operation of incumbents is taxed while at the same time R&D by incumbents and new entrants is subsidized. This is because of a strong selection effect: R&D resources (skilled labor) are inefficiently used by low-type incumbent firms. Subsidies to incumbents encourage the survival and expansion of these firms at the expense of potential high-type entrants. We show that optimal policy encourages the exit of low-type firms and supports R&D by high-type incumbents and entry. |
| JEL: | E02 L1 O31 O32 O33 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18993&r=ure |