estimating a price surface for vacant land in an urban area tthis paper examines urban land prices within a non parametric framework with specific interest in the land price gradient with respect to distance from the city center the land price surface is estimated over a 900 square mile portion of the chicago metropolitan area and is based on transaction level data of vacant land parcels the price surface is estimated using piecewise parabolic multiple regression proposed by colwell 1998 given the flexibility of this approach a rather complex price surface is revealed the estimated price surface provides some support for the standard urban economic doctrine of falling land prices with distance

does tax increment financing raise urban industrial property values the paper examines the impact of tax increment financing tif on the value of industrial properties in chicago because tif designation may be self selected a two stage procedure is used to estimate the influence of tif the authors find that the value of industrial parcels located in mixed use tif districts i e those that also contain commercial or residential properties is higher than that of similar parcels that are not located in a tif district however the value of industrial parcels that are located in homogeneous industrial use tif districts is no higher and in some specifications is lower than that of similar parcels not located in a tif district these divergent results may be best explained by industrial parcel owners desire to convert their properties to non industrial uses

real sectoral spillovers a dynamic factor analysis of the great recession abstract dynamic factor methods are used to identify the impact of common and idiosyncratic shocks on sixteen u s nonfarm business sectors this paper then studies changes in the transmission of these shocks across sectors during the great recession and evaluates the cross sectoral spillovers the great recession is found to be largely a time of heightened impact of common shocks which accounts for 3 4 of aggregate volatility and large spillovers of negative finance related shocks in addition prior to the recession aggregate fluctuations are mainly driven by sector specific shocks in contrast with findings from previous studies

internalizing neighborhood externalities the effect of subdivision size and zoning on residential lot prices abstract though land development regulations potentially control neighborhood externalities the developer of a residential subdivision contributes to that control by developing a larger parcel of land this paper reports estimates of the effect of parcel size on the sale price of developed building lots the results indicate that adding an acre to the median development increases lot prices by about 3 amenities appear to be income normal and the return to parcel size is greater in unincorporated areas perhaps due to less intensive governmental control over externalities

measuring interactions among urbanization land use regulations and public finance this article presents a polychotomous choice selectivity model to estimate the interactions among urbanization land use regulations and public finance in five western states california idaho nevada oregon and washington land use regulations in these five states reduced the total developed area by an estimated 12 2 from 1982 to 1992 but increased housing prices between 1 3 and 4 7 depending on the intensity of land use regulations in a county land use regulations also reduced public expenditure and property tax in the long run by 5 6 and 8 4 respectively but increased public expenditure and property tax in the short run by 9 8 and 12 6 local land use policies have been examined in a number of studies e g epple romer and filmore henderson levine mcdonald and mcmillen phillips and goodstein however little empirical evidence is available on which factors motivate adoption of land use regulations nor has there been much systematic analysis of the impact of land use regulations on land development and public finance in this article we present an empirical model to evaluate quantitatively the interactions among urbanization land use regulations and public finance in five western states of the united states oregon california idaho nevada and washington we provide estimates of both the extent to which the rate of development affects the demand for more restrictive land use regulations as well as the subsequent impact of those regulations on land development housing prices public expenditure and property tax because local political processes determine land use regulations treating regulations as exogenous may cause a selection bias when analyzing their effect on development pogodzinski and sass the endogenous nature of zoning regulation was first raised by

china s shallow integration networked production and the new challenges for late industrialization summary chinese enterprises have become extensively linked with the global economy yet in a shallow manner they remain stuck in commodity manufacturing undifferentiated activities for which innovation is absent competition then revolves around cutthroat cost cutting this outcome stems from three factors first it reflects the new challenges to development posed by globally networked production second it reflects tensions between the political economic imperatives of successful post socialist transition and the institutional imperatives for upgrading in networked economies third it reflects uncertainty surrounding the adjustment of traditional industrial policy to the new demands of development through participation in global supply chains

output dynamics in real business cycles models the time series literature reports two stylized facts about output dynamics in the united states gnp growth is positively autocorrelated and gnp appears to have an important trend reverting component this paper investigates whether current real business cycle rbc models are consistent with these stylized facts many rbc models have weak internal propagation mechanisms and must rely on external sources of dynamics to replicate both facts models that incorporate labor adjustment costs are partially successful they endogenously generate positive autocorrelation in output growth but they need implausibly large transitory shocks to match the trend reverting component in output

sectoral shocks and aggregate fluctuations abstract this paper presents a multisector dynamic general equilibrium model of business cycles with a distinctive feature aggregate fluctuations are driven by independent sectoral shocks the model hypothesizes that trade among sectors provides a strong synchronization mechanism for these shocks due to the limited but locally intense interaction that is characteristic of such input trade flows limited interaction characterized by a sparse intermediate input use matrix reduces substitution possibilities among intermediate inputs which strengthens comovement in sectoral value added and leads to a postponement of the law of large numbers in the variance of aggregate value added the chief virtue of this model is that reliance on implausible aggregate shocks is not necessary to capture the qualitative features of macroeconomic fluctuations building on horvath 1998 review of economic dynamics 1 781 808 which establishes the theoretical foundation for the relevance of limited interaction in the context of a stylized multisector model this paper specifies a more general multisector model calibrated to the us 2 digit standard industrial code economy simulations prove the model is able to match empirical reality as closely as standard one sector business cycle models without relying on aggregate shocks

the economic psychology of stock market bubbles in china the chinese stock markets were extremely volatile during the period 2005 08 the shanghai stock exchange sse composite index increased more than sixfold from 1 012 in 2005 to 6 124 by the end of 2007 it then declined continuously to reach a low of 1 929 on 17 september 2008 or a drop of 70 per cent from its peak in less than 10 months although the market downturn may have been affected by the financial crisis in the united states and the rest of the world the extreme fluctuations of stock prices signify a big market bubble and the burst of that bubble must be explained by intrinsic characteristics or the economic psychology of chinese investors based on a detailed market data analysis this paper attributes the development of the stock market bubble to three key psychological factors greed envy and speculation and the burst of the bubble to three contrasting factors fear lack of confidence and disappointment it concludes that only after chinese companies become really commercialised and profitable and investors become rational can the stock markets become stable without extreme volatility as seen in the past government policies can play a role in soothing market volatility detrimental to shareholders and the wider economy but investors should not depend on government for making their own investment decisions journal compilation 2009 blackwell publishing ltd

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

housing development and urbanisation in china rapid urbanisation and rising income have led to a strong demand for housing in urban china however housing development has been distorted by speculation income inequality and lack of government support for low cost houses in recent years house prices become so high making the vast majority of urban residents unable to afford whereas rich families are able to buy many and leave them vacant income inequality is a major cause for rising house prices which in turn exaggerates income inequality further this vicious relationship has caused social tension between the rich and the poor and unhappiness among the middle and low income groups this paper discusses the factors responsible for the housing bubble in china and recommends appropriate policies to resolve this problem

allocative disturbances and specific capital in real business cycle theories chanted albeit in varying degree with business cycle theories that either posit unexplained nominal wage and price rigidities or rely on misperceptions about nominal variables as a key driving force one response to this disenchantment has been a concentration of research effort on real business cycle theories aside from dissatisfaction with competitor theories the very visible oil price shock episodes of the 1970 s lent plausibility to the view that exogenous real disturbances cause large fluctuations in aggregate economic activity this essay on real business cycle theory considers the role of allocative disturbances in aggregate economic fluctuations when human and physical capital are specialized by allocative disturbances i mean events that impinge on the economy by inducing a costly time consuming reallocation of specialized resources at least since the publication of ricardo s principles in 1817 economists have recognized some of the potentially important aggregate consequences of allocative disturbances ricardo writes

factor demand linkages technology shocks and the business cycle abstract this paper argues that factor demand linkages can be important for the transmission of both sectoral and aggregate shocks we show this using a panel of highly disaggregated manufacturing sectors together with sectoral structural vars when sectoral interactions are explicitly accounted for a contemporaneous technology shock to all manufacturing sectors implies a positive response in both output and hours at the aggregate level otherwise there is a negative correlation as in much of the existing literature furthermore we find that technology shocks are important drivers of the business cycle

networks and economic policy over the past two decades economists have made significant advances in understanding how networks affect individual behaviour and shape aggregate outcomes we argue that insights from network economics can play an important role in the design of economic policy focusing on six policy domains we show that network economics not only deepens our understanding of existing policy concerns but also suggests a number of new policy questions in each of these policy areas we evaluate the availability of data and assess the suitability of the network economics toolkit for policy work we conclude with a discussion of challenges to the adoption of network based methods in economic policy along with strategies to overcome them

dwelling attribute forecasts based on land residual maximization this paper uses an implicit market approach to model the highest and best use concept when applied to single family residential development formulated from the landowner s perspective this persistence forecasting model relies on the theory that the marginal product of a site as determined by its locational traits varies with each alternative dwelling type the dwelling attribute bundle that maximizes its site s marginal product as measured by the resultant land residual value becomes that site s best use the empirical results indicate a site s locational attributes can provide reasonable dwelling type forecasts

development path of china and india and the challenges for their sustainable growth the segmentation of global manufacturing and services provided china and subsequently india with a golden opportunity to make full use of their absolute advantage low cost yet educated labour to integrate into the world economy within a comparatively shorter period of time than some earlier industrialisers though international trade functioned as a vent of surplus in view of the narrowness of their domestic markets at the beginning of their economic catch up the label of export led model may not reflect the real picture as imports underwent dramatic increases during their respective growth periods in particular for china foreign direct investment has played a pivotal role in their economic growth and has major presence in international trade and investment in leading sectors of both countries giving rise to certain special features and weak links for their economic expansion and sustainability of fast

asymmetric phase shifts in u s industrial production cycles abstract we identify cyclical turning points for 74 u s manufacturing industries and uncover new empirical regularities a industries tend to comove between expansion and contraction phases over the business cycle b clusters of industry turning points are highly asymmetric between peaks and troughs troughs are much more concentrated and sharper than peaks c the temporal pattern of phase shifts across industries supports the spillovers through input output linkages and d macroeconomic shocks such as unanticipated changes in monetary policy government spending oil prices and financial conditions are significant drivers of industrial phase shifts

production networks and economic policy in this paper we show how to combine data on input output tables and recent insights from the theory of production networks in order to inform policy we first describe the information contained in input output tables compiled by statistical agencies and show how to derive relevant statistics of production networks we then discuss the implications of production networks for policy intervention in a series of domains such as fiscal policy industrial policy or finance finally we present a quantitative exercise applied to french data in order to illustrate that production networks shape the overall impact of competition policy on the economy

sectoral price rigidity and aggregate dynamics abstract this paper studies the business cycle implications of sectoral heterogeneity in price rigidity using a highly disaggregated multi sector model the model is estimated by the simulated method of moments using a mix of aggregate and sectoral u s data the frequencies of price changes implied by our estimates are consistent with those reported in micro based studies we show that heterogeneity in price rigidity is the primary factor explaining the heterogeneity in the responses of sectoral output and inflation to a monetary policy shock we also find that ignoring sectoral heterogeneity in price rigidity leads to the mismeasurement of the relative importance of aggregate and sector specific shocks in aggregate and sectoral fluctuations

on income convergence among china hong kong and macau hong kong and macau were reunited with china in the late 1990s as two special administrative regions sars over the last half century they were china s good examples of economic development windows of openness and investors owing to historical reasons china lagged far behind hong kong and macau in terms of per capita incomes however rapid economic growth in china over the last three decades must have brought about a significant convergence of the three economies china s economic success has benefited from the integration of its two sars and the coastal provinces especially guangdong in terms of technological spillover massive investment and trade the economic trickledown direct investment and trade must have been important drivers of economic integration and income convergence this paper aims to analyse the trend and studies the determinants of income convergence between china and its two sars both parametric and non parametric techniques are employed to quantify the pace of convergence on per capita incomes in hong kong macau and the chinese provinces over a period of more than 40 years we find no evidence of convergence in the pre reform period but strong evidence of both absolute and conditional convergence in the post reform period over the reform period the pace of convergence is less than 1 per cent per annum without controlling for trade and more than 2 per cent conditional on trade

threshold behavior and aggregate fluctuation this paper concerns a propagation mechanism in an economy where many individuals follow a threshold rule and interact with a positive feedback we derive an asymptotic distribution of the propagation size when the number of the agents tends to infinity the propagation distribution exhibits a slower convergence to a deterministic value than it would if the agents followed a smooth adjustment policy this gives rise to significant aggregate fluctuations in a finite lumpy adjusting economy even when the agents are hit by small independent shocks

site density restrictions measurement and empirical analysis abstract restrictions on the density at which development can occur are a central tool of land use regulation yet they are understudied in the empirical literature in this paper we present a methodology to identify how much restrictions on the ratio of building space to lot area constrain developers our approach generates a measure of the distortion from the private optimum caused by restrictions as a function of land prices and the maximum allowed ratio of floor space to lot area we use this methodology to examine how the set of incentives facing different levels of local government in shanghai china affects density constraints on redevelopment sites in the city s emerging real estate market

self organized criticality and economic fluctuations economists have long been interested in explaining the observed instability of economic aggregates though several reasons for variation in the pace of production are easily given such as exogenous variation in tastes or in production possibilities it is hard to see why there should be large variations in those factors that are synchronized across the entire economy instead it seems more likely to suppose that variations in demand or in production costs in different parts of the economy should be largely independent and hence that a law of large numbers would imply that significant variations in aggregate activity relative to the typical size of aggregate activity are not likely to occur an alternative approach proposes that economies possess intrinsically unstable dynamics which even in the absence of external shocks would result in persistent deterministic fluctuations this type of model implies however that aggregate fluctuations should involve motion on a low dimensional attractor while analysis of economic time series has not revealed structure of this kind another alternative proposes that the economy possesses multiple equilibria and that it can therefore switch between equilibria for arbitrary reasons this possibility suffers however from the difficulty that one must explain how people succeed in coordinating their expectations about the times at which a shift should occur here we explore another type of explanation which relies on an entirely different mechanism our proposal is that the effects of many small independent shocks to different sectors of the economy need not cancel out in the aggregate due to the presence of significantly nonlinear strongly localized interactions between different parts of the economy the type of macroscopic instability that can result has been studied by condensed matter physicists under the name of self organized criticality per bak and kan chen 1991 physicists have noted in several contexts the possibility of a critical state in which independent microscopic fluctuations can propagate so as to give rise to instability on a macroscopic scale this is a state in which chain reactions initiated by local disturbances neither damp out over a short distance the subcritical case nor propagate explosively so that the system cannot remain in that state the supercritical case as in the controlled nuclear fission that allows a reactor to generate power without exploding often this has seemed to depend upon parameters being carefully tuned to exactly their critical values in the case of a reactor an elaborate control mechanism is required to keep it near criticality more recently it has been argued that some systems may spontaneously evolve toward a critical state and return to it even if perturbed by an external shock the prototypical example of such selforganized criticality is a sandpile when the slope of the pile is nowhere too steep dropping on additional grains of sand at randomly chosen sites has no macroscopic effects as at most small numbers of grains will shift position in each case however randomly dropping on additional sand will eventually result in the slope of the pile increasing to a critical slope at which point large avalanches can occur in response to the dropping of a single additional grain of sand a sandpile with a slope that is initially greater than the critical slope also evolves toward it in this case through an immediate department of economics university of chicago 1126 east 59th st chicago il 60637 we thank per bak buz brock boyan jovanovic and paul krugman for discussions and the santa fe institute and the nsf for research support 1scheinkman 1990 surveys empirical work on this

the market effects of zoning undeveloped land does zoning follow the market through restricting the uses of land zoning gives local governments the power to modify the dictates of unconstrained land markets many believe however that the regulations tend to coincide with or anticipate the market solution rather than modify it the validity of this assertion is an empirical question and has not yet been adequately addressed the purpose of this paper is to develop and apply an empirical test of the null hypothesis that zoning follows the market the null hypothesis can be rejected only if land uses under zoning differ from what they would be without zoning the first task in deriving the test is to differentiate between constrained and unconstrained land market allocations it is shown that parameter estimates for hedonic price functions when markets are zoned cannot be interpreted to imply that the regulations constrain market prices it is also shown that sample selection bias is a likely source of specification error in estimating hedonic price functions for zoned land markets since the sample selection of parcels to zone designations is unlikely to be random the selection process must be accounted for in ordinary least squares ols estimation of zone constrained hedonic price functions fortunately the correction for the specification error also provides a test for the market effects of zoning a bid price interpretation of hedonic price functions for land is presented in section ii the sample selection bias issues are also discussed in that section and a formal test for the market effects of zoning is introduced

when is sticky information more information this paper uses sectoral data to study survey based balance indices designed to capture changes in the business cycle in real time the empirical framework recognizes that when answering survey questions regarding their firm s output respondents potentially rely on infrequently updated information the analysis then suggests that their answers reflect notable information lags on the order of 71 2 months on average moreover information stickiness implies that noisy output fluctuations will be attenuated in survey answers and consequently helps explain why balance indices successfully track business cycles conversely in an environment populated by fully informed identical firms as in the standard rbc framework for example balance indices instead become degenerate finally information regarding changes in aggregate output tends to be sectorally concentrated the paper therefore illustrates how this feature of the data may be relevant for the construction of balance indices

a study of the impacts of zoning on housing values over time abstract using a virtually unique data base for vancouver canada this study examines the ways in which various zoning classifications and land uses affect the sale prices of single family residences over a 24 year period the overwhelming conclusion is that while there are impacts they are consistent in neither direction nor magnitude the results suggest that the negative externalities that are generally assumed to exist may in fact not exist as a result the use of zoning to control the effects of such presumed externalities may not be justified

china coming to grips with the new global player this paper analyses china s economic performance in the last 25 years and discusses its prospect for growth in the future exports and investment have been the two driving forces for the high annual gdp growth rates fdi plays an important role however structural issues such as the loss making state owned firms and the fragile banking industry have to be solved monetary policy is complicated by the accumulation of reserves which however provide an insurance for the fragile banking system property rights a crucial element in transforming a communist society are far from being clearly developed major policy issues in the future include the correction of the distorted growth process and of the institutional deficits especially with respect to the rule of law and the lack of democracy

the role of financial systems for cross country differences in the link between income and consumption inequality abstractthis article discusses why consumption inequality stays low despite high income inequality in the u s but income inequality is closely followed by consumption inequality in china we show that different financial systems can play a critical role in shaping the cross country different links between income and consumption inequality this phenomenon is consistent with the cross country different relationships between income inequality and saving rates consumer credit expansion in the u s makes inequality much less serious for consumption than for income and this result holds to an even larger extent if more domestic credit can be financed by foreign savings but this is not the case in china whose financial system focuses only on investment and trade while neglecting liquidity constraints on consumption our assertions accord well with evidence found from the u s china and other related economies

analysis of urban land shortages the case of korean cities both natural constraints and government regulations on urban land use can cause urban land shortages and hence higher prices of urban land and housing than otherwise there have been attempts to investigate the differential effects of natural and contrived restrictions on land price for w x example rose 10 found that natural constraints have a significant positive impact on land value while monopoly zoning power makes a smaller contribution in explaining inter city variations in urban land price w x on the other hand pollakowski and wachter 8 analyzed the impact of land use controls measured by an index of restrictiveness of zoning and confirmed that land use regulations raise the prices of housing and developed land to the best knowledge of the authors however none of the published empirical studies including the two cited above actually measure the amount of shortage of urban land at the city level instead land supply variables are employed together with demand variables such as income and population size to determine their impact on land or housing prices this study seeks to fill the gap in the literature first by developing a measure of the urban land shortagersurplus from an analysis of land price

an analysis of the supply of housing characteristics by builders within the rosen framework abstract this paper presents parameter estimates of the builder s supply function for various new single family housing attributes rosen s implicit price model is employed using the now standard two step procedure a suggested econometric procedure that utilizes data from multiple time periods within a single market is implemented to eliminate the simultaneity problem the results indicate that marginal prices decrease with quantity for several dwelling attributes including dwelling size cost differences were also found between builders of different size and product specialization

the identification of urban employment subcenters abstract the purpose of this paper is to propose empirical criteria for the identification of urban employment subcenters it is suggested that gross employment density employment divided by total land area and the employment population ratio are the best measures to identify an urban zone as an employment subcenter these measures are used to identify employment subcenters in the chicago smsa in 1970 and previous studies of housing and land prices in chicago are reviewed

long and plosser meet bewley and lucas abstract we develop an n sector business cycle network model a la long and plosser 1983 featuring heterogenous money demand a la bewley 1980 and lucas 1980 despite incomplete markets and a well defined distribution of real money balances across heterogeneous households the bewley lucas long plosser model remains analytically tractable with closed form solutions relying on the tractability we establish several important results i the economy s input output network linkages become endogenously time varying over the business cycle thanks to the endogenous time varying distribution of money demand and its influence on cross sector allocations of commodities ii despite flexible prices transitory money injections can generate highly persistent effects on sectoral output also thanks to the time varying distribution of money demand and its effect on input output coefficients iii although money injection is distributed equally across households by design the real effects are asymmetric across production sectors e g the impact of money is strongest on downstream sectors that purchase intermediate goods from the rest of the economy but weakest on upstream sectors that supply intermediate goods to the other sectors in sharp contrast to the case of sectoral technology shocks and government spending shocks our model also provides a micro foundation for the labor wedge and shows that movements in the distribution of money demand can explain the cyclical behavior of the labor wedge

aggregation and irrelevance in multi sector models abstract this paper studies the ability of input output relationships to generate fluctuations in aggregate output in several multi sector models including that of long and plosser 1983 in these models the manufacture of each sector s output depends on other sectors for materials these interconnections provide a mechanism for transmission of shocks across sectors and over time we ask how aggregates from these multi sector models behave relative to single sector models we provide conditions under which the second moment properties of aggregates in these models are the same as their single sector counterparts we further demonstrate that a broad class of input output structures generate aggregates with identical second moment properties and that the input output structures in this class provide a poor amplification mechanism for sector shocks

factors affecting commercial land values an empirical study of milwaukee wisconsint this paper uses an implicit market approach to model the highest and best use concept when applied to single family residential development formulated from the landowner s perspective this persistence forecasting model relies on the theory that the

selection bias and land development in the monocentric city model the land development process implied by the monocentric city model is extremely simple the model as set forth by muth 13 and mills 12 contains no error terms and the city lies on a featureless plain land is converted to urban use whenever urban land values rise relative to agricutural land values the assumptions of the model assure that land development in any period takes place in a ring at the edge of the city in this paper we relax the assumption that the city is a featureless plain by introducing error terms to the urban and non urban land value functions this simple addition a necessity for empirical work produces a much richer land development process than is imbedded in the simple muth mills model the error terms in the land value functions which represent the effects of missing variables such as the fertility of the soil influence the selection of land for urban and non urban use this selection process in turn causes a bias in ols estimates of land value functions the form of the selection bias implies three possible land development patterns first if traits that produce high urban land values cause low non urban values relatively low value non urban land is developed first and has above average value in urban use however if unusually productive agricultural land is also highly valued in urban use then the development process depends on the relative magnitudes of the variances of the two land value distributions for example if the variance of the urban distribution is the larger then relatively high value non urban land is developed first and has above average land value in urban use the greater variance in the urban distribution implies that unusually good farmland can earn more in urban use thus the expanded muth mills model incorporates urban expansion at the expense of high quality agriculture and a more benign land market in which only comparatively low quality agricultural land is taken by cities the expanded muth mills model implies the existence of selection bias in land value equations selection bias has only recently been recognized

the cost of quality in existing housing estimates from an implicit markets model abstract rosen s implicit markets approach is used to model and estimate the cost of improving the state of repair of rental housing in existing structures particular attention is devoted to potential errors in the measurement of state of repair and to the inconsistent estimates of supply and demand parameters implied by rosen s original econometric technique cost estimates imply that improvements in low income housing could be provided much less expensively in existing housing than by either public new construction or the section 8 existing housing program

china and india in the age of globalization sectoral variation in postliberalization reregulation in recent years china and india have extensively liberalized their economies they have departed from the east asian developmental states which have restricted foreign direct investment fdi to protect domestic industry and the liberal fdi strategy of latin america during a similar stage of development as they have eschewed dependent development instead they have taken a liberalization two step which follows liberalization with reregulation that varies across industrial sectors country and sectoral case studies demonstrate the perceived strategic value of a sector sectoral characteristics and the organization of state institutions shape the ways in which reregulation varies insulated from political pressures the chinese state shifts from universal controls on the aggregate level to selective controls at the sectoral level and adopts a bifurcated strategy in its reregulation in india the government liberalizes fdi according to state goals but reregulates as a function of sectoral interests

is the state led industrial restructuring effective in transition china evidence from the steel sector during the reform era the chinese government has been carrying out strategic industrial policies modelled on those in post war japan and south korea in the hope of transforming its highly fragmented manufacturing sector into one that comprises a small number of internationally competitive big businesses using the evolution of the chinese steel industry structure from the late 1980s to the early 2000s as a case in point this paper finds that the chinese government s consolidation attempts have by and large not been very successful the disappointing policy outcome is interpreted by a detailed examination of the industry policy mechanism in china it is concluded that the institutional framework of the chinese state differs from its counterparts in korea and japan in some fundamental aspects among these the fragmented and uncoordinated chinese bureaucracy contributes significantly to the inefficacy of policy implementation

micro shocks and aggregate risk the paper presents a micro shock explanation of aggregate risk shocks are independent over agents and equilibria are always unique it is shown that any amount of aggregate risk can be generated by games in which shocks to players are independent explicit examples are given some of which elaborate on examples in the literature implications are drawn for factor analytic methods of extracting aggregate shocks

risk and return abstract this paper examines the seasonality in the basic relationship between expected return and risk during 1935 82 the results reveal that the positive relationship between return and risk is unique to january the risk premiums during the remaining eleven months are not significantly different from zero

targeted carbon tax reforms abstract in the presence of intersectoral linkages sector specific carbon tax changes can have complex general equilibrium effects in particular a carbon tax on the emissions of a sector can lead to an increase in aggregate emissions we analytically characterise how incremental taxes on the emissions of any set of sectors affect aggregate emissions we show that carbon tax reforms that target sectors based on their position in the production network can achieve a greater reduction in aggregate emissions than reforms that target sectors based on their direct emissions alone we illustrate the effects of carbon tax reforms by calibrating our intersectoral network model to the economies of two countries

market volatility and investor behavior it appears that speculative asset prices tend to show excess volatility relative to simple present value efficient markets models and that prices are partly forecastable as tending to returning to mean appropriately defined but what does this tell us about how speculative prices are determined are there fads in prices and if so how do they behave the question has arisen recently whether there is really room for fads in speculative prices whether or not speculative prices are too volatile if stock prices are highly correlated with dividends we might conclude that the movements in stock prices are driven by fundamentals not fads a question of longer standing is whether fads models that entail feedback from price change to price change are consistent with the observed approximate random walk price behavior that is rather low serial correlation of short run price changes we can also ask whether the feedback models are consistent with the observed relation of stock prices to dividends and earnings

multiple regime bid rent function estimation abstract this paper reviews estimators for multiple regime selection models which include the standard urban bid rent model as a special case 4 probabilistic bid rent model imposes a restrictive selection process while existing two stage multiple regime estimators assume an error structure that is inconsistent with bid rent theory monte carlo experiments demonstrate that two stage estimators are accurate and robust to distributional misspecification the practical usefulness of the estimators is illustrated using data on 1920s chicago land values

the determinants of nonresidential urban land values abstract this paper presents the results of an empirical study of nonresidential urban land values in the dallas metropolitan area the data base consists of 467 vacant land transactions from 1978 to 1982 by concentrating on sales prices of vacant land rather than improved property problems normally encountered from use of appraised values or improved properties are eliminated separate models are developed for industrial commercial and office land the study focuses on the tendency toward agglomeration for consumers of each land use as measured by the impact on land values in the central business district suburban nodes and other employment concentrations the results provide insight into a number of influences on urban land value and offer evidence that office land derives greater benefit from agglomeration than does commercial or industrial land

the price effects of monetary shocks in a network economy abstract empirical evidence shows monetary shocks have two temporary effects on the distribution of prices one the dispersion of cross section of prices increases in response to monetary shocks two some prices change in the wrong direction some prices decrease in response to positive monetary shocks and increase in response to negative monetary shocks we present a model that generates the two effects of monetary shocks on the distribution of prices as an out of equilibrium phenomena firms are related to each other through a production network monetary shocks change the working capital of a subset of firms and percolate to other firms through buyer seller linkages price dispersion increases because the percolation of a monetary shock through the production network causes prices to differentially deviate from their steady state values some prices change in the wrong direction because a shift in one firm s demand causes a shift in another firm s supply and vice versa thereby generating complicated chains of bi directional price changes monetary shocks can significantly disturb relative prices even when all prices are fully flexible

global linkages the chinese high tech community and industrial cluster development the semiconductor industry in wuxi jingsu the development of industrial clusters in china has become a subject of international interest but attention has primarily focused on government efforts to attract fdi to promote industrial clusters and regional development the local process which supports the rise and growth of clusters driven by the domestic firms has been relatively ignored in this debate thus this article considers the analytical framework of strategic coupling and uses a case study of the wuxi semiconductor industry to investigate the cluster formation dynamics and effects driven by domestic rather than fdi firms with the mediating role of the transnational chinese technical community the state and domestic firms it concludes that the rise and growth of the semiconductor domestic led cluster in wuxi is not dependent on fdi but instead results from the dynamic interplay of several elements effects of technology spillover from the government funded research institutions as well as mutual competition and co operation in tech

the structure of urban land prices abstract recognition of the existence of nonlinear land prices has an impact on the measurement of the rate at which land price declines with distance from the urban center it is hypothesized that concave parcel prices have given rise to overly large estimates of the rate of price decline with distance because parcel sizes increase with distance and increased parcel sizes would be associated with lower unit prices as a result of the concavity of the land price function this hypothesis is empirically tested using vacant residential commercial and industrial land sales from within cook county illinois an important finding is that allowing for concavity greatly reduces although it does not eliminate measured rates of price decline with distance

a comment on zoning returns to scale and the value of undeveloped land this paper revisits the relationship between land value and parcel size the authors demonstrate that using a simple arbitrage equilibrium argument the value size relationship is convex concave whenever land assembly subdivision is possible they also explore further the impact of zoning on market outcomes copyright 1993 by mit press

monetary non neutrality in a multisector menu cost model empirical evidence suggests that as much as one third of the u s business cycle is due to nominal shocks we calibrate a multisector menu cost model using new evidence on the cross sectional distribution of the frequency and size of price changes in the u s economy we augment the model to incorporate intermediate inputs we show that the introduction of heterogeneity in the frequency of price change triples the degree of monetary non neutrality generated by the model we furthermore show that the introduction of intermediate inputs raises the degree of monetary non neutrality by another factor of three without adversely affecting the model s ability to match the large average size of price changes a single sector model with a frequency of price change equal to the median rather than the mean generates monetary non neutrality similar to that in our multisector model our multisector model with intermediate inputs generates variation in real output in response to calibrated aggregate nominal shocks that can account for roughly 23 of the u s business cycle

on economic theory and recovery of the financial crisis this paper presents a new economic theory to explain the evolution of a financial crisis and why a major crisis may take a long time to recover it suggests that asymmetric psychological reactions of market players to gains and losses are the principal cause of a crisis and responsible for prolonging recovery three different shapes of recovery v u and l are defined and explained during the current financial crisis some countries such as china and india may have a v shaped recovery others such as the uk and the us may have a u shaped recovery an important policy implication is that effective macroeconomic policies should be designed to smooth market movements and implementation of such policies has to be countercyclical rather than pro cyclical

financial networks and contagion we study cascades of failures in a network of interdependent financial organizations how discontinuous changes in asset values e g defaults and shutdowns trigger further failures and how this depends on network structure integration greater dependence on counterparties and diversification more counterparties per organization have different nonmonotonic effects on the extent of cascades diversification connects the network initially permitting cascades to travel but as it increases further organizations are better insured against one another s failures integration also faces trade offs increased dependence on other organizations versus less sensitivity to own investments finally we illustrate the model with data on european debt cross holdings jel d85 f15 f34 f36 f65 g15 g32 g33 g38 globalization brings with it increased financial interdependencies among many kinds of organizations governments central banks investment banks firms etc that hold each other s shares debts and other obligations such interdependencies can lead to cascading defaults and failures which are often avoided through massive bailouts of institutions deemed too big to fail recent examples include the us government s interventions in aig fannie mae freddie mac and general motors and the european commission s interventions in greece and spain although such bailouts circumvent the widespread failures that were more prevalent in the nineteenth and early twentieth centuries they emphasize the need to study the risks created by a network of interdependencies understanding these risks is crucial to designing incentives and regulatory responses which defuse cascades before they are imminent in this paper we develop a general model that produces new insights regarding financial contagions and cascades of failures among organizations linked through a network of financial interdependencies organizations values depend on each other e g through cross holdings of shares debt or other liabilities if an

financial globalisation and emerging markets volatility the volatility of capital flows to emerging market em countries and frequency of financial crises have imposed high welfare costs on the countries involved the empirical literature provides at best a mixed picture on the relationship between long run em country growth and financial integration meanwhile the prevailing policy discourse regarding reform of the international financial system remains incomplete the focus has largely been on either institutional and policy measures required of em countries or international crisis resolution procedures the role played by private financial markets and institutions in the developed world has not received adequate attention this paper describes some of the structural features inherent in today s financial markets that directly contribute to the instability in em capital flows

land use regulations and regional economic development this paper uses a data intensive computable general equilibrium cge model of a medium sized city with integrated commercial and residential land data to analyze changes to local land use regulations via changes in land supply elasticities on economic development measures employment household income housing prices and tax revenue under various types of regional growth that originate from different local sectors the cge framework overcomes difficulties of econometric modeling in this area namely measurement consistency impact isolation and endogeneity issues the results both link the sparse work in this area and provide a systematic analysis including marginal and total impacts

title systems and land values abstract the torrens or registration and the recording title systems apply different principles to resolve conflicting claims to land title this paper develops a theoretical model of how expected title risk and transactions costs affect land value across the two systems and ultimately concludes that the torrens system leads to higher property values ceteris paribus it also suggests that empirical studies of the title system land value nexus need to control for self selection effects in the data we use the simultaneous existence of two alternative title systems in cook county illinois as a natural experiment for comparing land values under each system the estimates indicate that the torrens system increases land value relative to the recording system when controlling for self selection effects

monetary policy vagabonding liquidity and bursting bubbles in new and emerging markets an overinvestment view credit booms have globally fuelled hikes in stock raw material and real estate markets which have culminated in the recent us subprime market crisis we explain the global asset market booms since the mid 1980s based on the overinvestment theories of hayek wicksell and schumpeter we argue that ample liquidity supply originating in the large industrialized countries has contributed to overinvestment cycles in japan east asia new markets in the industrial countries and many emerging market economies expansionary monetary policies in response to the burst of bubbles are argued to have contributed to vagabonding bubbles around the globe

aggregate fluctuations and the industry structure of the us economy abstract in a two sector economy changes in intermediate input trade as reflected in cost share fluctuations are key to determining the amplification properties of investment specific and neutral shocks i document that the cost shares of intermediate inputs produced by the investment sector correlate positively with gdp whereas those of inputs produced by the consumption sector correlate negatively with gdp the two sector model of greenwood et al 1988 is extended to allow for trade of intermediate goods and to show that the documented correlations discipline heterogeneous elasticities of substitution in intermediate inputs across sectors shock amplification that is the effect of a sectorial shock on aggregate value added depends on the degree of heterogeneity in these elasticities of substitution for a calibrated economy to that of the united states i find that shock amplification is stronger than in a unitary elasticity economy it is also stronger than in an economy with a common non unitary elasticity that is either inferred from data via reduced form estimates or calibrated to match the same targets as our benchmark economy

comment on long and plosser meet bewley and lucas abstract feng dong and yi wen introduce money into the long and plosser multi sector real business cycle model money exists as a liquid asset that allows households to respond to idiosyncratic preference shocks despite the resulting heterogeneity in consumption a constant marginal utility of leisure implies that households eliminated differences in their wealth each period i argue that this framework implies excessive consumption volatility at the household level

sectoral versus aggregate shocks a structural factor analysis of industrial production using factor methods we decompose industrial production ip into components arising from aggregate and sector specific shocks an approximate factor model finds that nearly all of ip variability is associated with common factors we then use a multisector growth model to adjust for the effects of input output linkages in the factor analysis thus a structural factor analysis indicates that the great moderation was characterized by a fall in the importance of aggregate shocks while the volatility of sectoral shocks was essentially unchanged consequently the role of idiosyncratic shocks increased considerably after the mid 1980s explaining half of the quarterly variation in ip

on the new economic policies promoted by the 17th ccp congress in china the 17th chinese communist party congress in october 2007 attracted attention within and outside china for the bold development agenda that was placed before delegates after 30 years of economic reform that has produced a remarkable improvement in living standards and china s reintegration into the world economy the party unveiled a programme that would push china to become a world superpower over the next 30 years china s ambition is to become a technologically innovative state to make china a moderately prosperous and harmonious society with a scientific outlook on development and to achieve full industrialisation and sustainable prosperity whether china is able to attain its objectives will critically depend on the party s ability to implement the new economic policies and address the social and political challenges that economic growth has created the aim of the paper is to examine the policies motivations and constraints that china faces in achieving the objectives laid out at the party congress

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

determinants of local public policies for farmland preservation and urban expansion a french illustration we outline the determinants of local public policies for farmland preservation and urban expansion we first rely on the literature and on a purposely designed field study of municipalities in southern france to propose a theoretical framework better suited to the french situation the model considers aspects of land consumption includes two interest groups as well as the median voter and is then econometrically tested we confirm the expected effects of certain sociodemographic determinants and highlight the impact of municipal budgetary considerations and the role of the agricultural sector we also find more counterintuitive determinants like local political regime or unbalanced neighboring relationships

cascading failures in production networks i show how the extensive margin of firm entry and exit can greatly amplify idiosyncratic shocks in an economy with a production network i show that canonical input output models which lack the extensive margin of firm entry and exit have some crucial limitations in these models the systemic importance of a firm does not respond to productivity shocks depends only on the firm s role as a supplier and is equal to or well approximated by the firm s size this means that for every canonical input output model there exists a non interconnected model that has the same aggregate response to productivity shocks i show that when we allow for entry and exit the systemic importance of a firm responds endogenously to productivity shocks depends on a firm s role not just as a supplier but also as a consumer and a firm s systemic influence is no longer well approximated by its size furthermore i show that nondivisibilities in systemically important industries can cause one failure to snowball into a large scale avalanche of failures in this sense shocks can be amplified as they travel through the network whereas in canonical input output models they cannot