School Quality, House Prices and Liquidity |
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| Authors: | Velma Zahirovic-Herbert Geoffrey K Turnbull |
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| Institution: | (1) Department of Housing & Consumer Economics, University of Georgia, 213 Dawson Hall, Athens, GA 30602-3622, USA;(2) Fiscal Research Center, Georgia State University, P.O. Box 3992, Atlanta, GA 30302-3992, USA |
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| Abstract: | This paper develops an empirical framework for taking into account the effects of endogenous liquidity on price capitalization
estimates. Changes in school attendance zones in the East Baton Rouge Parish public school district provide a natural experiment
for studying how changes in school characteristics affect house prices and liquidity. House price and selling time, or liquidity,
are simultaneously determined in search markets. The empirical model exploits variation in the surrounding neighborhood market
conditions pertinent to each house to identify the system of price and liquidity equations. The estimates are consistent with
search-market theory in that liquidity absorbs part of the capitalization of school quality.
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| Keywords: | Capitalization House price Liquidity School quality Search market |
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