to build above the limit implementation of land use regulations in urban china abstract this paper studies the implementation of land use regulations in urban china in particular we investigate land developers compliance with floor to area ratio far regulations using a unique set of residential land parcel data from 30 major chinese cities matched with the corresponding residential development projects built on those parcels in our sample in more than 20 of the cases developers built above the regulatory far limits in the ex post land development and the total floor area built in those cases increased 21 5 over the regulatory limit our analysis finds that attractive land location attributes tend to induce developers to pursue upward adjustments of far moreover developers who are more likely to have special relationships with government officials tend to make larger upward adjustments our estimates suggest that there exists a significant gap between the privately optimal far that maximizes land value and the regulatory far this gap is only modestly reduced by corrupt ties with government officials implying that far regulations have imposed a highly restrictive constraint on china s urban land development even given imperfect compliance

the introduction of price signals into land use planning decision making a proposal although directed to the british system of town and country planning this paper has relevance for many oecd countries including some with systems of land use regulation which evolved entirely independently of the british the paper starts by characterising the basic features of the british land use planning system viewed from the resource allocation point of view of an economist a conclusion is that the system explicitly excludes any use of price signals from its decisions the paper then summarises the problems which the exclusion of price information has given rise to because the uk planning system has deliberately constrained the supply of space and space is an attribute of housing which is income elastic in demand rising incomes not only drive rising real house prices but also mean that land prices have risen considerably faster than house prices several housing attributes other than garden space are to a degree substitutes for land but the underlying cause of the inelastic supply of housing in the uk is the constraint on land supply the final section proposes a mechanism which would make use of the information embodied in the price premiums of neighbouring parcels of land zoned for different uses such premiums signal the relative scarcity of land for different uses at each location and should become a material consideration in planning decision making if they were above some threshold this should provide a presumption of development unless maintaining the land in its current use could be shown to be in the public interest if combined with impact fees such a change would not only make housing supply more elastic and the system more transparent but would help to distance land availability decisions from the political process

new urbanism and housing values a disaggregate assessment in this paper we attempt a formal analysis of the virtues of new urbanism a movement hailed as the most significant movement in urban planning and architecture in this century we proceed using the tools of geographic information systems gis to develop quantitative measures of urban form we then incorporate those measures in a hedonic price analysis we find that our measures of urban form capture meaningful differences in the characters of urban neighborhoods that could well have direct impacts on the utility of urban residents further we find that such differences are capitalized into residential property values the results imply that some but not all of the design features of new urbanism provide benefits for which urban residents are willing to pay

solution of macromodels with hansen sargent robust policies some extensions abstract we summarize some methods useful in formulating and solving hansen sargent robust control problems and suggest extensions to discretion and simple rules matlab octave and gauss software is provided we illustrate these extensions with applications to the term structure of interest rates the time inconsistency of optimal monetary policy the effects of expectations on the variances of inflation and output and on whether central banks should make their forecasts public

a defense of the fomc we defend the forecasting performance of the fomc from the recent criticism of christina and david romer our argument is that the fomc forecasts a worst case scenario that it uses to design decisions that will work well enough are robust despite possible misspecification of its model because these fomc forecasts are not predictions of what the fomc expects to occur under its model it is inappropriate to compare their performance in a horse race against other forecasts our interpretation of the fomc as a robust policymaker can explain all thefindings of the romers and rationalises differences between fomc forecasts and forecasts published in the greenbook by the staff of the federal reserve system

exploring spatial dynamics with land price indexes the purpose of this study is to explore the within region spatial dynamics of appreciation and depreciation rates using three different representations of geographical space mean value indexing methods are used to construct global land price indexes sub market land price indexes and local land price indexes using transaction price data for vacant residential land within the city of hamilton ontario between 1995 and 2003 the results are validated against statistics canada s series of new housing price indexes followed by a comparison of the relative performance of the three geographical representations of land price indexes the results indicate that the mean value indexing methods are robust although subject to outliers and sample selection bias and clearly illustrate the spatial dynamics of annual appreciation and depreciation rates across the study area the results also underscore the need for regular surveillance of the spatial dynamics of urban land markets

doubts or variability reinterpreting most of the market price of risk as a price of model uncertainty eradicates a link between asset prices and measures of the welfare costs of aggregate fluctuations that was proposed by hansen et al 1999 tallarini 2000 and alvarez and jermann 2004 prices of model uncertainty contain information about the benefits of removing model uncertainty not the consumption fluctuations that lucas 1987 2003 studied a max min expected utility theory lets us reinterpret tallarini s riskaversion parameter as measuring a representative consumer s doubts about the model specification we use model detection instead of risk aversion experiments to calibrate that parameter plausible values of detection error probabilities give prices of model uncertainty that approach the hansen and jagannathan 1991 bounds fixed detection error probabilities give rise to virtually identical asset prices as well as virtually identical costs of model uncertainty for tallarini s two models of consumption growth

designing development planning charges settlement patterns cost recovery and public facilities there is a large body of literature that discusses the control of settlement patterns using traditional planning instruments whilst there is some theoretical literature discussing the use of development charges to influence settlement patterns by addressing market failure there is limited literature examining how such charging is implemented in practice this paper presents the theoretical basis for development charging based on the pigouvian tradition and discusses how these charges can be calibrated it identifies the potential for second best approaches including hypothecation of revenues this approach is distinguished from infrastructure charging which is a cost recovery instrument the irish system of infrastructure charging is assessed as a means of exploring how current instrument design could be improved to align with policy aspirations using the lessons that theory provides

estimation of high frequency volatility an autoregressive conditional duration approach we propose a method to estimate the intraday volatility of a stock by integrating the instantaneous conditional return variance per unit time obtained from the autoregressive conditional duration acd model called the acd icv method we compare the daily volatility estimated using the acd icv method against several versions of the realized volatility rv method including the bipower variation rv with subsampling the realized kernel estimate and the duration based rv our monte carlo results show that the acd icv method has lower root mean squared error than the rv methods in almost all cases considered this article has online supplementary material

for a few dollars more reserves and growth in times of crises abstract based on a dataset of 112 emerging economies and developing countries this paper addresses the question whether the accumulation of international reserves has effectively protected countries during the 2008 09 financial crisis more specifically the paper investigates the relation between international reserves and the existence of capital controls we find that the level of reserves matters countries with high reserves relative to short term debt suffered less from the crisis particularly when associated with a less open capital account this suggests some degree of complementarity between reserve accumulation and capital controls

robustness information processing constraints and the current account in small open economies article i nfo in this paper we examine the effects of two types of induced uncertainty model uncertainty due to robust ness rb and state uncertainty due to finite information processing capacity called rational inattention or ri on consumption and the current account we show that the combination of rb and ri improves the model s predictions for i the contemporaneous correlation between the current account and income and ii the volatility and persistence of the current account in small open emerging and developed economies in addition we show that the two informational frictions improve the model s ability to match the impulse response of consumption to income and the relative volatility of consumption to income growth

spatial patterns of development and the british housing market the government wants 3m houses built by 2020 economic theory tells us their locations matter for living standards economics cannot tell us the optimal locations but does show that houses are usually socially more valuable in high land price areas because additional workers are more productive in such places land price data and evidence on urban agglomeration economies point to a significant rise in the optimal sizes of some uk cities and that optimal locations have moved from industrial revolution cities towards the south east as a result significantly expanding london its commuter satellites and other high skill places in the uk but particularly in the south east is likely to generate substantial rises in wages and living standards in these places the planning system dramatically constrains the economy from responding with nineteenth century dynamism when new economic opportunities led some towns to grow dramatically

the welfare economics of land use planning abstract this paper presents an empirical methodology for the evaluation of the benefits and costs of land use planning the technique is applied in the context of the town and country planning system of the uk and examines the gross and net benefits of land use regulation and their distribution across income groups the results show that the welfare and distributional impacts can be large

assessing the relative merits of development charges and transferable development rights in an uncertain world traditionally regulatory instruments have been used to achieve planning objectives however emerging market based policy instruments such as transferable development rights a quantity based app

on estimating market microstructure noise variance abstract we study the market microstructure noise variance estimation of high frequency stock prices based on the hansen and lunde 2006 approach we propose estimates using subsampling method at different time scales we conduct a monte carlo study to compare our method against others in the literature our results show that our proposed estimates have lower absolute mean error and root mean squared error and their performance is quite stable at different time scales

robust animal spirits abstract in a real business cycle model an agent s fear of model misspecification interacts with stochastic volatility to induce time varying worst case scenarios these time varying worst case scenarios capture a notion of animal spirits where the probability distributions used to evaluate decision rules and price assets do not necessarily reflect the fundamental characteristics of the economy households entertain a pessimistic view of the world and their pessimism varies with the overall level of volatility in the economy implying an amplification of the effects of volatility shocks by using perturbation methods and monte carlo techniques we extend the class of models analyzed with robust control methods to include the sort of nonlinear production based dsge models that are popular in academic research and policymaking practice

structural breaks and diversification the impact of the 1997 asian financial crisis on the integration of asia pacific real estate markets abstract currently there exists relatively little research on the influence that the 1997 asian financial crisis has had upon capital flows within the property market and the associated long run implications of it this paper examines the impact that the crisis has had upon the integration and dynamic links between a number of asia pacific real estate markets the results show that asia pacific property markets are integrated despite a structural shift occurring at the time of the crisis these results are a particularly important finding for fund managers concerned with the impact of globalization on the performance of their real estate portfolios showing that in the asia pacific region diversification benefits are actually less than that suggested by an analysis incorrectly ignoring the crisis

assessing market microstructure effects via realized volatility measures with an application to the dow jones industrial average stocks transaction prices of financial assets are contaminated by market microstructure effects this is particularly relevant when estimating volatility using high frequency data in this article we assess statistically the effect of microstructure noise on volatility estimators and test the hypothesis that its variance is independent of the sampling frequency we provide evidence based on the dow jones industrial average stocks we find that noise has a statistically significant effect on volatility estimators at frequencies of 2 3 min or higher the independently and identically distributed specification with constant variance seems to be a plausible model for microstructure noise except for ultra high frequencies

the stochastic city abstract this paper analyzes a simple model of an urban area with growth and uncertainty household income rents and prices for land follow stochastic processes even though investors are risk neutral uncertainty affects both land rents and land prices in equilibrium because the conversion of land from agricultural to urban use is irreversible growth on the other hand affects urban and agricultural land prices but not the level of rents we show that uncertainty i delays the conversion of land from agricultural to urban use ii imparts an option value to agricultural land iii causes land at the boundary to sell for more than its opportunity cost in other uses and iv reduces equilibrium city size

robustness and u s monetary policy experimentation we study how a concern for robustness modifies a policy maker s incentive to experiment a policy maker has a prior over two submodels of inflationunemployment dynamics one submodel implies an exploitable trade off the other does not bayes law gives the policy maker an incentive to experiment the policy maker fears that both submodels and his prior probability distribution over them are misspecified we compute decision rules that are robust to misspecifications of each submodel and of the prior distribution over submodels we compare robust rules to ones that cogley colacito and sargent 2007 computed assuming that the models and the prior distribution are correctly specified we explain how the policy maker s desires to protect against misspecifications of the submodels on the one hand and misspecifications of the prior over them on the other have different effects on the decision rule

regulation and productivity performance the paper reviews theory and evidence on the ways in which regulation affects productivity outcomes in a context of endogenous growth it is argued that traditional measures of compliance costs miss the potentially most important impacts of regulation on productivity which occur through changes in incentives to invest and to innovate recent attempts to measure cross country variations in the strength of product market and employment regulation are considered and some weaknesses are highlighted nevertheless consistent with endogenous growth models there appears to he quite strong evidence that regulations which inhibit entry into product markets have an adverse effect on tfp growth in oecd countries although there are some discrepancies in the evidence on most measures the uk appears lightly regulated relative to france and germany and this may have contributed to a reduction in the recent past in the uk s tfp gap

empty homes longer commutes the unintended consequences of more restrictive local planning abstract we investigate the impact of land use regulation on housing vacancy rates using a 30 year panel dataset on land use regulation for 350 english local authorities las and addressing potential reverse causation and other endogeneity concerns we find that tighter local planning constraints increase local housing vacancy rates a one standard deviation increase in restrictiveness causes the local vacancy rate to increase by 0 9 percentage points 23 the same increase in local restrictiveness also causes a 6 1 rise in commuting distances the results underline the interdependence of local housing and labour markets and the unintended adverse impact of more restrictive planning policies

british planning policy and access to housing some empirical estimates there is evidence that the implementation of the planning system creates scarcity rents for land in different uses by acting as a constraint on land supply this paper provides for 1984 estimat

benefits from u s monetary policy experimentation in the days of samuelson and solow and lucas a policy maker knows two models of ination unemplo yment dynamics one implies an exploitable trade o the other does not the policy maker s prior probability over the two models is part of his state vector bayes law converts the prior probability into a posterior probability at each date and gives the policy maker an incentive to experiment for two models calibrated to u s data through the early 1960s we isolate the component of government policy that is due to experimentation by comparing the outcomes from two bellman equations the rst of which experiments and learns the second of which learns but doesn t experiment we interpret the second as an anticipated utility model and study how well its outcomes approximate those from the experiment and learn bellman equation the approximation is good for our calibrations the benets from purposeful experimentation are small

the fundamentals of land prices and urban growth abstract in a very simple model in which capital is durable and landowners have perfect foresight the price of urban land has four additive components the value of agricultural land rent the cost of conversion the value of accessibility and the value of expected future rent increases a growth premium in rapidly growing cities the growth premium may easily account for half of the average price of land and may create a large gap between the price of land at the boundary minus conversion cost and the value of agricultural land rent

the asian financial crisis and international reserve accumulation a robust control approach abstract standard macroeconomic models have difficulties accounting for the surge in international reserves of asian countries in the aftermath of the asian financial crisis of 1997 we propose precautionary demand for saving generated by model uncertainty as an important driver of this phenomenon using korean data we estimate a simple permanent income model augmented with model uncertainty find a structural break at the point of the asian financial crisis and identify a rise in concern for model misspecification which is distinct from an increase in income volatility the post crisis concern for model misspecification implies a reasonable detection error probability we also show that learning serves as an additional powerful amplification mechanism in our framework

robust permanent income and pricing i suppose there exists an extremely powerful and if i may so speak malignant being whose whole endeavours are directed toward deceiving me rene descartes meditations ii 1

the qualitative economics of development control abstract this paper examines space supply restrictions and containment policies in the context of a monocentric urban model with several classes results are obtained concerning the qualitative effects of such policies on space i e land values and locations of the various groups

on the price of land and the value of amenities a house represents not only a bundle of structural characteristics but also a set of location specific characteristics adding locational coordinates and site area to other house characteristics makes it possible to estimate a land rent surface as well as thle hedonic prices attached to local patterns of land use and other neighbourhood characteristics one can then estimate how the value of such location specific characteristics are capitalized into land prices this analysis illustrated with estimates based on data from two british towns has a number of wider implications it generates a more parsimonious method of estimating amenity values it also reveals likely systematic biases produced by conventional hedonic studies which exclude land and location finally it clarifies the conceptual definition of land and suggests that monocentric models can perform well despite recent criticism