residential vertical rent curves abstract we estimate the equilibrium bid rent function for vertical locations within residential buildings using geocoded rental price data we find that the vertical rent curve is non monotonic with respect to floor level specifically residential bidders pay a 1 5 to 3 5 ground floor premium for the remaining vertical locations the slope of the vertical rent curve is positive with respect to floor level our analysis shows that the ground floor premium is indeed a valuation of access similar to the valuation of access to the central business district cbd in a monocentric setting based on the cities in our sample the ground floor premium is roughly equivalent to moving between 250 450 m closer to the cbd the positive slope of the vertical rent curve with respect to floor level is predominately explained by amenities e g views that compensate residents for the lack of easy access to the street furthermore our analysis provides evidence of an equilibrium relationship between rental prices and proximity to initially high priced areas that is consistent with rental price spillovers more precisely dwellings at higher vertical locations exhibit stronger rental price growth if they are located closer to an initially expensive neighborhood compared to dwellings on lower floor levels

tall buildings and land values height and construction cost elasticities in chicago 1870 2010 cities around the world are experiencing unprecedented vertical growth yet the economics of skyscrapers remain empirically understudied this paper analyzes the determinants of the urban height profile by combining a micro geographic data set on tall buildings with a unique panel of land prices covering 140 years we provide novel estimates of the land price elasticity of height the height elasticity of construction cost and the elasticity of substitution between land and capital for tall build ings in line with improvements in construction technology the land price elasticity of height increased substantially over time rationalizing a trend to ever taller buildings the land price elasticity of height is larger for commercial than for residential buildings suggesting that the typical segregation of land uses within cities is not exclusively shaped by the demand side but also by the supply side

inflation and asset prices in a monetary economy abstract this paper derives solutions for inflation and asset prices in a cash in advance economy with logarithmic preferences although the monetary and real processes are independent the money supply affects real interest rates and stock returns as well as nominal interest rates

agglomeration economies and building height abstract in a series of papers m fujita and h ogawa studied a model where two agents firms and households compete for land in those papers the configuration of the city depends on transport costs supported by household and agglomeration economies between firms in this paper the two agents do not directly occupy land but they compete for housing and the densities of firms and households for each point of the space and the size of the city become endogenous variables

more on the inflation tax and the value of equity a cash in advance macro model is presented in which dividends are distributed at the end of each p eriod but where all other money receipts may be spent immediately on output and labor markets if money grows at a constant rate only th e real price of equity will be inversely related to inflation in the steady state if the money supply is allowed to grow at an increasing rate however agent welfare will decline

against the odds retrenchment in agriculture in france and the united states this article extends recent work on a comparative theory of retrenchment in social policy by asking whether the politics of retrenchment travels well across policy areas with policy feedback remaining a crucial variable for explaining government success or failure the article analyzes policy change in agriculture in the united states and france a natural choice for an extension of retrenchment theory because agricultural policy resembles social policy in some respects but also provides telling points of contrast the article finds that the call for new theories focusing on retrenchment is justified the politics of agricultural retrenchment differs from that of expansion and success at retrenchment varies by program the analysis shows as well that retrenchment has been significant both in the u s and in france and the european union variations in policy feedback help explain why these policy changes occurred moreover the france u s comparison highlights how systemic institutional factors shape the politics of retrenchment finally focusing on agriculture a policy sector in which international developments have a greater direct importance than they do in social policy the article identifies an additional systemic retrenchment strategy constraining domestic programs through international agreements

the impact of ideas on trade policy the origins of u s agricultural and manufacturing policies since the close of world war ii the united states has supported contradictory trade policies in manufacturing the united states has fostered a liberal trade regime spurning government involvement in market transactions in agriculture it has sanctioned policies of import restrictions export subsidies and import fees this variation is rooted in decisions that were made in the 1930s and institutionalized in the 1940s in the wake of the great depression policymakers concluded that state intervention helped agriculture and hurt industry this article argues that the choice of government policy and its appropriateness to the economic problems faced by each sector reflect the accepted knowledge at the time neither liberalization nor subsidization was inevitable both were economically viable options however central decision makers made choices that were often based on inaccurate beliefs about the utility of different policy options

monetary policy and the transaction role of money in the us the declining importance of money in transactions can explain the well known fact that u s interest rate policy was passive in the pre volcker period and active after 1982 we generalise a standard cashless new keynesian model woodford2003 by incorporating an explicit transaction role for money in the pre volcker period we estimate that money did play an important role and determinacy required a passive interest rate policy however after 1982 money no longer played an important role in facilitating transactions correspondingly the conventional view prevails and an active policy ensured equilibrium determinacy

the economic effects of density a synthesis abstract this paper synthesises the state of knowledge on the economic effects of density we consider 347 estimates of density elasticities of a broad range of outcomes ranging from wages innovation rents various amenities the cost of providing public services transport and environment related outcomes to health and wellbeing more than 100 of these estimates have not been previously published and have been provided by authors on request or inferred from published results in auxiliary analyses we contribute original estimates of density elasticities of 16 distinct outcome variables that belong to categories where the evidence base is thin inconsistent or non existent along with a critical discussion of the quality and the quantity of the evidence base we present a set of recommended elasticities applying them to a scenario that roughly corresponds to an average high income city we find that density seems to be a net amenity that is associated with positive external welfare effects densification policies may be welfare enhancing but the distributional effects may be regressive especially if residents are immobile and housing supply is inelastic

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

asset prices liquidity and monetary policy in an exchange economy i formulate a model in which money coexists with equity shares on a risky aggregate endowment agents can use equity as a means of payment so shocks to equity prices translate into aggregate liquidity shocks that disrupt the mechanism of exchange i characterize a family of optimal monetary policies and find that the resulting equity prices are independent of monetary considerations i also study a perturbation of the family of optimal policies that targets a positive constant nominal interest rate and find that in this case the real equity return includes a liquidity return that depends on monetary considerations

money and asset prices in a cash in advance economy an asset pricing model with money introduced via a cash in advance constraint is presented the monetary velocity is variable hence money demand does not obey the trivial quantity equation the effects of disturbances in output and money growth on real balances the price level and interest rates are examined monetary policy has effects on real asset prices the fisher relation and the premium on nominal bonds are discussed the precise role of the timing of information and transactions for properties of price levels and interest rates are clarified

rigging the lobbying process an application of the all pay auction textabstractin a world where a politician can explicitly auction off a prize to the high bidder the standard auction literature can be used to analyse political behavior the justice system however precludes politicians from explicitly selling the prize to the highest bidder thus politicians cannot let it become public knowledge that they are in the business of selling political favors an institution has emerged in political markets to overcome this constraint which are termed as lobbying lobbyists make implicit payments to the politician through campaign contributions if these up front payments were rebated to those failing to receive the prize it would be clear that the politician was selling favors this article has examined an interesting principle arising in all pay auctions this principle states that a politician wishing to maximize political rents may find it in his best interest to exclude certain lobbyists from participating in the lobbying process particularly lobbyists valuing most the political prize

skyscraper height and the business cycle separating myth from reality this article is the first to rigorously test how skyscraper height and output co move because builders can use their buildings for nonrational or nonpecuniary gains it is widely believed that height competition occurs near the business cycle peaks this would suggest that extreme building height is a leading indicator of gdp since the tallest buildings are likely to be completed at or near the peak of a cycle to test these claims first we look at both the announcement and the completion dates for record breaking buildings and find there is very little correlation with the business cycle second cointegration and granger causality tests show that while height and output are cointegrated height does not granger cause output these results are robust for the united states canada china and hong kong

the welfare cost of inflation in a cash in advance economy with costly credit the paper presents a modification of the lucas stokey 1983 cash in advance economy in which the representative consumer decides based on relative prices which goods to buy with cash and which with costly credit an explicit baumol 1952 condition emerges that guides this consumer choice deriving and estimating a closed form welfare cost function in an example economy the paper shows that the welfare cost of inflation depends on the margins of substitution the consumer avoids inflation through costly credit and faces higher welfare costs of inflation than in standard cash in advance economies

time consistency of fiscal and monetary policy the problem of time inconsistency arises from two different sources first as shown by guillermo a calvo 1978 the re is an incentive for each government to engage in an initial unanti cipated inflation second as discussed by robert e lucas and nancy l stokey 1983 there is an incentive for each government to deviat e from the path of taxes announced by the preceding government in th is paper it is shown that these two sources of time inconsistency ca n be removed by a particular method of debt management involving bot h nominal and indexed government bonds of various maturities copyright 1987 by the econometric society

monetary growth innovations in a simple cash in advance asset pricing model abstract this paper contributes to the existing literature in the rational expectations cash in advance asset pricing general equilibrium model in two directions first we show that by allowing a variable velocity of circulation an increase in the conditional variance of the money growth process triggers an increase in the demand for money relative to stocks and bonds with a consequent reduction in stock and bond prices which is the opposite of the current result in the literature with constant unitary velocity second we explicitly show how the sequential markets and specific timing of information fits exactly into the notion of irreversibility in the sense that when faced with uncertainty agents might find optimal to delay decisions in order to wait for the arrival of new information

agricultural policy reform in the european community a three level game analysis since the beginning of the general agreement on tariffs and trade gatt uruguay round the european community ec has twice attempted to reform the common agricultural policy cap resulting in the february 1988 stabilizers reform package and the may 1992 macsharry reform package curiously these two attempts at reform resulted in vastly different outcomes the 1988 reform was incremental in nature and functioned mainly as a stopgap measure the 1992 reform however called for a shift from nontransparent consumer subsidies to transparent taxpayer subsidies this shift represented a fundamental change in the philosophy underlying the cap and laid the groundwork for an agreement in the uruguay round this article examines the conditions under which this important policy shift occurred it employs an interpretative case study method that demonstrates the empirical value of robert putnam s two level game model when it is expanded to consider the simultaneous interaction of negotiations at three levels the domestic level the ec level and the international level the study concludes that the power and heterogeneity of interest groups at various levels of the game matter that the real and perceived costs of no agreement affect the degree of substantive reform and finally that a three level interactive strategy is important in achieving an acceptable agreement at each level of the game

sticky goods prices flexible asset prices monopolistic competition and monetary policy a monetary general equilibrium asset pricing model with sticky goods prices is developed goods prices are set by monopolistically competitive firms that maximize stock market value equilibria with underutilization of resources excess capacity in some states result in contrast to previous monetary asset pricing models the degree of competition affects capacity utilization monetary policy can affect output and resource utilization in addition to real asset prices depending upon the amount of information available to the monetary authority

does money explain asset returns theory and empirical analysis a cash in advance model of a monetary economy is used to derive a money based capm m capm which allows us to implement tests of asset pricing restrictions without consumption data a test as in fama and macbeth of the model suggests that the money betas have some explanatory power for the cross sectional variation of expected returns however the model is rejected using conditional information consistent with our predictions estimates of the curvature parameter are lower than those of the consumption capm c capm and pricing errors of the m capm tend to be smaller than those of the c capm while the relation between asset prices and real macroeconomic variables such as aggregate consumption has been extensively investigated less attention has been devoted to the relation between monetary aggregates and asset prices that arises from models which incorporate a monetary sector it is often argued that one possible reason for the rejection of the consumption oriented capm c capm is the absence of monetary considerations this paper takes a step towards encompassing money into the c capm and proposes a moneybased capm m capm that can be tested without using consumption data this m capm is interesting in the way it captures the time series and crosssectional variation in stock returns and it provides insights in the possible misspecification of existing c capm models the setup is based on the cash in advance model of lucas and stokey 1987 in which some consumption goods are financed with outside money i e cash and some are financed with inside money e g bank deposits the pricing results of this paper differ from those of other monetary models such as those considered by finn hoffman and schlagenauf 1990 or singleton 1985 which focus on the role of outside money in affecting the marginal utility of consumption instead we concentrate on inside money in asset pricing the focus on inside money is appealing because inside money reflects conditions in

money and interest in a cash in advance economy the authors analyze an aggregative general equilibrium model in which the use of money is motivated by a cash in advance constraint applied to purchases of a subset of consumption goods the system is subject to both real and monetary shocks which are economy wide and observed by all they develop methods for verifying the existence of characterizing and explicitly calculating equilibria copyright 1987 by the econometric society

nominal prices and interest rates in general equilibrium endowment shocks the outstanding problem of neoclassical monetary theory has been to determine the effect of changes in the money stock on nominal prices and interest rates the classic result is that in the absence of money illusion contracts fixed in nominal terms and other such impedimenta money is neutral thus a doubling of the money stock results in a doubling of the nominal price level and in no change in nominal interest rates except at most for a temporary liquidity effect while the price level is rising to its new level during the adjustment period the nominal interest rate might temporarily drop this neutrality result has conventionally been proved in a static framework in intertemporal models it is necessary to distinguish between static neutrality and dynamic neutrality if a model displays dynamic neutrality fluctuations in the money stock immediately induce a proportional change in the nominal price level and no change in nominal interest rates or any real variable this property is different from and stronger than static neutrality which in dynamic models states only that if the money stock at all dates is doubled so will be the price level at all dates the effects of exogenous shocks in the monetary growth rate on nominal prices and interest rates are analyzed a representative individual rational expectations framework is adopted and a demand for money is generated by entering money in the utility function the effects of monetary shocks on inflation and interest rates are shown to depend on the autocorrelation of the monetary growth rate for example under serial independence the inflation rate equals the monetary growth rate and the nominal interest rate is nonrandom while under positive negative autocorrelation the nominal interest rate is affected positively negatively by positive growth rate shocks i am grateful to the staff of the federal reserve bank of philadelphia to the finance groups at the university of southem california and virginia polytechnic institute and to c j lacivita dan peled john seater and jon sonstelie for valuable comments on earlier drafts

a game theoretic analysis of skyscrapers abstract skyscrapers are urbanism in the extreme but they have received surprisingly little direct attention in urban economics the standard urban model emphasizes differentials in access across locations which determine land price differentials and building heights this explanation leaves out an important force that appears to have historically influenced skyscraper construction an inherent value placed on being the tallest in this paper we present a game theoretic model of skyscraper development that captures this additional force the model predicts dissipative competition over the prize of being tallest a prediction consistent with the historical record the paper discusses the implications of this result for the nature and efficiency of urban development and for the operation of urban real estate markets

agglomeration economies and productivity a structural estimation approach using commercial rents we gain more insight into the heterogeneity in firms productivity regarding agglomeration economies given a production function that allows for input factor substitution we identify ratios of firm specific production parameters employing a hedonic price approach we use unique microdata of commercial rents and firm characteristics and employ semiparametric estimation techniques the results show that agglomeration economies capitalize in commercial rents nevertheless expenditure on agglomeration is in general limited for example it is on average only 5 3 of expenditure on office floor space it is much higher in some sectors for retail firms it is about 20 of the expenditure on floor space 2013 the london school of economics and political science

an analysis of the war of attrition and the all pay auction we study the war of attrition and the all pay auction when players signals are affiliated and symmetrically distributed we a find sufficient conditions for the existence of symmetric monotonic equilibrium bidding strategies and b examine the performance of these auction forms in terms of the expected revenue accruing to the seller under our conditions the war of attrition raises greater expected revenue than all other known sealed bid auction forms journal of economic literature classification numbers d44 d82 1997 academic press

time consistent monetary policy with endogenous price rigidity abstract i characterize time consistent equilibrium in an economy with price rigidity and an optimizing monetary authority operating under discretion firms have the option to increase their frequency of price change at a cost in response to higher inflation previous studies which assume a constant degree of price rigidity across inflation regimes find two time consistent equilibria one with low inflation the other with high inflation in contrast when price rigidity is endogenous the high inflation equilibrium ceases to exist hence time consistent equilibrium is unique this result depends on two features of the analysis 1 a plausible quantitative specification of the fixed cost of price change and 2 the presence of an arbitrarily small cost of inflation that is independent of price rigidity