gone with the wind valuing the visual impacts of wind turbines through house prices this study provides quantitative evidence on the local benefits and costs of wind farm developments in england and wales focussing on their visual environmental impacts in the tradition of studies in environmental public and urban economics housing sales prices are used to reveal local preferences for views of wind farm developments estimation is based on quasi experimental research designs that compare price changes occurring in places where wind farms become visible with price changes in appropriate comparison groups these groups include places close to wind farms that became visible in the past or where they will become operational in the future and places close to wind farms sites but where the turbines are hidden by the terrain all these comparisons suggest that wind farm visibility reduces local house prices and the implied visual environmental costs are substantial

the optimal mechanism for selling to a budget constrained buyer abstract this paper finds an optimal mechanism for selling a good to a buyer who may be budget constrained we consider a seller with one unit of a good facing a buyer with a quasilinear utility function if the buyer does not face a binding budget constraint textbook monopoly pricing is optimal by contrast the possibility of a binding budget constraint can make it optimal for the seller to use nonlinear pricing to commit to a declining price sequence to require the buyer to disclose his budget or to offer financing journal of economic literature classification numbers c70 d42 d45 d89 l12

no price like home global house prices 1870 2012 how have house prices evolved in the long run this paper presents annual house price indices for 14 advanced economies since 1870 based on extensive data collection we are able to show for the first time that house prices in most industrial economies stayed constant in real terms from the 19th to the mid 20th century but rose sharply in recent decades land prices not construction costs hold the key to understanding the trajectory of house prices in the long run residential land prices have surged in the second half of the 20th century but did not increase meaningfully before we argue that before world war ii dramatic reductions in transport costs expanded the supply of land and suppressed land prices since the mid 20th century comparably large land augmenting reductions in transport costs no longer occurred increased regulations on land use further inhibited the utilization of additional land while rising expenditure shares for housing services increased demand

financial crises unconventional monetary policy exit strategies and agents expectations a central bank may purchase assets during a financial crisis and then exit from those purchases agents have rational expectations about financial crises as rare events the probability the central bank purchases assets and the exit strategy selling off assets quickly produces a double dip recession while slowly unwinding generates a smooth recovery expectations about the exit strategy influence the initial effectiveness of purchases increasing the probability of purchases during crises distorts the pre crisis economy and depends upon the exit strategy the welfare benefits of unconventional policy may differ ex ante versus ex post as can the preferred exit strategy

valuing nuclear energy risk evidence from the impact of the fukushima crisis on u s house prices abstract behavioral economics suggests that individuals overweight recent unexpected and or rare events when updating beliefs this study investigates the effect of such an event the fukushima nuclear crisis in 2011 on the learning process of a local environmental risk by evaluating how perceptions of the risk of a nuclear accident are capitalized into house prices near nuclear power plants npps in the u s our results provide new evidence on the dynamics of the effect spatially the impact was concentrated in a 4 km radius around npps and temporally it peaked a half year later and dissipated one year after the crisis

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

the amenity cost of road noise this article reports a complete two stage hedonic analysis for road noise for the estimation of the hedonic price function i develop a spatial research design which simultaneously reduces the risk of omitted variable bias and the risk of measurement error in the noise measure the preference parameters are identified following the approach developed in bajari and benkard 2005 by using a simple functional form for utility preferences are very heterogeneous and observable demographic characteristics explain 30 percent of the variation in taste for quiet results are used to discuss willingness to pay for noise reductions from two policy measures

selling less information for more garbling with benefits abstract the expected value of information in a standard portfolio investment problem with ex post payment can increase when the information is garbled prior to its sale distorting the information helps to resolve the incentive problem decreasing the buyer s default risk and thereby increasing the seller s expected revenues

what has and has not been learned about monetary policy in a low inflation environment a review of the 2000s as the world economy recovers from the worst financial crisis and most severe global slump in 75 years policymakers regulators and academics are focusing intensely and appropriately on lessons to be learned for monetary policy there are certainly many questions to answer among the most important are are inflation expectations well anchored what if any influence should asset quantities and prices have on monetary policy do we have sufficient confidence in our alternative monetary policy tools to stabilize the economy at the zero lower bound

the impact of supply constraints on house prices in england we test the theoretical prediction that house prices respond more strongly to changes in local earnings in places with tight supply constraints using a unique panel dataset of 353 local planning authorities in england between 1974 and 2008 exploiting exogenous variation from a policy reform vote shares and historical density to identify the endogenous constraints measures we find that regulatory constraints have a substantive positive impact on the house price earnings elasticity the effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas and uneven topography has a quantitatively less meaningful impact

house values incomes and industrial pollution abstract this paper analyzes the effect of polluting manufacturing facilities on the economic characteristics of nearby neighborhoods it tests the hypothesis that communities exposed to high levels of pollution will have lower house prices and poorer residents than cleaner locations the econometric model treats pollution and income as simultaneously determined variables the multiple equation fixed effects model attempts to account for cross section and time varying biases it uses toxics release inventory tri and census data from the 1980s for the six new england states i employ a new measure of the change in exposure to pollution over the 1980s for census tracts the estimates suggest that being a mile closer to a polluting manufacturing plant reduces house values by 1 9 which is smaller than estimates from existing studies however the equivalent single equation estimate suggests misleadingly that pollution has a positive effect on house values

quasi experimental evidence on the effect of aircraft noise on apartment rents inferring the implicit price of an environmental good hinges on ceteris paribus conditions that are often hard to justify this paper uses an unexpected change in flight regulations as source of exogenous variation and identifies aircraft noise effects from price adjustments in the market for rental apartments controlling for spatial and apartment heterogeneity we find that aircraft noise reduces apartment rents by about 0 5 per decibel our results indicate i that noise discounts are overestimated in cross sectional studies because aircraft noise tends to be negatively correlated with omitted neighborhood and housing amenities and ii that noise effects are unlikely to be constant over the entire noise range

does hazardous waste matter evidence from the housing market and the superfund program this paper uses the housing market to develop estimates of the local welfare impacts of superfund sponsored cleanups of hazardous waste sites we show that if consumers value the cleanups then the hedonic model predicts that they will lead to increases in local housing prices and new home construction as well as the migration of individuals that place a high value on environmental quality to the areas near the improved sites we compare housing market outcomes in the areas surrounding the first 400 hazardous waste sites chosen for superfund cleanups to the areas surrounding the 290 sites that narrowly missed qualifying for these cleanups we find that superfund cleanups are associated with economically small and statistically insignificant changes in residential property values property rental rates housing supply total population and types of individuals living near the sites these findings are robust to a series of specification checks including the application of a regression discontinuity design based on knowledge of the selection rule overall the preferred estimates suggest that the local benefits of superfund cleanups are small and appear to be substantially lower than the 43 million mean cost of superfund cleanups

the power of forward guidance revisited in recent years central banks have increasingly turned to forward guidance as a central tool of monetary policy especially as interest rates around the world have hit the zero lower bound standard monetary models imply that far future forward guidance is extremely powerful promises about far future interest rates have huge effects on current economic outcomes and these effects grow with the horizon of the forward guidance we show that the power of forward guidance is highly sensitive to the assumption of complete markets if agents face uninsurable income risk and borrowing constraints a precautionary savings effect tempers their responses to changes in future interest rates as a consequence forward guidance has substantially less power to stimulate the economy in addition we show that the business cycle dynamics of our incomplete markets model differ substantially from its complete market counterpart this contrasts with the well known results of krusell and smith 1998 we present approximate representations that can easily be incorporated into standard business cycle models

occbin a toolkit for solving dynamic models with occasionally binding constraints easily abstract the toolkit adapts a first order perturbation approach and applies it in a piecewise fashion to solve dynamic models with occasionally binding constraints our examples include a real business cycle model with a constraint on the level of investment and a new keynesian model subject to the zero lower bound on nominal interest rates compared with a high quality numerical solution the piecewise linear perturbation method can adequately capture key properties of the models we consider a key advantage of the piecewise linear perturbation method is its applicability to models with a large number of state variables

do capitalization effects for public goods reveal the public s willingness to pay this article develops a welfare theoretic framework for interpreting evidence on the impacts of public programs on housing markets we extend rosen s hedonic model to explain how housing prices capitalize exogenous shocks to public goods and externalities the model predicts that trading between heterogeneous buyers and sellers will drive a wedge between these capitalization effects and welfare changes we test this hypothesis in the context of changes in measures of school quality in five metropolitan areas results from boundary discontinuity designs suggest that capitalization effects understate parents willingness to pay for public school improvements by as much as 75

is energy efficiency capitalized into home prices evidence from three u s cities abstract we test for evidence that energy efficiency features are capitalized into home prices in three u s metropolitan areas using hedonic regressions and multiple matching procedures we find that energy star certification is associated with higher sales prices in two of the markets the research triangle region of north carolina and portland oregon we find that local green certifications in portland and in austin texas are also associated with higher prices and that the estimated price impacts are larger than those from energy star matching on observables proves to be important in some cases reducing the estimated impacts compared with models without matching we calculate the implied energy savings from the estimated premiums and find that in the research triangle market the energy star premiums approximately equal the savings that program is designed to achieve but in portland the premiums are slightly greater than the program s savings due to low energy costs in the region

global effective lower bound and unconventional monetary policy abstract in a standard open economy new keynesian model the effective lower bound causes anomalies output and terms of trade respond to a supply shock in the opposite direction compared to normal times we introduce a tractable framework to accommodate for unconventional monetary policy in our model these anomalies disappear we allow unconventional policy to be partially active and asymmetric between countries empirically we find the us euro area and uk have implemented a considerable amount of unconventional monetary policy the us follows the historical taylor rule whereas the others have done less compared to normal times

the economics of density evidence from the berlin wall this paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks the model remains tractable and amenable to empirical analysis because of stochastic shocks to commuting decisions which yield a gravity equation for commuting flows to structurally estimate agglomeration and dispersion forces we use data on thousands of city blocks in berlin for 1936 1986 and 2006 and exogenous variation from the city s division and reunification we estimate substantial and highly localized production and residential externalities we show that the model with the estimated agglomeration parameters can account both qualitatively and quantitatively for the observed changes in city structure we show how our quantitative framework can be used to undertake counterfactuals for changes in the organization of economic activity within cities in response for example to changes in the transport network

valuing rail access using transport innovations this paper uses a powerful empirical method to evaluate the benefits of rail access to consumers we study the effects on house prices of a transport innovation that altered the distance to the nearest station for some households but left others unaffected the transport innovation we study is the construction of new stations in london in the late 1990s using this innovation we implement a quasi experimental approach that allows us to avoid the biases inherent in cross sectional valuation work our evidence on distance station effects on local prices identified through distance changes induced by the transport innovation suggests that households value rail access and that these valuations are large compared to the valuations of other local amenities

wagner s hypothesis in time series and cross section perspectives evidence from real data for 115 countries internationally comparable data on income and government expenditure for 115 countries covering the period 1950 80 are used to assess the validity of wagner s hypothesis individual country time series data and several intercountry cross sections are studied besides a tremendous diversity in the position for various countries the results indicate that while there is support for the hypothesis in some time series data sets such support is lacking in most cross section estimates much of the support for the hypothesis reported in many earlier studies therefore was probably due to either use of limited samples or inadequate data comparability across the observations studied copyright 1987 by mit press

evaluating central banks tool kit past present and future abstract we develop a structural dsge model to systematically study the principal tools of unconventional monetary policy quantitative easing qe forward guidance and negative interest rate policy nirp as well as the interactions between them to generate the same output response the requisite nirp and forward guidance interventions are twice as large as a conventional policy shock which seems implausible in practice in contrast qe via an endogenous feedback rule can alleviate the constraints on conventional policy posed by the zero lower bound quantitatively qe1 qe3 can account for two thirds of the observed decline in the shadow federal funds rate in spite of its usefulness qe does not come without cost a large balance sheet has consequences for different normalization plans the efficacy of nirp and the effective lower bound on the policy rate

land values in a newly zoned city the introduction of a new zoning ordinance to chicago in 1923 offers a natural experiment that allows us to determine the effects of zoning on relative land value growth rates policymakers claimed at the time that land use zoning would raise aggregate land values by reducing negative externalities associated with mixed land use after controlling for initial land use and the endogeneity of zoning decisions we find that residential zoning led to higher land value growth rates than commercial zoning

the value of school facility investments evidence from a dynamic regression discontinuity design author s cellini stephanie riegg ferreira fernando rothstein jesse abstract despite extensive public infrastructure spending surprisingly little is known about its economic return in this paper we estimate the value of school facility investments using housing markets standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing prices our research design isolates exogenous variation in investments by comparing school districts where referenda on bond issues targeted to fund capital expenditures passed and failed by narrow margins we extend this traditional regression discontinuity approach to identify the dynamic treatment effects of bond authorization on local housing prices student achievement and district composition our results indicate that california school districts underinvest in school facilities passing a referendum causes immediate sizable increases in home prices implying a willingness to pay on the part of marginal homebuyers of 1 50 or more for each 1 of capital spending these effects do not appear to be driven by changes in the income or racial composition of homeowners and the impact on test scores appears to explain only a small portion of the total housing price effect c 2010 by the president and fellows of harvard college and the massachusetts institute of technology

limited liability contracts between principal and agent abstract the optimal strategy of the principal is examined in an environment where there are ex post limitations on the maximum penalty that can be imposed on a riskneutral agent contrary to the case in which such limitations are not imposed it is in the principal s interest to deliberately forego the opportunity to induce socially efficient behavior and to instead design a contract that induces the agent to realize an efficient outcome only in the most productive state of nature and perhaps in certain very unproductive states the properties of the contract are examined in detail

estimates of the impact of crime risk on property values from megan s laws abstract we estimate the willingness to pay for reductions in crime risk using the location and move in dates of sex offenders we find significant effects of sex offenders locations that are geographically localized house prices within 0 1 miles of a sex offender fall by 4 percent on average we then use this finding to estimate the costs to victims of sexual offenses and find costs of over 1 million per victim far greater than previous estimates however we cannot reject the alternative hypotheses that individuals overestimate risks posed by offenders or that living near an offender poses significant costs exclusive of crime risk jel k42 r23 r31

ease vs noise long run changes in the value of transport dis amenities for a complete cost benefit analysis of durable infrastructures it is important to understand how the value of non market goods such as transit time and environmental quality changes as incomes rise in the long run we use difference in differences and spatial differencing to estimate the land price capitalization effects of metro rail in berlin germany today and a century ago over this period the negative implicit hedonic price of rail noise tripled our results imply income elasticities of the value of noise reduction and transport access of 2 2 and 1 4 substantially exceeding cross sectional contingent valuation estimates

should urban transit subsidies be reduced this paper derives empirically tractable formulas for the welfare effects of fare adjustments in passenger peak and off peak rail and bus transit and for optimal pricing of those services the formulas account for congestion pollu tion accident externalities scale economies and agency adjustment of transit service offerings we apply them using parameter values for washington dc los angeles and london the results support the efficiency of the large cur rent fare subsidies even starting with fares at 50 percent of operating costs incremental fare reductions are welfare improving in almost all cases these findings are robust to alternative assumptions and parameters jel l92 r41

homevoters vs leasevoters a spatial analysis of airport effects we use a public referendum on a new aviation concept in berlin germany as a natural experiment to analyze how the interaction of tenure and capitalization effects influences the outcome of direct democracy processes we distinguish between homevoters i e voters who are homeowners and leasevoters i e voters who lease their homes we expect that homevoters would be more likely to support initiatives that positively affect the amenity value of a neighborhood because some of the related benefits of leasevoters are neutralized by adjustments in market rents likewise homevoters would be more likely to oppose initiatives that negatively affect the amenity value of a neighborhood our empirical results are consistent with these expectations implying that public votes on local public goods do not necessarily reflect the spatial distribution of welfare effects in mixed tenure environments