community development with endogenous land use controls abstract when competitive landowners developers control incorporation and zoning decisions efficient patterns of development emerge when by contrast early arrivals control policy they may impose zoning restrictions that force later entrants to pay via the property tax a disproportionate share of the cost of providing public services if new arrivals are sufficiently poor they may choose to reside outside the community while higher quality land within the community remains unoccupied this inefficient and exclusionary outcome can be an equilibrium if boundaries once drawn are irreversible the ex ante introduction of a seemingly natural compensation scheme may not remedy the problem

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

the role of amenities in a general equilibrium model of regional migration and growth economists have been steadily refining the theoretical framework developed by sherwin rosen 25 to determine the implicit prices of amenities rosen s model was a partial equilibrium model which focused on the behavior of households as consumers jennifer roback 23 24 substantially expanded rosen s model by explicitly including the behavior of firms in a more general framework which she used to measure the value of amenities blomquist berger and hoehn 3 extended the roback model by incorporating intraregional as well as interregional differences in amenities however their basic theoretical framework is the same as that proposed by roback other works in this literature which have been based on roback s model are primarily empirical in nature for example see beeson and eberts 2 in a recent paper voith 31 modifies roback s model by incorporating local as well as regional amenities and by recognizing that the effect of an amenity on wages and rents may differ depending upon the nature 6f the community i e whether the community is residential commercial or mixed use voith also presents empirical results with mixed success

wealth effects distribution and the theory of organization abstract we construct a general equilibrium model of firm formation in which organization is endogenous firms are coalitions of agents providing effort and investment capital effort is unobservable unless a fixed monitoring cost is paid and borrowing is subject to a costly state verification problem because incentives vary with an agent s wealth different types of agents become attractive firm members under different circumstances when borrowing is not costly firms essentially consist of one type of agent and are organized efficiently but when the costly state verification problem is sufficiently severe firm organization will depend on the distribution of wealth with enough inequality it will tend to be dictated by incentives of rich agents to earn high returns to wealth even if the chosen organizational form is not a technically efficient way to provide incentives journal of economic literatureclassification numbers d2 d31 j41 l2

redevelopment and the urban land price gradient abstract this paper presents the first careful test of an equilibrium model of urban redevelopment in addition it demonstrates a new methodology for recovering vacant urban land prices in areas that have already been developed using data on single family detached homes sold in vancouver b c we estimate the price of vacant land based on properties that were sold and redeveloped the price of developed land is also estimated based on properties that were sold and not redeveloped various tests overwhelmingly support the hypothesis that housing is redeveloped when the price of vacant land exceeds the price of land in its current use this result provides support for various theoretical models of urban spatial growth and indicates that one can recover vacant urban land prices by examining redeveloped properties

why progressive redistribution can hurt the poor recent macroeconomic research discusses credit market imperfections as a key channel through which inequality retards growth with convex technologies progressive transfers increase aggregate output because marginal returns become more equalized across investment opportunities we argue that this reasoning may not hold in general equilibrium since the investment functions are concave in wealth reducing inequality increases capital demand and the interest rate hence through the impact on capital costs shifting wealth from the rich to the middle class depletes the poorest investors access to credit but because the poor face the highest marginal returns the net effect on output may be negative we find however that redistributing towards the bottom end of the distribution has a clear positive impact finally we discuss the implications of our theoretical findings for future empirical research

socialist cities without land markets abstract how does the spatial dynamics of the socialist city compare with that of the market city what happens when all investment decisions are made administratively in the absence of land markets russian development is the longest socialist experiment on record its outcome is of paramount interest to urban economists this paper reports the first analysis of the structure of russian cities after 70 years of soviet development the main finding is a perversely positive population density gradient the soviet city also has a disproportionate share of industrial land often in prime locations free property trading started in russia in 1992 the emerging negative price gradient contrasts totally with the positive population gradient that is the legacy of administrative land allocation these two conflicting gradients highlight the land misallocation and inefficiency of the socialist city

commercial land use regulation and local government finance land use regulation in american cities is pervasive taken together these rules probably represent the most significant market intervention undertaken by state and local governments land use regulation includes a wide variety of rules governing the physical location of economic activities within jurisdictions regulations governing the design height or capital intensity of commercial and industrial property rules regarding the minimum lot sizes for residential parcels the number of bedrooms in new dwellings or other restrictions on residential density and rules delineating developer responsibilities for infrastructure provided in newly subdivided areas by international standards regulations in the united states are adopted by rather small units of government i e by towns rather than regional authorities whose objectives are typically confined to narrowly defined geographical portions of metropolitan areas the small scale at which regulations are promulgated and the existence of substitutable sites within metropolitan areas for residential commercial and industrial activity suggest that recognition of competition across jurisdictions is crucial to understanding the impact of land use rules as they affect the quality of life or the fiscal health of the residents of any jurisdiction many economic models ignore these competitive forces concentrating instead upon the case of the regulatory monopolist in consequence there is considerable theoretical uncertainty about the impact of locally adopted regulations upon the utilities of local citizens or their economic wealth a selective review is provided by j m pogodzinski and tim sass 1989 land use regulations in urban areas are motivated by two conceptually distinct concerns the control of externalities and the pursuit of fiscal objectives these mixed objectives make it more difficult to understand the effects of regulation especially since externality arguments are notoriously difficult to confirm in empirical analyses fiscal arguments on the other hand are more easily tested in this paper we investigate a new but increasingly popular form of land use control limitations on the growth of commercial property in one instance we provide bounds on the fiscal implications of controls on commercial property this in turn bounds the magnitude of the implied efficiency gains when the land use policy is viewed as a rational choice by citizens

bargaining power and enforcement in credit markets abstract in a credit market with enforcement constraints we study the effects of a change in the outside options of a potential defaulter on the terms of the credit contract as well as on borrower payoffs the results crucially depend on the allocation of bargaining power between the borrower and the lender we prove that there is a crucial threshold of relative weights such that if the borrower has power that exceeds this threshold her expected utility must go up whenever her outside options come down but if the borrower has less power than this threshold her expected payoff must come down with her outside options in the former case a deterioration in outside options brought about say by better enforcement must create a lorenz improvement in state contingent consumption in particular borrower consumption rises in all bad states in which loans are taken in the latter case in contrast the borrower s consumption must decline at least for all the bad states these disparate findings within a single model permit us to interpret existing literature on credit markets in a unified way

housing choice hindrances and urban spatial structure evidence from matched location and location preference data in chinese cities abstract in a monocentric city with a well functioning residential market pareto efficient spatial equilibrium entails the sorting of residents according to their bid rent gradient in descending order away from city center violation of this sorting condition creates opportunities for pareto improving trading of locations and can be sustained only if the market is hindered we propose a simple ordered location choice model using matched location and location preference data of individual households to examine violations of the pareto efficient spatial sorting condition in so doing we are able to identify population groups facing housing choice hindrances we find in a sample of chinese cities undergoing housing market liberalization that poor marketability of the previously state provided homes inadequate provision of housing finance and spatial mismatch between job market and housing market opportunities contribute to a pareto inefficient spatial structure

do middle classes bring about institutional reforms abstract we reexamine the association between poverty the middle class and institutional outcomes using a newly developed cross country panel dataset containing detailed information on the distribution of income and expenditure when the size of the middle class increases measured as the proportion of people with income above 10 us dollars a day in purchasing power parity ppp terms social policy on health and education becomes more active and the quality of governance regarding democratic participation and official corruption improves this does not occur at the expense of economic freedom as an expansion of the middle class also implies more market oriented economic policy on trade and finance in these respects the impact of a larger middle class appears to be more robust than those of lower poverty lower inequality or higher gross domestic product gdp per capita

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

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

measuring the price impact of municipal incorporation on homeowner associations this paper investigates the impact of municipal formation and subsequent change in land use restrictions on existing deed restricted subdivisions drss using a unique case in the suburbs of saint louis county the city of wildwood incorporated in 1995 even though a majority of houses were already in a homeowner association data was collected on single family housing sales from 1990 through 2000 and on characteristics of 830 drss using a hedonic model the surrounding 10 municipalities and unincorporated area results show a decline in drs premiums after incorporation however the decline seems to have been concentrated in lots larger than 1 acre

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

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

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

patterns of growth in chinese cities implications of the land lease abstract a special feature of china s housing market is land use rights in the form of land leasehold contracts granted by the government we consider an equilibrium model in which a representative developer may choose to redevelop existing centrally located housing or to develop new housing at the periphery of the city we show that as the city grows the land leasehold system results in the city center being developed less intensely and more land being used on the outskirts of the city when compared to a fee simple environment thus cities in china are likely to be relatively more spread out with city centers relatively older than would be the case with fee simple ownership our model suggests that excess residential land use is about 6 percent in addition compared with the ownership case housing supply will grow more quickly in the near future but more slowly later on during the transition of the chinese economy parallel to the supply growth pattern equilibrium price grows relative slowly in the near future but more quickly later on while we focus on residential uses we believe our model can be applied to other land uses

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

large lot zoning and subdivision costs a test abstract this paper tests two hypotheses 1 that large lot zoning is a binding constraint on the residential land market and 2 that subdivision costs are inversely related to lot size the paper shows that in general the two hypotheses are not mutually exclusive but that they can be distinguished in the case of a test conducted across tracts of unsubdivided vacant land a hedonic price model for vacant land is developed and then estimated using disaggregate data from a new york city suburb

urban spatial development with durable but replaceable capital the theory of urban spatial development until recently has been primarily a static theory of economic equilibrium the models of alonso l mills 6 and muth 7 determine a complete spatial equilibrium between the supply and demand for urban land the study of growth or change in such models therefore has been limited exclusively to comparative statics wheaton 8 it should be clear that the central and in many respects unrealistic assumption of such models is that housing capital is neither physically nor economically durable without durability there is no opportunity cost to old capital no barrier to change and no history to an urban area within such a framework a common set of conclusions emerges regarding urban spatial structure residential density and the price per unit of land decline monotonically from the location of employment a greater population results in higher density at all locations while increases in income or decreases in the cost of travel create a more steeply sloped density and price gradient in the last few years there has been a growing awareness that the equilibrium portrayed by such models does not correctly reflect the process of urban development theoretical papers by anas 2 31 and brueckner 4 and an empirical model by harrison and kain 5 develop an alternative theory of urban spatial development in which the process of growth is explicitly modeled and in which capital is completely durable in their models the spatial development of cities occurs incrementally over time in successive rings from the center of employment outwards the development of each ring is done with myopic foresight and is therefore determined exclusively by market conditions at the time of development once built

bank capital regulation in a barrier option framework abstract the barrier options theory of corporate security valuation is applied to the contingent claims of a regulated bank the regulator insurer of a bank owns a down and in call option on the bank assets which can be balanced against the expected coverage cost raising the regulatory barrier critical asset level triggering bank closure leads to a transfer of wealth from stockholders to the insurer and reduces stockholder incentives to increase asset risk empirical tests on a sample of 152 one bank holding companies show that regulatory barriers are priced in the stock market and are inversely related to tier 1 leverage ratios

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

politics institutions and local land use regulation summary this article investigates the factors that account for second generation land use restrictions that result from comprehensive planning processes after a review of the evolution of growth management policy in the us variation among florida counties in the adoption of development impact fees and regulatory complexity is examined political system institutions were found to be related to growth management policies as predicted by distributive theories of urban politics in particular elected mayor commission government was linked to growth management these results indicate that second generation land use regulation may be driven as much by the political incentives of local actors as the preferences of the median voter

testing for strategic interaction among local governments the case of growth controls this paper helps to fill a gap in the public economics literature by providing empirical evidence on strategic interaction among local governments using the methodology of case et al journal of public economics 52 285 307 1993 the paper focuses on the adoption of growth control measures by cities in california and looks for evidence of policy interdependence in these choices the data are drawn from an elaborate survey of growth control practices in california cities conducted by glickfeld and levine regional growth local reaction lincoln institute of land policy cambridge ma 1992 the survey results are used to compute an index of the stringency of growth controls in each city which serves as the dependent variable for the study

the economic costs and transport benefits of seoul s industrial land use controls this study focuses on both the favourable and adverse consequences of seoul s industrial development controls namely the transport benefits and the economic costs the study develops a method to estimate the effects of the controls by combining three different models a 2sls regression model a random utility based location choice model and a transport model the most important findings are the aggregate annual economic costs and transport benefits of the controls a 45 9 billion output and 336 000 job losses versus 4 8 billion in transport cost savings these empirical findings indicate that the citizens of the seoul metropolitan region would be better off economically with more job opportunities in the absence of the industrial development controls and would pay relatively minor transport costs for these benefits

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 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

elements of an economic justification for municipal zoning abstract the possibility that externalities will produce a nonconvexity in the social production set limits the application of both the coase and pigou solutions for achieving an optimal allocation of land resources conditions on relative land prices are derived which indicate that external effects are strong enough to introduce a nonconvexity into the production set these conditions were not fulfilled in a sample of single family and multifamily dwellings in foster city california this does not preclude the possibility that they are fulfilled in cases of more severe external effects

the economic theory of zoning a critical review municipal zoning regulations are the most important way in which local governments affect housing markets numerous studies have been undertaken to analyze the impact of zoning on housing and land prices on population density and on welfare however despite the volume of previous research there is little agreement on the effects of zoning or how to properly analyze those effects several papers have reviewed the empirical literature on zoning this review focuses on the theory of zoning specifically on how zoning is modeled especially whether zoning is embedded in an urban model and the implications derived from these models for the impact of zoning on welfare and housing prices we divide the effects of zoning on economic agents into six broad categories supply side effects demand side effects tiebout effects externality effects endogenous zoning and rent seeking behavior supply side effects concern how zoning affects the suppliers of housing services and the land market demand side effects concern how zoning affects consumers choice of the optimal consumption bundle especially the choice of housing characteristics tiebout effects result from consumer mo

land use regulation and the intensive margin of housing supply abstract this paper proposes a method for estimating the extent to which density regulation causes the actual housing supply per land unit to deviate from the unconstrained amount i e the impact of density regulation on the intensive margin of housing supply to overcome the challenges that both the housing supply per land unit which is a combination of quantity and quality measures and its unconstrained amount are unobserved to the researchers we extend the framework of epple gordon and sieg 2010 by explicitly allowing substitution between the quantity and quality inputs in the housing production function and by imposing a regulatory upper limit on the use of the quantity input we show theoretically that the land share of the housing value can be used as a proxy for the stringency of the density regulation we apply this method in our investigation of the stringency of floor to area ratio far regulation in urban china at the land parcel level and find that the regulation imposes a significant binding constraint on the housing supply per land unit we then explore the spatial and temporal variations of far regulation stringency we also find that the far regulation stringency intensified the housing price appreciation that occurred during the economic stimulus period after 2008

information the dual economy and development we examine the interactions between different institutional arrangements in a general equilibrium model of a modernizing economy there is a modern sector where productivity is high but information asymmetries are large and a traditional sector where productivity is low but information asymmetries are small consequently agency costs in the modern sector make consumption lending difficult while such lending is readily done in the traditional sector the resulting trade off between credit availability and productivity implies that not everyone will move to the modern sector in fact the laissez faire level of modernization may fail to maximize net social surplus this situation may also hold in the long run in a dynamic version of the model a trickle down effect links the process of modernization with reduction in modern sector agency costs this effect may be too weak and the economy may get stuck in a trap and never fully modernize the two sector structure also yields a natural theoretical testing ground for the kuznets inverted u hypothesis we show that even within the sectoral shifting class of models this phenomenon is not robust to small changes in model specification

modeling of cpdos identifying optimal and implied leverage abstract when the subprime crisis started to emerge collateralized products based on credit default swap cds exposures combined with security features seemed to be a more rational alternative to classic asset backed securities constant proportion collateralized debt obligations cpdos are a mixture of collateralized debt obligations cdos and cppis with inverse mechanism this new asset aims at meeting the investors demand for credit derivatives with security enhancements but to our knowledge quantitative approaches for pricing other than simulation algorithms do not exist yet cpdos became famous notably by standard poor s rating model error which illustrated that closed form analytical pricing is necessary in order to evaluate and understand complex derivatives this article aims to shed a light on cpdos specific structural enhancements and mechanisms we quantify inherent risks and provide a dynamic closed form pricing formula

a theory of trickle down growth and development this paper develops a model of growth and income inequalities in the presence of imperfect capital markets and it analyses the trickle down effect of capital accumulation moral hazard with limited wealth constraints on the part of the borrowers is the source of both capital market imperfections and the emergence of persistent income inequalities three main conclusions are obtained from this model first when the rate of capital accumulation is sufficiently high the economy converges to a unique invariant wealth distribution second even though the trickle down mechanism can lead to a unique steady state distribution under laissez faire there is room for government intervention in particular redistribution of wealth from rich lenders to poor and middle class borrowers improves the production efficiency of the economy both because it brings about greater equality of opportunity and also because it accelerates the trickle down process third the process of capital accumulation initially has the effect of widening inequalities but in later stages it reduces them in other words this model can generate a kuznets curve

the dynamics of the wealth distribution and the interest rate with credit rationing are uniquely determined and wealth dispersion among individuals or firms is irrelevant introducing credit rationing into the solow model modifies these conclusions multiple stationary interest rates and wealth distributions can exist because higher initial rates can be self reinforcing through higher credit rationing and lower capital accumulation the wealth accumulation process is ergodic in every steady state but wealth mobility is lower with higher steady state interest rates aggregate output is higher in steady states with lower interest rates because credit is better allocated short run interest rate or distribution shocks can be self sustaining and can have long run effects on output through the induced dynamics of the wealth distribution and credit rationing

measuring the stringency of land use regulation the case of china s building height limits this paper develops a new approach for measuring the stringency of a major form of land use regulation building height restrictions and applies it to an extraordinary data set of land lease transactions from china our theory shows that the elasticity of land price with respect to the floor area ratio far a building height indicator is a measure of the regulation s stringency the extent to which far is kept below the free market level using a national sample estimation allowing this elasticity to be city specific shows variation in the stringency of far regulation across chinese cities single city estimation for beijing shows that stringency varies with site characteristics

split bond ratings and rating migration abstract this paper examines the relationships between split ratings and ratings migration we find that bonds with split ratings are more likely to have future rating changes a one notch more than one notch split rating increases the probability of rating change within one year of initial issuance by about 3 6 furthermore we find that about 30 of split rated bonds have their two ratings converge after four years of initial issuance the rating convergence tapers off after three years and the rating agency with a higher lower initial rating generally maintains a higher lower rating in subsequent years if the two ratings do not converge we also show that rating transition estimation can be improved by taking into consideration split ratings we find that one year rating transition matrices are significantly different between non letter split rated bonds and letter split rated bonds and we show that the difference has an economically significant impact on the pricing of credit spread options and var based risk management models overall our results suggest that split ratings contain important information about subsequent rating changes

the evolution of the housing market and its socioeconomic impacts in the post reform people s republic of china a survey of the literature the development of the housing market in the people s republic of china is not only a major component of chinese economic growth but also has wide ranging influential impacts on chinese society a burgeoning number of papers have examined the housing market in the postreform people s republic of china from various perspectives this paper aims to provide a thorough survey of the key literature in the field and then supply a complete picture of the dynamics of the housing market in the people s republic of china to assess the functional efficiency of this nascent market we pay particular attention to the literature that is related to the academic debate over the chinese housing bubble issue the structure and operation of the housing market is another major concern in this paper finally we summarize the key insights of the literature that we surveyed note research gaps in the literature and discuss further research directions in this field

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