the demand for housing in sweden equilibrium choice of tenure and type of dwelling abstract most studies of housing demand and tenure choice only identify two modes of tenure owner occupied one family houses and rental apartments furthermore they are typically based on a cross section across all households in this study we use recent swedish data to overcome these weaknesses we identify owner occupied apartments coop shares as a third mode of tenure and show that this should be treated separately we also use information about the household s own assessment of its probability of moving during the next year we demonstrate that it makes a large difference if likely movers are eliminated from the sample

uncertain neighborhood effects and restrictive covenants abstract this paper provides a theoretical model and empirical analysis of private land use contracts in an urban housing market one contribution of our analysis lies in the explicit treatment of neighborhood externalities as uncertain processes the potential resident views the contractual obligation established by deed restrictions as credible commitment by unknown future neighbors to utilize their own property within the defined bounds thereby reducing the uncertainty or riskiness of future externality effects following this view we present a hedonic valuation model for deed restrictions and neighborhood covenants to tie housing consumption risk theory to the empirical hedonic method we then use a unique land use contracts data set to test the model implications

aggregate demand for electricity in south africa an analysis using the bounds testing approach to cointegration abstract electricity demand in south africa has grown at a very rapid rate over the past decade as part of reform initiatives to enhance long term sustainability of the country s electricity industry south africa s authorities have in recent years sought to develop an electricity pricing framework that is cost reflective and forms the cornerstone of demand management schemes meant to foster changes in consumption behaviour and enhance efficiency in resource use the effects of any pricing policy on aggregate electricity consumption will depend on a useful understanding of the factors that influence electricity demand and the magnitude to which electricity demand responds to changes in such factors in this context this paper applies the bounds testing approach to cointegration within an autoregressive distributed lag framework to examine the aggregate demand for electricity in south africa during the period 1960 2007 the results indicate that in the long run income is the main determinant of electricity demand with electricity prices having an insignificant effect on aggregate electricity demand future pricing policies will need to ensure that electricity prices are cost reflective and enhance efficiency of electricity supply and use

analysis of the changing influences on traditional households ownership patterns abstract sociological and economic forces have begun to alter ownership patterns in ways not yet captured by movements in the aggregate ownership rate while demographic factors such as marital status and family structure remain influential in determining tenure choice their impact has waned particularly among the best educated households and those with rising real incomes labor market conditions as evidenced by increasing returns to skill are more strongly felt than ever before in the housing market the impact on owning of being highly educated now rivals the influence of being married with minor children increasingly delayed ownership is a reality even for traditional family units with 36 to 45 year old heads that have not prospered in the labor market the rising real cost of even relatively inexpensive suburban housing is also beginning to be reflected in a heightened impact for real family income on tenure choice finally race currently is more adversely influential in determining suburban ownership for young middle aged minority families than it was in 1960 particularly if the household head is not well educated we suspect this is due to racially disparate impacts of increasingly rigorous zoning regulations and higher impact fees in the suburbs

intraurban residential mobility the role of transactions costs market imperfections and household disequilibrium abstract this paper presents a model of household residential search and mobility that focuses on microeconomic elements of household behavior and incorporates housing market features the model is cast explicitly in terms of a rigorous model of housing demand allowing the benefits from moving to be measured as the compensating income variation of the potential change in consumption the empirical results indicate that large changes in economic variables such as income and prices produce only small potential gains from moving and that a major factor in the moving decision is the magnitude of search and moving costs

an empirical investigation of alternative approaches to estimating the equilibrium demand for housing two approaches to estimating the desired or equilibrium housing demand parameters have been utilized in recent literature one approach commonly referred to as the conventional model assumes that households continuously consume their temporal equilibrium housing services where a temporal equilibrium is defined with respect to the household s current economic and demographic characteristics based upon this assumption conventional demand studies have employed random samples which include a majority of households that have not recently moved see lee and kong 6 or carliner 2 a problem with this approach is its failure to recognize moving costs households must pay to alter their housing service consumption the existence of moving costs suggests that households may not respond rapidly to changes in their desired consumption of housing but instead remain in their dwelling unit until the cost incurred from consuming the non equilibrium level of services exceeds the cost of relocating if so demand samples employed in conventional studies may include a significant number of disequilibrium observations this causes two problems first there exist measurement errors in independent variables that have changed since the household was last in equilibrium second the true equilibrium effect of an independent variable may be incorrectly estimated due to its correlation with either the occurrence of disequilibrium or the length of the housing adjustment lag the second approach to estimating the equilibrium parameters attempts to minimize these problems by restricting the sample to households that have recently moved see hanushek and quigley 3 or aaron l

life cycle and housing adjustment as explanations of residential mobility the paper develops a typology of reasons for residential mobility and systematises the many survey analyses of reasons for moving the relative importance of life cycle and housing adjustment mecha

an economic analysis of the homeownership decision analysts of the homeownership decision have traditionally asserted that owning makes much greater sense than renting 16 p 359 for families in high tax brackets however empirical studies of homeownership propensities indicate that not all high income families own nor do all low income families rent for example li 8 p 1081 notes that a large number of studies find that a variety of variables such as family size age of the head and race are generally found to be determinants of homeownership even when income or the marginal tax bracket are held constant previous attempts to explain why the marginal tax bracket is not a sufficient statistic for homeownership argue that people differ in their preferences for homeownership either because owning and renting are not perfect substitutes in consumption see for example 13 141 or because of differences in liquidity mobility ability at home repairs and home management and simply peculiar circumstances 4 p 14 this paper develops a general model of the homeownership decision and explores two alternative explanations of why the marginal tax bracket is not a sufficient statistic this is accomplished by incorporating both transaction costs and housing market quality sorting into the model section ii derives a simple parametric statement of the homeownership decision the third section examines the special case which yields a homeownership decision rule which is comparable to existing models an alternative special case is presented in the fourth section which incorporates consumer sorting across quality markets it is demonstrated that the housing market may adjust until

regional variations in us consumer response to price changes in home heating fuels the northeast and the south 1987 regional variations in us consumer response to price changes in home heating fuels the northeast and the south applied economics vol 19 no 9 pp 1261 1268

safe and satisfied external effects of homeownership in rotterdam the article analyses the impact of homeownership on neighbourhood safety and neighbourhood satisfaction using a unique panel dataset for the city of rotterdam the results show that there are significant but economically small effects of homeownership on safety and satisfaction moreover the relation between ownership and satisfaction is significantly moderated by neighbourhood safety the paper examines whether the marginal impact of increases in homeownership on external effects diminish once ownership levels are higher according to the data this seems to be the case the results are robust to alternative specifications the findings provide insights for the evaluation of housing market policies that subsidise or stimulate homeownership

evidence on discrimination in mortgage lending much of the controversy about whether mortgage lenders discriminate against minorities can be explained in terms of the confusion about how to define discrimination based on the legal definition careful studies of loan denial rates such as that done by the federal reserve bank of boston represent an appropriate method for testing for discrimination by lenders based on that study it is quite clear that lenders discriminate the fact that minorities have higher default rates on average than whites is irrelevant to the interpretation of the race coefficient in such models nonetheless more research on and discussion about the relationship between the race of the applicant and delinquencies defaults and losses would be desirable

natural gas price elasticities variations by region and by sector in the usa abstract this article s primary objective is to estimate the own price and cross price elasticities of demand for natural gas in the residential commercial and industrial sectors by doe region in the usa a simultaneous equations model was developed and its reduced form was employed for natural gas consumption demand elasticity estimation in conjuction with the instrumental price variables data from 1967 to 1978 were used in the estimation but the 1973 oil embargo effect was separated with the use of a dummy variable the demand for natural gas was much more price elastic in the long run than in the short run and the industrial sector was more less price sensitive than others however there were significant interregional and intersectoral variations among the elasticities estimated

heterogeneity within communities a stochastic model with tenure choice standard explanations for the income heterogeneity within neighborhoods rely on differences of preferences across households and heterogeneity of the housing stock we propose an alternative and complementary explanation we construct a stochastic equilibrium sorting model where 1 income is the sole dimension of household heterogeneity 2 households form state contingent housing location plans that may involve moves over their lifetimes 3 households choose whether to own or rent depending on the housing expenditure risk associated with each tenure mode and 4 there is a probability that newcomer households move in and compete for homes with native households income mixing within neighborhood arises for two reasons first allowing natives to form state contingent housing location plans breaks the indivisibility of housing consumption implicit in the literature where households choose their location once and for all second natives can insure themselves against rent fluctuations by buying their home prior to the realization of the population shock newcomers cannot as a result poorer natives stay in the more desirable communities and only richer newcomers move in these communities evidence from u s metropolitan areas supports the effects predicted by the model

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

taxation of capital gains on owner occupied homes the paper compares taxation on realization with taxation on accrual in the context of owner occupied housing it considers a model where the utility a household derives from housing relative to other consumption varies over the life cycle as there are sizeable transaction costs housing consumption will not even in the absence of taxes be adjusted continuously but at discrete intervals the focus of the paper is on tax effects on the length of these intervals the following results are shown u taxing true economic appreciation at the same rate as imputed rental income and other capital income will lead to a shortening of the intervals if the capital gains are taxed on accrual an increase in this tax rate holding other rates constant will lead to a shortening of the intervals if the capital gains are taxed only as they are realized an increase in this tax rate holding other rates constant may either lead to a lengthening or a shortening of the holding period shortening is more likely if transaction costs are large whereas lengthening will occur if the rate of price increase is high

neighborhood externality risk and the homeownership status of properties in contrast to corporate and institutional investors single owner occupiers cannot adequately diversify housing investment risk consequently homeownership should be relatively less likely in places with higher housing investment risk using the american housing survey it is documented that neighborhood externality risk a major component of housing investment risk substantially reduces the probability that a housing unit is owner occupied even when controlling for housing type and numerous location and household specific characteristics the effects are quantitatively meaningful and change in change estimates suggest that the effects are causal

moving and housing expenditure transaction costs and disequilibrium abstract this paper specifies and estimates a model of rental housing expenditure that explicitly incorporates moving transaction costs parameter estimates reveal low income elasticities and substantial moving costs which vary considerably among families the model is employed to evaluate the effects of proposed subsidy schemes simulated responses indicate that high moving costs deter many families from adjusting current rental expenditure to higher levels in response to subsidies an additional dollar of unconstrained subsidy payment will on average increase rental expenditures by only 2 7 cents schemes with minimum rent requirements are also quite ineffective and involve substantial deadweight loss comparisons of the model predictions with estimated program effects based on experimental data are also included

speculative currency attacks with endogenously induced commercial bank crises abstract to date all models of exchange rate crises ignore the existence of a commercial banking sector however if deposit money internal drain is used to purchase foreign exchange external drain then an external drain may give rise to a banking crisis the paper illustrates how an internal drain alters the dynamics of a speculative attack when it results in a cash payments restriction by interrupting the external drain such a restriction postpones devaluation and reduces the size of the initial devaluation the us internal and external drains of 1893 are discussed to provide motivation and support for the model

the determinants of smsa homeownership rates abstract aggregate smsa data are used to explain homeownership rates it finds that income house values the size and age distribution of households and the rate of population change in an smsa were significant determinants of the tenure decision on an smsa wide basis in 1970 over 56 of the variance in smsa homeownership rates could be explained by these variables

the impact of transaction costs and the expected length of stay on homeownership abstract economic theory suggests that an increase in the expected length of stay in a dwelling increases the probability of a household choosing to own a house rather than rent this hypothesis is derived from recognition that there are substantial transaction costs associated with homeownership and increased expected time in the home reduces the annualized transaction cost using a military data set we confirm that expected length of stay in a dwelling and the transaction costs of selling are very important to the ownership decision our best estimate of the transaction costs of selling a home are the sum of 3 of house value and 4 of household earnings

rent control and misallocation rent control is still an important type of government regulation of housing markets in many countries and numerous researchers have studied its implications for allocation welfare and investments in housing the present paper aims to improve our understanding of the effect of second generation rent control when it is applied only to one sector of the rental market it is diagrammatically shown that the welfare effects are very different between a universal and a limited application of rent control studying the danish case of second generation rent control lower rents are found in controlled sectors and a minor increase of the rent in the uncontrolled sector using the area of living space in the dwelling as a measure for housing consumption evidence is also produced of both overallocation and underallocation of housing in the rent controlled sectors as envisaged by economic theory

the existence and capitalization of neighborhood externalities a reassessment an anomalous result in the empirical literature on residential property values has been the inability to measure the capitalization of negative neighborhood externalities using disaggregate data this result has persisted with few exceptions across data sets and across definitions of externality and neighborhood this paper argues that the literature may have misspecified the theoretical relationship between residential property values and neighborhood externalities and that this could explain the lack of observed capitalization a new specification is proposed and given a preliminary test the conventional literature on neighborhood externalities can be summarized by the hedonic price equation

determinants of residential space heating expenditures in germany abstract we first examine the determinants of household expenditures on space heating and hot water supply in germany a number of socio economic characteristics of households are included along with building characteristics our analysis covers information on more than 12 000 households in germany for the years 1998 and 2003 the analysis continues by investigating whether different kinds of households are affected differently by increases in energy prices households in owner occupied properties are less affected compared to those in rented accommodation this could be because owners are more likely to have installed energy efficient heating and hot water supply systems and landlords have less of an incentive to improve the conditions of their rented accommodations an energy policy targeting especially the latter group might benefit not only households in rented accommodation but might also increase energy efficiency and reduce greenhouse gas emissions as well

tax subsidies to owner occupied housing an asset market approach inflation reduces the effective cost of homeownership and raises the tax subsidy to owner occupation this paper presents an asset market model of the housing market and estimates how changes in the expected inflation rate affect the real price of houses and the equilibrium size of the housing capital stock simulation results suggest that the accelerating inflation of the 1970s which substantially reduced homeowners user costs could have accounted for as much as a 30 percent increase in real house prices persistent high inflation rates could lead ultimately to a sizable increase in the stock of owner occupied housing

precaution and liquidity in the demand for housing we exploit cross sectional mortgage data to investigate the importance of liquidity constraints and a precautionary motive in the demand for housing households that are not liquidity constrained consume housing services essentially as the life cycle hypothesis suggests but with a significant precautionary component households that are liquidity constrained in terms of not meeting standard loan to value or payments to income constraints are similar to unconstrained households in most respects including the precautionary motive but they respond somewhat less to fluctuations in their lifetime income suggesting some influence of bank induced liquidity constraints we additionally find however that banks enforce liquidity constraints only weakly jel d91 d12 r21 i introduction the benchmark theory in the economics of consumption is the life cycle or permanent income hypothesis lcpi based on the work of modigliani and brumberg 1954 and friedman 1957 its empirical validity is sometimes questionable especially when compared against alternatives that incorporate liquidity constraints or the precautionary motive for saving see for instance deaton 1992 for a survey rejection of the lcpi may however be just a manifestation of the poor quality of consumption data at the micro level these data are typically subject to the reporting biases and omissions inherent in consumer surveys there are further difficulties in measuring a desired stream of consumption services nondurable consumption goods are a small fraction of total consumption and in the case of food essentials hardly a consumer choice variable durable consumption goods have the feature that they are lumpy and that the consumption services at any point in time are hard to measure we propose to test the lcpi at the micro level with a quite different type of data the data are obtained from the residential mortgage finance database collected by the national association of realtors they are based on actual home purchases and the associated mortgage transactions reported by realtors and thus avoid some of the reporting biases of the consumer surveys more important they allow us to accurately identify households that in principle have instantaneous access to additional liquidity by lowering the down payment for the house purchase or increasing the size of the loan further the purchase of a house provides an accurate measure of a relatively large fraction of consumption services obtained for a medium to long horizon and measured at the time of the consumption decision although our data also have some serious shortcomings they allow a look at the lcpi from an unconventional vantage point perhaps the most influential study employing the standard consumer survey in testing the lcpi at the micro level is that of hall and mishkin 1982 it examines food expenditure from the panel study of income dynamics one of their key results is that consumption tracks income more closely than would be expected under the lcpi they demonstrate that this result could be explained by assuming a group of liquidity constrained consumers consuming their income at each point in time of 20 of the total sample some of the drawbacks of this study are the use of food expenditures to represent consumption the underreporting of income and absence of proper wealth data inherent in the consumer survey and the associated inability to individually separate liquidity constrained consumers from the rest of the sample several previous studies have attempted to improve on this way of testing the lcpi by examining other data sets bernanke 1984 used data on durable consumption goods automobiles to overcome the drawbacks of using food consumption in the hall and mishkin study his results support the lcpi but are still suspect because of possible reporting biases and the lack of good wealth and savings observations

portfolio choices for homeowners abstract in this paper i show that introducing frictions associated with housing into standard life cycle models can partially resolve the portfolio choice puzzle i calibrate a model in which a representative household endogenously transits from renting to mortgage financed homeownership the household can later adjust housing status either voluntarily or because of a forced move by paying transaction costs it is shown that homeownership crowds out stock market participation risky owner occupied housing substitutes for stocks while bonds provide liquidity young and middle aged households regardless of whether they are currently homeowners hold much less stock than predicted by traditional models without housing

the mirage of fixed exchange rates this paper discusses the profound difficulties of maintaining fixed exchange rates in a world of expanding global capital markets contrary to popular wisdom industrialized country monetary authorities easily have the resources to defend exchange parities against virtually any private speculative attack but if their commitment to use those resources lacks credibility with markets the costs to the broader economy of defending an exchange rate peg can be very high the dynamic interplay between credibility and commitment is illustrated by the 1992 swedish and british crises and the 1994 95 mexican collapse we also discuss the small number of successful fixers

electricity demand in kazakhstan properties of electricity demand in transition economies have not been sufficiently well researched mostly due to data limitations however information on the properties of electricity demand is necessary for policy makers to evaluate effects of price changes on different consumers and obtain demand forecasts for capacity planning this study estimates kazakhstan s aggregate demand for electricity as well as electricity demand in the industrial service and residential sectors using regional data firstly our results show that price elasticity of demand in all sectors is low this fact suggests that there is considerable room for price increases necessary to finance generation and distribution system upgrading secondly we find that income elasticity of demand in the aggregate and all sectoral models is less than unity of the three sectors electricity demand in the residential sector has the lowest income elasticity this result indicates that policy initiatives to secure affordability of electricity consumption to lower income residential consumers may be required finally our forecast shows that electricity demand may grow at either 3 or 5 per year depending on rates of economic growth and government policy regarding price increases and promotion of efficiency we find that planned supply increases would be sufficient to cover growing demand only if real electricity prices start to increase toward long run cost recovery levels and policy measures are implemented to maintain the current high growth of electricity efficiency

measuring the impact of crime on house prices this paper uses data on over 2800 house sales in jacksonville fl to estimate the impact of crime on house prices a gis programme is used to develop neighbourhood characteristics that are unique t

the income elasticity of demand for single family owner occupied housing an empirical reconciliation abstract past studies estimate the permanent income elasticity of demand for single family owner occupied housing to range from 0 14 to 1 5 a range much too broad to be of any use for solving policy questions data from the panel study of income dynamics are used herein to test the sensitivity of this income elasticity to several factors the results suggest that differences in sample population with respect to duration of housing tenure explain a large portion of the variation in the estimates of this elasticity the paper concludes that for short run applications the probable value of this elasticity is approximately 0 70 and for long run applications the probable value of this elasticity might best be taken as approximately 1 00

dynamic aspects of consumer decisions in housing markets abstract in this study we estimate a model of the joint tenure length of stay and consumption level choices of families in the housing market this is the first attempt we know of to do this type of estimation the data pertain to a single residence spell per household from the panel study of income dynamics wealthier and better educated families were found to be more mobile in terms of housing consumption after accounting for tenure choice and controlling for planned length of stay renters and owners were found to have similar demand function relationships in terms of the impacts of socioeconomic variables this confirms the notion that renters and owners are not differentiated by housing choice but simply in life cycle circumstances as to when it is optimal to own or rent

menu costs and the neutrality of money a model of endogenous price adjustment under money growth is presented firms follow s s pricing policies and price revisions are imperfectly synchronized in the aggregate price stickiness disappears and money is neutral the connection between firm price adjustment and relative price variability in the presence of monetary growth is also investigated the results contrast with those obtained in models with exogenous fixed timing of price adjustment

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

capital gains taxation and residential mobility in sweden abstract theoretical studies have shown that capital gains taxes in the housing market may create lock in effects but so far no empirical evidence has been presented regarding the size of these effects for a panel of swedish house owners in 1984 1990 we show that lock in effects only appear for households with income reductions the size of these lock in effects crucially depends on the magnitude of the income loss the theoretical model and features of the swedish tax system imply that lock in effects depend on the degree of mismatch in the current residence and whether the households buy up or buy down

measuring the external benefits of homeownership abstract the subsidization of homeownership is justified on efficiency grounds only to the extent that it provides benefits to people other than the homeowner we use the clustered neighborhoods subsample in the american housing survey to measure that benefit in the form of higher housing prices in neighborhoods with higher ownership rates and lower vacancies we attempt to account for unobservable neighborhood and house attributes that may be correlated with occupancy and ownership through instrumental variables switching regressions and panel methods estimates indicate that a housing transition from renting to owning creates approximately 1300 in measured benefits

a model of housing in the presence of adjustment costs a structural interpretation of habit persistence building on the model of sanford j grossman and guy laroque 1990 this paper provides a model of household consumption and portfolio allocation which incorporates the role of housing as both a consumption good and as a component of wealth the model captures the following features of the household s problem a utility depends probably nonseparably on two distinct goods nondurable consumption and housing b nondurable consumption can be adjusted cost lessly but housing is subject to an adjustment cost c households face housing price risk in the sense that the relative price of housing varies over time and d in addition to the house the household can invest in a wide variety of financial assets this single reasonably tractable model generates testable implications for portfolio allocation risk aversion asset pricing and the dynamics of nondurable consumption because the original grossman and laroque model considers a utility function in which the durable good is the sole argument and thus abstracts completely from nondurable consump tion their analysis cannot address either the potential spillover effects of the adjustment costs of the durable good on the dynamics of nondurable consumption or the implications for portfolio allocation of housing risk arising from variation in the relative price of housing in addition to generating implications for issues on which the original grossman and laroque model was silent the housing model delivers a strikingly different message concerning asset pricing that is in contrast to the grossman and laroque result that the consumption based capital asset pricing model consumption capm fails the housing model implies that the consumptioncapm holds we assume that the household incurs an adjustment cost when altering the holding of the dura ble good or house although financial assets can be bought and sold costlessly consumption of the nondurable good can also be adjusted costlessly when choosing a new house the consumer takes into account the fact that the consumption of housing services will be constant at the new level until the subsequent stopping time when it is again worthwhile to incur the adjustment cost thus the home purchase decision is endogenous and fully rational but because of the adjustment cost infrequent in this continuous time setting the household s decision process has a recursive structure at each instant the household first decides whether it is optimal to sell the house immediately on those rare occasions that it is optimal to incur the adjustment cost the household sells the old house and buys a new one instantaneously if the household decides that it is not optimal to sell the house immediately it then determines its optimal holdings of financial assets and optimal level of nondurable consumption conditional on the current housing stock in essence because of the adjustment costs associated with the durable good the current

housing and location choices of retiring households evidence from france in this paper a study is made of the mobility and housing choices of the elderly when retiring using household data collected in france from a theoretical viewpoint individuals are likely to decrease their housing quantity because of an income loss when retiring but they may also increase it to benefit from more housing comfort for leisure using the 1992 trois generations survey it is first shown that housing mobility at retirement is substantial in france with a variety of self reported motives then using the 1994 2001 french europanel survey evidence is found of both upsizing and downsizing for mobile recent retirees in many cases housing adjustments lead to a correction of the initial disequilibrium between the number of rooms and the number of occupants however a significant proportion of mobile recent retirees improve the quality of their dwelling

why do higher income households choose low income neighbourhoods pioneering or thrift this paper offers several hypotheses about which us higher income households choose to move into low income neighbourhoods and why it first explores whether the probability that a household moves into a relatively low income neighbourhood an rlin move varies with predicted household and metropolitan area characteristics secondly it estimates a residential choice model to examine the housing and neighbourhood preferences of the households making such moves thirdly it explores responses to survey questions about residential choices evidence is found that in the us households who place less value on neighbourhood services and those who face greater constraints on their choices are more likely to make an rlin move no evidence is found that households making rlin moves are choosing neighbourhoods that are more accessible to employment rather it is found that households making rlin moves appear to place less weight on neighbourhood amenities than other households and more weight on housing costs

the demand for housing in britain and population ageing microeconometric evidence the paper estimates a household s demand function for housing using household data esti mates of the price and current income elasticities are robust at about 0 4 and 0 5 respec tively independent of price and income effects there is a strong age pattern to household demand in conjunction with the age profile of household formation this pattern implies that changes in the age distribution of the population have important effects on aggregate housing demand although economic growth dominates in determining its rate of growth during the 1980s there was a dramatic boom in british house prices followed by large declines in the early 1990s while financial deregulation and rapid growth in real incomes for people in non manual occupations contributed to the rise in housing demand and prices changes in the population s age distribu tion also played a role ermisch 1990 in particular the number of people in the prime ages for first house purchase increased as a consequence of the baby boom of the 1960s the fall in birth rates during the 1970s and continued low fertility during the 1980s entail smaller numbers in these prime ages and an ageing of the population more generally what effect will these changes in the age distribution of the population in britain have on housing demand and house prices it may be possible to use aggregate data to answer this question e g in fair and dominguez 1991 but as recently stressed by stoker 1993 the most informative assessments of such distributional effects on demand come from studying individual level cross section or panel data a recent study in this vein by mankiw and weil 1989 of the us housing market experience has attracted a great deal of attention because it suggests that house prices are going to fall dramatically in the coming years because of the ageing of the population while their study estimates an age pattern of housing demand from micro data they admit it is a biased estimate and their conclusions concerning the impact of age distribution on house prices are based on a simple aggregate time series equation which omits income and other housing demand and sup ply shifters this paper takes a microeconometric approach it estimates a demand func tion for housing in britain and then examines the implications of prospective changes in the age distribution for housing demand an important by product in estimating the demand function is an estimate of the price elasticity of housing demand despite the importance of this parameter in assessing the impact of policy changes estimates of it for britain are few and existing ones are questionable because of the absence of appropriate data for its estimation

moving costs and housing demand abstract several recent housing demand studies use samples of recent movers based on the presumption that only such households are on their demand curves we find contrary to this presumption that the absolute values of the residuals from a standard housing demand equation fall with duration in the present dwelling this shows that the correlation pattern between housing and the explanatory variables at the moving date does not correspond to the average pattern over a typical housing spell we interpret this as evidence of forward looking behavior and show how it may be handled in econometric work with cross section samples

central bank reactions to banking crises in fixed exchange rate regimes abstract until recently speculative attacks and banking crises have been largely treated as separate phenomena however the recent experiences of several southern cone countries indicates that banking difficulties can lead to a currency crises if in combatting them the central bank adopts policies which are inconsistent with the fixed exchange rate regime the paper illustrates how this can be the case and discusses what are the policy responses available to central banks that face banking crises in fixed exchange rate regimes

new housing supply and the dilution of social capital this paper examines the role of local housing supply conditions for social capital investment using an instrumental variables approach and data from the social capital community benchmark survey it is documented that the positive link between homeownership and individual social capital investment is largely confined to more built up neighborhoods with more inelastic supply of new housing the empirical findings provide support for the proposition that in these localities house price capitalization provides additional incentives for homeowners to invest in social capital the findings are also largely consistent with the proposition that built up neighborhoods provide protection from inflows of newcomers that could upset a mutually beneficial equilibrium involving reciprocal cooperation however the results do not appear to be driven by selection based on inherent differences in social aptitudes or by tiebout sorting

tenure neutral and equitable housing taxation equity and neutrality are distinct concepts in housing taxation and weak and strong tenure neutrality should be distinguished when a tax system is tested for those criteria the taxes paid by landlords must be included as they affect the rents renters pay this paper defines appropriate tests applies them to a stylised tax system and proposes tax changes designed to restore tenure equity and or neutrality it shows how the homeowner s implicit income should be computed for taxes to be fundamentally tenure neutral or equitable or both it also shows the key role played by the cost differential in producing housing services under owner occupation and renting

the contribution of weather variability to economic sectors every day people make economic decisions based on the weather affecting sales of companies in a wide range of economic sectors in many cases the impact of weather on sales is not constant from

homeownership in the 1980s and 1990s aggregate trends and racial gaps abstract housing policy under the clinton and bush administrations has sought to boost homeownership while also narrowing racial gaps in owner occupancy rates against that backdrop homeownership rose sharply in the 1990s but white minority gaps remain in excess of 25 percentage points we analyze these patterns using data from the 1983 to 2001 survey of consumer finances results indicate that household characteristics explain most of the increase in homeownership and roughly two thirds of the white minority homeownership gap credit barriers account for no more than 5 percentage points of the remaining gap this suggests that policy makers will need to look beyond innovations in mortgage finance if their goal is to further expand homeownership

housing demand and disequilibrium abstract researchers have recently begun relying heavily on samples of recent movers to estimate housing demand parameters estimates from mover equilibrium and disequilibrium samples are compared to determine whether significant differences exist the results suggest that income elasticities are not affected by the sample distinctions but demographic effects vary across the different subsamples

the mortgage interest deduction and its impact on homeownership decisions abstract this paper examines the impact of the combined u s state and federal mortgage interest deduction mid on homeownership attainment using data from 1984 to 2007 and exploiting variation in the subsidy arising from changes in the mid within and across states over time we test whether capitalization of the mid into house prices offsets the positive effect on homeownership we find that the mid boosts homeownership attainment only of higher income households in less tightly regulated housing markets in more restrictive places an adverse effect exists the mid is an ineffective policy to promote homeownership and improve social welfare

the size of banking crises in credible fixed exchange rate regimes abstract since monetary policy is constrained in fixed exchange rate regimes we should observe fewer banking crises due to moral hazard in countries with credible currency pegs however three countries with seemingly credible pegs in the nineteen eighties and nineties namely china hong kong and argentina still suffered crises in their domestic banking sectors the present note illustrates that bank incentives to take on excess risk still exist in countries with currency peg credibility and that the size of that risk exposure and thus the potential for crisis may be positively related to the level of central bank foreign exchange reserves

taking apart the american dream the influence of income and family composition on residential evaluations americans overwhelming desires for single family homeownership have been so well documented that they have been termed the american dream government and financial incentives for homeownership are believed to allow the fulfillment of uniformly accepted housing norms which drive people to buy their own homes this research takes apart that american dream by examining the preferences of different income and family life cycle groups for housing and neighborhood characteristics associated with the housing bundle based on a sample of syracuse metropolitan respondents this research applies the factorial survey method to assess the variations in housing preferences by socio economic status and family composition findings show that all groups of respondents were indifferent to housings tenure all respondents desired single family housing but the intensity of these preferences for single family homes over other types of housing varied among subgroups strong desires were expressed not to live among blacks

demand for space heating in apartment blocks measuring effects of policy measures aiming at reducing energy consumption abstract panel data covering the period 1984 1995 on energy consumption and technical characteristics of apartment blocks from denmark are analysed in order to measure effects of policy measures aimed at reducing the consumption of energy for space heating results indicate that building regulations have been important in reducing energy consumption in new buildings furthermore conditional price responses are estimated to be relatively small or non existent indicating small short run effects of fuel taxes on energy consumption in apartment blocks finally a consultancy scheme implemented with the purpose of improving knowledge about the potential for energy savings is found to have had moderate effects

moving and improving strategies for attaining housing equilibrium the concept of equilibrium consumption is central to much housing market analysis yet analysts must contend with the likelihood that many housing consumers are not at an exact equilibrium level of

does investment risk affect the housing decisions of families i introduction the purpose of this article is to investigate the effect of heightened price volatility in housing markets on homeownership and housing demand the literature on housing markets has recognized that buying a home involves consumption and investment motives as in ranney 1981 henderson and ioannides 1983 and fu 1995 purchasing a home requires a concentrated investment in housing stock that for most families is not easily diversified caplin et al 1997 indeed in 1995 the typical american household had most of its gross assets in real estate and held no corporate equity and only households in the top 10 of the wealth distribution held portfolios that were diversified tracy et al 1999 in 1998 despite strong stock market gains home equity was a dominant investment for most households although roughly two thirds owned their homes less than half of all households held stock of those households owning both stocks and homes 60 had more wealth in home equity than in stocks di 2001 nominal house prices in u s cities have generally risen over time with some cities experiencing periods of steep house price appreciation however homeowners in many cities have been exposed to considerable downside risk according to repeat sales price indexes published by the federal home loan mortgage corporation freddie mac significant one year declines in home prices are not uncommon for example nominal declines of 15 5 and 9 occurred in san antonio in 1985 denver in 1987 and boston in 1990 respectively sustained house price declines have occurred in texas california and the eastern states for example in the long beach los angeles metropolitan area the nominal price of single family homes declined 22 from 1990 to 1996 1 furthermore there is evidence that losses at the time of sale are surprisingly common 2 what is not clearly understood is the extent to which families are responsive to such house price risk the investment literature has demonstrated that risk averse households prefer to hold less risk at a given expected rate of return when house prices are uncertain homeownership and demand relationships depend on the distribution of the random price variable 3 fu 1991 characterizes the price distribution by its first and second moments and shows that the likelihood of homeownersbip and the demand for owner occupied housing are increasing in the expected rate of house price appreciation and decreasing in house price volatility these results do not hold however for liquidity constrained households when households cannot borrow against the expected future gains of housing investment for current consumption the theoretical effects on housing choices of the expected rate of return and house price uncertainty are ambiguous fu 1995 thus the effect of price volatility on housing choices remains to be determined empirically the empirical research on housing markets includes a number of micro level econometric studies on the determinants of homeownership and housing demand these studies provide a framework for the present study and have shown that a household s after tax relative cost of homeownership permanent and transitory income and family composition are important in explaining housing decisions e g see rosen 1979 dynarski and sheffrin 1985 henderson and ioannides 1987 1989 in addition homeownership is negatively impacted by income uncertainty haurin 1991 and by an inability to generate savings for a down payment as in henderson and ioannides 1987 linneman and wachter 1989 haurin et al 1994 and gyourko et al 1999 nevertheless despite the importance of owner occupied housing in the portfolios of homeowners surprisingly little empirical work exists on the housing choices of families in the presence of house price uncertainty rosen et al 1984 provide some empirical evidence on the question of housing choices and risk

a residence time model of housing markets abstract this paper estimates a semi markov model of housing markets in which families move from one home to another spend a random amount of time in each home and choose whether to own or to rent at each move limiting conditions of the semi markov process are used to characterize the steady state frequency of owner occupied housing and to simulate the impact of changes in housing tax policy this approach differs markedly from previous studies of housing tax policy which focus on the entire population as opposed to the movers and ignore the effect of household residence times see king 1980 rosen 1979 white and white 1977 or laidler 1969 residence times further influence the analysis by affecting the relative cost of owning to renting in the tenure choice model homeowners pay legal and realtor fees at the time they move out of their homes which renters do not have to pay the discounted value of these fees declines with length of stay and provides a structural explanation of why families with longer residence times have a greater propensity to own results from the empirical analysis suggest that the semi markov model closely predicts conditions in the united states and provide important insights into the effects of housing tax policy residence times are also found to influence household tenure choice through their impact on the discounted legal and realtor fees paid by homeowners

neighbourhood effects and housing demand in this paper we estimate a model of housing demand with neighborhood eects we exploit special features of the national sample of the american housing survey and properties of housing markets that allow us to create natural instruments and therefore identify the impact of social interactions we find evidence of both endogenous and contextual neighborhood eects we report two alternative sets of estimates for neighborhood eects that dier in terms of the instruments we use for estimating the model when the endogenous neighborhood eect is large the respective contextual eects are weak and vice versa the elasticity of housing demand with respect to the mean of the neighbors housing demands the endogenous eect ranges from 0 19 to 0 66 and is generally very significant the contextual eects are also very significant a key such eect the elasticity with respect to the mean of neighbors permanent incomes ranges from 0 17 to 0 54

the transition to home ownership and the black white wealth gap this paper analyzes differences in the likelihood that black and white families become homeowners by following a sample of black and white renters over time we are able to separately study racial differences in the likelihood of applying for a mortgage and in the likelihood that a mortgage application is accepted although its effect on the race gap in housing transitions is small we find strong evidence that black applicants are almost twice as likely as comparable white households to be rejected even when credit history proxies and measures of household wealth are accounted for we show that the housing transition gap exists primarily because blacks are less likely to apply for mortgages in the first place the analysis suggests that differences in income family structure and in the ability and willingness of parents to provide down payment assistance are the primary reasons for this applications gap we speculate that the portion of the gap that remains unexplained after controlling for income d

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

imperfect capital markets and the monetarist black box liquidity constraints inflation and the asymmetric effects of interest rate policy in this paper we examine the effects of unanticipated changes in interest rates on consumers expenditure in a model in which capital markets are imperfect we show that where constraints exist on the amounts individuals can borrow individuals may rationally choose to borrow up to the limits of such constraints over part of their lifetimes such liquidity constrained individuals in general have a higher marginal propensity to consume out of changes in current income than is the case with liquidity unconstrained individuals changes in interest rates which have the effect of redistributing income between liquidity constrained monetary debtors and liquidity unconstrained creditors will thus have a net effect on aggregate consumption we further show that this effect operates asymmetrically in the sense that an increase in interest rates will have a larger net impact than a fall formally we examine the impact of a change in the interest rate which we assume exogenous on the behaviour of an individual consumer the analysis is thus independent of the source of the interest rate shock 2 but we believe an important application of the model concerns the transmission mechanism through which monetary policy operates in this paper we do not consider the relationship between the supply of money and interest rates but simnply follow standard economic theory in assuming that monetary policy operates through the impact of interest rates on expenditure it is the mechanism linking interest rate changes to expenditure that has proved hard to identify and it is in this respect that our analysis may be relevant in suggesting a process through which interest rates can affect expenditure which appears to have been neglected hitherto the model provides a possible channel of transmission of monetary policy different from those usually considered 3 in so doing the model may offer some insight into the transmission processes within the monetarist black box and indeed suggests that the efficacy of monetary policy may in part depend on the existence of capital market imperfections

spatial asset pricing a first step people choose where to live and how much to invest in housing traditionally the first decision has been the domain of spatial economics while the second has been analyzed in finance spatial asset pricing is an attempt to combine equilibrium concepts from both disciplines in the finance context we show how spatial decisions can be framed as an expanded portfolio problem within spatial economics we identify the consequences of hedging motives for location decisions we characterize a number of observable deviations from standard predictions in finance e g the definition of the relevant market portfolio for the pricing of risk includes homeownership rates and in spatial economics e g hedging considerations and the pricing of risk affect the geographic allocation of human capital

the timing and size of bank financed speculative attacks abstract the recent epidemic of banking and currency crises has led researchers to consider the role that unhealthy banks may have in currency crises the present paper in contrast investigates the anatomy of a currency crisis when banks are healthy enough to finance it it is shown that when banks finance the crisis an anticipated collapse occurs sooner and an unanticipated collapse is worse than when banks do not increase credit during the crisis the findings imply that restrictions on bank loan activities and careful management of bank balance sheet risks may lessen the severity of or even prevent a currency crisis

moving costs and the dynamics of housing demand it is well established that moving costs make households adjust their housing consumption far less frequently than they would have done in a world in which relocation was costless this paper adds

upgrades switching costs and the leverage theory of tying this article investigates the role of product upgrades and consumer switching costs in the tying of complementary products previous analyses have found that a monopolist of one product will not increase its profits and reduce social welfare by tying and leveraging its monopoly position into a complementary market if the initial monopolised product is essential where essential means that all uses of the complementary good require the initial monopolised product we show that this is not true in settings characterised by product upgrades and consumer switching costs we also discuss various extensions including the role of the reversibility of tying

bank runs and currency peg credibility abstract it is shown that as a currency peg constrains a government s ability to finance a bailout bank runs are more likely in credible fixed exchange rate regimes than in those in which the central bank is less committed to its exchange rate within the context of the model and given the government responses to their respective banking crises during the period 1994 1995 the bank runs in argentina and lack thereof in mexico seem to be rational responses of depositors

the effects of price risk on housing demand empirical evidence from u s markets this article examines how price risk affects housing demand it identifies two relevant channels a financial risk effect that reduces demand and a hedging effect that increases demand since current homes may hedge future housing costs the latter dominates when hedging incentives are strong namely when the likelihood of moving up the housing ladder is high and the tendency to move across markets is low for households with weak hedging incentives the article finds negative effects of price risk on the timing and size of home purchases but positive effects for households with strong hedging incentives

the demand for electricity and natural gas in the northeastern united states the demand for natural gas and electricity for the residential commercial and industrial sectors was estimated using a combination of the error components model and seemingly unrelated regressions the estimated demand models showed both natural gas and electricity to be price elastic in the long run and price inelastic in the short run in all sectors except the commercial sector in which electricity demand is unresponsive to its own price natural gas had negligible income elasticities in the residential and commercial sectors and a long run income elasticity of 2 86 in the industrial sector electricity had an insignificant income effect in all sectors but the industrial where its long run elasticity was unitary only in the residential demand for natural gas is the cross price elasticity substantial with the price of electricity having a long run cross elasticity of 1 70 fuel oil prices generally had a negative impact probably indicating a large income effect the elasticities of adjustment were higher for natural gas than electricity indicating a faster adjustment to change either in response to greater instability in energy availability or reflecting more alternative fuels or both 16 references 4 tables

residential mobility and the housing market in a two sector neoclassical growth model the impact of residential mobility and competitive housing markets on long run growth is examined using a two sector general equilibrium overlapping generations model in continuous time there is an infinity of agents with finite lives who adjust their housing consumption by moving which is costly we explore the model s steady state properties first with a free housing market then under rent control when the market clears through restrictions on the frequency of moves rent controls do not just reduce welfare they may increase the steadystate capital labor ratio

estimating equilibrium housing demand for stayers abstract this study models demand by owner occupied housing stayers most consumers do not move routinely in response to small changes in income or housing price so the own rent and move stay decisions are modeled as multiperiod optimization in the presence of transaction costs the empirical section uses the american housing survey to provide a panel of household stayers for a metropolitan area results indicate that income and value rent measures in different years have separable and significant impacts on housing demand estimated conditional income elasticities are between 0 40 and 0 45

when zero interest rate differentials signal a lack of currency peg credibility abstract a negative shock to bank insolvency fears causes a positive domestic foreign interest rate differential if the currency peg is credible and a differential equal to zero if it is not this is contrary to what is expected from interest rate parity