Planning à la Carte: The Location Patterns of Gated Communities around Buenos Aires in a Decentralized Planning Context

The spectacular growth of gated communities around Latin America’s largest cities has been widely noted. In Buenos Aires, after the upgrade of the northern highway in the 1990s, the number of gated communities along the road more than tripled, reaching 500 by the year 2001. Yet, the geographic distribution of these communities was uneven, with the majority concentrated in municipalities with the highest percentage of poor households. Why, given similar land prices, land availability, access to infrastructure and distance to the city’s core, did developers build gated communities in the poorest municipalities? This article argues that the decentralization of planning controls contributed to these patterns of distribution. While wealthier municipalities used this prerogative to enforce tighter controls on land use, the less affluent ones relied on their capacity to modify planning codes to lure real estate developers. Unlike well‐serviced municipalities, who perceived the gated communities’ privatization of services as a potential danger to their fiscal tax base, the municipalities that lacked urban services in most of their territory saw gated communities as a fast and inexpensive way of increasing local economic activities in less productive lands. As a consequence, after decentralization of planning capacities, the development of gated communities clustered in less affluent municipalities, hence deepening the social polarization in these jurisdictions.     

The Political Economy of the (Weak) Enforcement of Indirect Taxes

The objective of this paper is to understand the determinants of the enforcement level of indirect taxation in a positive setting. We build a sequential game where individuals, who differ in their willingness to pay for a taxed good, vote over the enforcement level. Firms then compete à la Cournot and choose the fraction of sales taxes to evade. We assume in most of the paper that the tax rate is set exogenously. Voters face the following trade‐off: more enforcement not only increases tax collection but also increases the consumer price of the goods sold in an imperfectly competitive market. We obtain that the equilibrium enforcement level is the one most preferred by the individual with the median willingness to pay, that it is not affected by the structure of the market (number of firms) and the firms’ marginal cost, and that it decreases with the resource cost of evasion and with the tax rate. We also compare the enforcement level chosen by majority voting with the utilitarian level. In the last section, we endogenize the tax rate by assuming that individuals vote simultaneously over tax rate and enforcement level. We prove the existence of a Condorcet winner and show that it entails full enforcement (i.e., no tax evasion at equilibrium). The existence of markets with less than full enforcement then depends crucially on the fact that tax rates are not tailored to each market individually.     

THE TRANSMISSION OF MONETARY POLICY UNDER THE REPO SYSTEM IN SOUTH AFRICA: AN EMPIRICAL ANALYSIS♣

The study examines the influence of the repo rate on the interbank rate and analyses whether the transmission channels of interest rates have changed since the adjustment to the repo system in September 2001. The paper employs the Granger causality test using the ECM framework. The results suggest that the influence of the repo rate on the interbank rate was stronger before the adjustments to the system were made. The interbank rate and the repo rate were found to “reverse” roles in the period after the adjustments to the system. Our results show that the changes to the repo system in 2001 did not lead to the achievement of the intended transmission channel; instead it was found that the system in place before the changes were made was in fact already achieving the transmission path that the authorities hoped to accomplish by changing the system.     

The Theory of Bank Risk Taking and Competition Revisited

There is a large body of literature that concludes that—when confronted with increased competition—banks rationally choose more risky portfolios. We argue that this literature has had a significant influence on regulators and central bankers. We review the empirical literature and conclude that the evidence is best described as “mixed.” We then show that existing theoretical analyses of this topic are fragile, since there exist fundamental risk‐incentive mechanisms that operate in exactly the opposite direction, causing banks to become more risky as their markets become more concentrated. These mechanisms should be essential ingredients of models of bank competition.     

IS CORRUPTION REALLY PERSISTENT?

Theoretical and empirical research on corruption generally concludes that corruption is persistent. However, using International Country Risk Guide data for the period 1984–2008 for 101 countries, we find strong evidence that corruption changes over time. In the present study, corruption levels of many countries decline, whereas those of other countries rise over the same period. We find that this convergence process is not continuous: there is an improvement in world corruption in the first part of our sample period, but a worsening in the second half.     

Firm Location and the Creation and Utilization of Human Capital

This paper presents a theory of location choice that draws on insights from the incomplete contracts and investment flexibility (real option) literatures. Our analysis indicates that the choice of locating within rather than away from industry clusters is influenced by the extent to which training costs are borne by firms versus employees. In addition, the uncertainty about future productivity shocks and the ability of firms to modify the scale of their operations also influence location choice. In particular, we show that locating in clusters is preferred when training costs are borne by workers and when firm-specific productivity shocks can potentially be large. However, there is an incentive for firms to choose isolated locations when significant training costs are borne by firms.