Debt and Development

This paper examines incentive and valuation effects of debt financing on land investment. When land is debt financed, the landowner holds both a development option on the land and a default option on the debt. Because development typically devalues the default option, investment may be delayed past the point at which efficient investment would otherwise proceed. The incentive to underinvest is shown to be more pronounced as debt level increases, i.e., as the debt becomes riskier. This agency problem provides an explanation as to why land is generally difficult to debt finance and may also explain why debt levels are relatively low for “land-intensive” real estate firms. Novel comparative statics show that debt value may increase for a given increase in asset volatility as well as for a given increase in interest rate. Renegotiation and restrictive contract provisions are considered as mechanisms to promote efficient investment policy in the presence of debt financing.     

Is econometrics useful for private policy making? A case study of replacement policy at an auto rental company

The goal of this paper is to illustrate the potential usefulness of econometrics as a tool to assist private policy makers. We provide a case study and detailed econometric analysis of the automobile replacement policy adopted by a large car rental company. Unlike public policy making–where the benefits from using econometric models and “science-based” approaches to policy making are hard to quantify because the outcomes of interest are typically subjective quantities such as “social welfare”–in the case of firms there is an objective, easily quantifiable criterion for judging whether policy A is better than policy B: profits. We introduce and estimate an econometric model of the rental histories of individual cars in the company’s fleet. Via stochastic simulations, we show that the model provides a good approximation to the company’s actual operations. In particular, the econometric model is able to reproduce the extraordinarily high rates of return that the company obtains on its rental cars, with average internal rates of return between purchase and sale of approximately 50%. However, the econometric model can simulate outcomes under a range of counterfactual vehicle replacement policies. We use the econometric model to simulate the profitability of an alternative replacement policy under pessimistic assumptions about the rate maintenance costs would increase and rental rates would have to be decreased if the company were to keep its rental cars longer than it does under the status quo. Depending on the vehicle type, we find that the company’s expected discounted profits would be between 6% to over 140% higher under the suggested alternative operating strategy where vehicles are kept longer and rental rates of older vehicles are discounted to induce customers to rent them. The company found this analysis to be sufficiently convincing that it undertook an experiment to verify the predictions of the econometric model.     

Planning Discourse versus Land Discourse: The 2009–12 Reforms in Land‐Use Planning Policy and Land Policy in Israel

Land policy and land‐use planning policy are two types of public policy pertaining to space. In general, land‐use planning policy deals with land‐use allocation and property rights, whereas land policy defines the land regime of a society. These differences have shaped a unique discourse for each of these policy types. The purpose of this article is to examine the differences and similarities between the land discourse and the planning discourse by analyzing two public campaigns conducted in Israel against two proposed reforms: the 2009 reform of the Israel Land Administration and the 2010–12 reform of the Planning and Building Law. The findings reveal substantive differences between the two campaigns, manifested in the nature of the leading players, the types of public activities they chose, and most notably in the discourses and the hierarchy of considerations they addressed. The findings raise profound questions regarding universal trends in spatial policy reforms; their influence on the activities of public coalitions and the discourses they adopted; possible future effects of these trends on the differences between the land discourse and the planning discourse; and the impact of these trends on the ability of groups and individuals elsewhere to influence spatial policies (such as planning and land policies).     

Optimal policies in cities with congestion and agglomeration externalities: Congestion tolls,labor subsidies,and place-based strategies

This paper develops a spatial general equilibrium model that accommodates both congestion and agglomeration externalities, while firms’ and households’ land-use decisions are endogenous across continuous space. Focusing on the interaction between externalities and land use patterns, we examine the efficiencies of first-best policies and second-best pricing and place-based strategies using numerical simulations. A first-best policy must combine both Pigouvian congestion tolling (PCT) and Pigouvian labor subsidies (PLS) instruments, or design an optimal toll (or subsidy) internalizing agglomeration externalities (or congestion externalities). We also examine second-best pricing policies if only one instrument is adopted. Congestion pricing policies alone (e.g., a partial PCT or a flat-rate toll) can improve social welfare only in heavy-congestion cities, and their welfare gains may be insignificant (e.g., below 10% of the welfare improvement achieved by first-best policies). In contrast, second-best labor subsidy policies alone are a more effective alternative to first-best policies. As to place-based policies, the firm cluster zoning (FCZ) regulation is more efficient than the urban growth boundary (UGB) policy. UGBs only have small effects on the agglomeration economy but could worsen land market distortions via residential rent-escalation effects. These findings suggest that it is important to internalize business land use decisions and relax monocentricity assumptions, in order to appreciate the interplay of both urban externalities, since spatial adaptations to policy interventions can distort system efficiencies.     

政策影响下土地利用空间布局变化模拟分析

目前,对土地利用在空间布局方面的研究已经成为新兴热点,而对于政策影响下的土地利用空间布局变化模拟研究与分析的成果尚只存少数。因此,本文在对研究区进行土地利用现状于结构和空间布局两方面的分析的基础上,根据研究区当前面临的主要土地利用变化相关政策进行需求变化研究,通过合理选择土地利用分类,运用逻辑回归分析及ROC曲线等方法进行反复的驱动因子筛选,最终选出最适用于研究区特点的因子,并通过CLUE-S模型对土地利用变化政策在空间布局上的影响做出合理模拟。结果显示,采用确切符合研究区特点的参数设置,灵活多变地选用驱动因子可以有效地帮助实现运用CLUE-S模型同时模拟出"建设用地上山"、"建设用地为耕地腾挪土地"、"建设用地沿河沿路发展"、"重点产业用地扩张"等多项土地利用政策在空间上的布局,其结果对土地利用变化研究、土地利用规划工作等具有一定意义。     

“100% EDI-connected suppliers” projects: An empirical investigation of success factors

Electronic Data Interchange (EDI) is becoming increasingly important, and new organizational forms based on EDI suppliers’ capabilities are emerging. Therefore, taking advantage of recent technological changes, especially the development of Web-based EDI systems, many big industrial buyers are seeking to get all their suppliers EDI-connected. Based on previous research on EDI adoption, we conducted a survey to study the opportunities of success of such a “100% EDI-connected suppliers” policy using data from the vehicle industry. Findings from our survey helped us to understand suppliers’ responses to such a policy and to provide recommendations to industrial buyers who are seeking to succeed in a “100% EDI-connected suppliers” project. This includes employing tailored communication strategies and selecting appropriate incentives that take into account different levels of suppliers’ EDI-capabilities and suppliers’ dependence.     

Income taxes and urban spatial structure

This paper examines the impact of an income tax in a monocentric city where households equilibriate their allocation of time between work, commuting, and leisure. An increase in the income tax rate lowers the implicit value of time, and hence transportation costs. “Compensated equilibrium” comparative statics analysis shows that under certain conditions, this results in a larger, more dispersed urban area, with lower land rents at the city center and less population within any given distance from the center. The welfare effect of an income tax rate change is also studied, and an expression for the marginal excess burden is derived. The income tax produces welfare losses both because it induces substitution in favor of leisure and in favor of travel—the latter accompanied by excessive spatial dispersion and consumption of space. The marginal excess burden depends not only on the compensated demand elasticity for leisure, but also on that for space. Finally, the problem of benefit measurement for transportation projects in this tax-distorted spatial economy is examined. Benefit measures should be deflated to adjust for the fact that further transportation improvements lead to reduction of land use intensity, exacerbating the problem of spatial resource misallocation in an already excessively dispersed urban area.     

On the use of policy to reduce housing market segmentation

This paper discusses two questions: (i) in Britain, can the movements of households away from cities be reversed by suitable government policies? (ii) Can integrated rather than segregated communities be developed? We consider the use of three types of policy instrument—land use planning, area regeneration initiatives and fiscal incentives targeted at individual households. We employ two types of model to investigate these policies—firstly, illustrative cellular automata, designed to illustrate the stability of segregation and, secondly, a fully estimated model of location choice. Our results suggest that there is potential for wider use of fiscal policy to influence population distributions.     

不同类型调控政策对房地产市场影响的实证分析——以江苏省为例

近年来,国家对房地产宏观调控采取的多种政策,可划分为五类,即房地产开发投资规模、土地供应、金融信贷、住房供给结构、税收等政策。文中就这五类政策对房地产市场的影响进行了实证分析和定性分析。实证分析中采取了12个指标,利用了向量自回归模型和广义脉冲响应函数,就五类调控政策和市场形势对住房价格、成交量以及住房需求的影响时间和影响程度进行分析。定性分析中主要分析利率、税收、广义货币供应量M2、高房价等四个因素变化对住房价格、成交量以及住房需求的影响。     

Evaluation of urban land supply policy in Iran

Since the Islamic revolution of 1979, several urban land laws and regulations, as well as a new urban land development policy, have been initiated in Iran. The implementation of these policies was mainly based on public land ownership as a fundamental principle. This paper evaluates the process of recent urban land development policy and focuses on the effectiveness of the policy in terms of land supply. It includes a discussion on the issue of public land ownership, an investigation of post-revolutionary urban land policies in Iran, a discussion on the evaluation of urban land development policy in terms of land supply, and finally, presents an argument on the relationship between public land ownership and urban development. The paper argues that alongside the primary advantages of public land ownership, such as urban growth control, preventing land speculation and providing land for various social needs, the land policy has succeeded to some extent in meeting residential land demand in the study period. However, in terms of the effectiveness of the land supply policies, the paper raises some concerns such as the centralized nature of the land development process, land wastage and isolation from the general process of planning.     

Externalities, Indivisibility, Nonreplicability, and Agglomeration

In this paper we argue that the impact of external scale economies and diseconomies on city size is not nearly as clear-cut as it is tacitly believed in urban economics. Similarly, city-size distortions are not caused by externalities alone. Indivisibility and nonreplicability, which prevent establishing the “right” number of cities, may represent a source for city-size distortions which can be stronger than the standard resource misallocation resulting from external scale economies and diseconomies. It follows that a direct population dispersion policy is not just an inferior substitute to Pigouvian taxes and subsidies but rather a useful complement.     

Determinants of local housing growth in a multi-jurisdictional region,along with a test for nonmarket zoning

In the State of New Jersey, two rural preservation tools are paramount: (1) Zoning that sets a floor on the size of residential lots; and (2) the outright acquisition of open space or its development rights by government and nonprofit entities. The present study explores the effects of these two policies on the number of building permits issued across 83 municipalities in northern New Jersey. The empirical work is based on a widely-used urban development model that uses both monocentric and polycentric factors to allocate growth across a set of suburban communities. The study also develops a growth-based test for binding minimum-lot-size zoning, leveraging the fact that the 83 communities are in a single housing market and must serve the distribution of home and lot-size demand collectively, not individually. The study finds strong evidence of excess large-lot zoning, leading to the suppression of short-term housing growth in communities that specialize in this particular “product.” No firm evidence is found that residential development is attracted to the amenities that flow from either large-lot zoning or open space set asides.     

Tax Policy Coordination, Vertical Externalities, and Optimal Taxation in a System of Hierarchical Governments

Tax policies of two levels of government (state and federal) with overlapping tax bases are considered. This overlap leads to “vertical” fiscal externalities are considered when several different commodities are in the tax base and the tax bases of the two levels of government may not be identical. When the governments share a tax base, the mix of combined taxes is optimal. With different tax bases, combined taxes are no longer optimal as federal tax rates are adjusted to reflect state public service levels. When grants are available, a welfare-maximizing mix of taxes and public services is obtained.     

AGGLOMERATION AND SUB‐REGIONAL DISPARITIES UNDER DECENTRALIZATION: EVIDENCE OF SPATIAL CLUSTERING OF LAND VALUES IN THE PHILIPPINES

Like other developing countries, the Philippines aims for balanced spatial development. This paper investigates the pattern of sub‐regional disparities by applying the global Moran I and local Moran I_i test statistics on land values data for 1986–2000. Overall, both provincial and city land values diverge spatially. Local clustering of land values is found only within and around Metro Manila. While the results suggest persistent agglomeration economies during the decentralization period, partly because of bias in the fiscal transfer system, they also indicate that other government policies were effective in promoting land values immediately outside Metro Manila.     

The Nature of Urban Land

A bstract . Considerations about land interpose into almost every aspect of urban life. They may not be the only factor determining a city's well-being but appropriate land policies are necessary to bring about prosperity and equity. Contemporary accounts of the 'urban crisis' and of urban problems reveal the pervasiveness of land issues. Use of one urban land parcel has bearing on the usability of neighboring sites, which makes land a community resource. Urban land may be defined as land used or expected to be used for urban activities. Its attributes include location, space, property, clustering, heterogeneity and immobility and indestructibility. Neo-classical theorists, by stressing accessibility and ignoring externalities and other attributes of land, achieved only an unrealistic understanding of it. Most land economists are institutionalists , their theory encompassing long-validated concepts about the nature of land. The neo-Marxian approach has many points of congruence with the institutionalist one. Empirically investigated, urban land is found to be different from economic goods and hence its production, allocation and disposition must proceed at least like other public goods.     

Coordinating Opposite Approaches to Managing Urban Growth and Curbing Sprawl: A Synthesis

The purchase of development rights to farmland and open space has recently gained in popularity as a growth management tool. A purchase of development rights program pays the landowner for the unearned increment in exchange for strong deed restrictions, limiting the use of the property. On the other hand, land value taxation, a modification of Henry George's Single Tax, would tax land more heavily than improvements, thus encouraging the development of land. While land value taxation and the purchase of development rights appear to be opposing fiscal policies, they could be employed together as part of a regional planning strategy to encourage in-fill development within and near cities and to curb sprawl by retaining farm, forest, and ranch lands.     

‘Arriving At’ Urban Policies: The Topological Spaces of Urban Policy Mobility

Spatial vocabularies are stretched to their limits by the complexities of policy mobilities. Using the example of city‐wide strategic policymaking in Johannesburg, this essay argues for an enrichment of our vocabularies for appreciating how wider circuits of urban policy shape localized policy outcomes. Rather than tracing policies until they arrive somewhere, a more nuanced spatiality of policy mobility emerges when considering how policies are 'arrived at'. Thus policy influences can, for example, be ephemeral and recursive, international but already present in localities, have many simultaneous origins, and be folded into a relatively amorphous but specific policy blend. Drawing on John Allen's account of topological space, the essay indicates how both a more subtle spatiality and a more open politics of policy formation would emerge from turning the analysis of policy mobilities on its head in this way.     

Alternative Policies for Preserving Farm and Open Areas: Analysis and Evaluation of Available Options

A bstract . Rapid urban growth disrupts land use patterns on the urban-rural fringe , increasing development pressure on nearby farm and open lands. Many public agencies have attempted to moderate these development pressures through intervention in the local land market in order to preserve remaining open areas. There are essentially five ways that governmental units can act to preserve farm and open lands: public purchase of these lands; restrictive zoning laws ; public purchase of the development rights to open lands; programs of transferable development rights, and preferential assessment property tax programs. Each of these methods imposes burdens on different groups and creates winners and losers among property owners, taypayers and others. This paper analyzes the economic impacts of these open space preservation programs and evaluates their effectiveness in achieving their goals. None of the programs evaluated is judged to be perfect in preserving open space, but the public purchase of development rights is seen to be an equitable second-best solution.     

When does coordination pay?

In a continuous-time model of two symmetric open economies, with a floating exchange rate, we find that the pay-off to macroeconomic policy coordination depends systematically on how heterogeneous is their inflation experience. While monetary policy coordination improves welfare in handling a common rate of underlying inflation, it exacerbates the ‘time consistency’ problem arising when there are differences (as is illustrated diagrammatically). Since the principle of ‘certainty equivalence’ applies to time-consistent policy in linear quadratic models, we are also able to give a stochastic interpretation of the deterministic results.     

Ramsey policies in a small open economy with sticky prices and capital

This paper analyzes jointly optimal fiscal and monetary policies in a small open economy with capital and sticky prices. We allow for trade in consumption goods under perfect international risk-sharing. We consider balanced-budget fiscal policies where authorities use distortionary taxes on labor and capital together with monetary policy using the nominal interest rate. First, as long as a symmetric equilibrium is considered, the steady state in an open economy is isomorphic to that of a closed economy. Second, sticky prices’ allocations are almost indistinguishable from flexible prices allocations both in open and closed economies. Third, the open economy dimension delivers results that are qualitatively similar to those of a closed economy but with significant quantitative changes. Tax rates are both more volatile and more persistent to undo the distortions implied by terms of trade fluctuations.