Category: Anthony Yezer

What Do Hedonic House Price Estimates Tell Us When CAP Rates Vary?

2021, Anthony Yezer, Anthony Yezer, Paul Carrillo, Working Papers

February 2022

Paul E. Carrillo and Anthony Yezer

IIEP working paper 2021-03

Abstract: This paper demonstrates theoretically and empirically that estimated implicit prices from hedonic equations using house value do not reflect implicit willingness to pay for housing attributes unless very strong conditions are present. The argument is simple. Implicit prices obtained from rental hedonics, consistent with theory, can potentially be used to reveal the willingness to pay for current housing services. Therefore hedonic equations relating asset prices to current characteristics only reveal willingness to pay for structure and neighborhood services if cap rates (rent to value ratios) are constant. In some cases, the sign of the bias inherent in using asset rather than rental prices can be anticipated. Some rules and tests for situations where cap rates are constant are developed. At a minimum some of these checks for variation in cap rates should be implemented before using asset price hedonics to measure the current flow of housing services.

Key Words: Hedonic models, implicit markets, capitalization rate, environmental valuation

How Should We Measure City Size? Theory and Evidence Within and Across Rich and Poor Countries

2019, Anthony Yezer, Anthony Yezer, Development Economics and Poverty Alleviation Events, Remi Jedwab, Working Papers

August 2019

Remi Jedwab, Prakash Loungani, and Anthony Yezer

IIEP working paper 2019-11

Abstract: It is obvious that holding city population constant, differences in cities across the world are enormous. Urban giants in poor countries are not large using measures such as land area, interior space or value of output. These differences are easily reconciled mathematically as population is the product of land area, structure space per unit land (i.e., heights), and population per unit interior space (i.e., crowding). The first two are far larger in the cities of developed countries while the latter is larger for the cities of developing countries. In order to study sources of diversity among cities with similar population, we construct a version of the standard urban model (SUM) that yields the prediction that the elasticity of city size with respect to income could be similar within both developing countries and developed countries. However, differences in income and urban technology can explain the physical differences between the cities of developed countries and developing countries. Second, using a variety of newly merged data sets, the predictions of the SUM for similarities and differences of cities in developed and developing countries are tested. The findings suggest that population is a sufficient statistic to characterize city differences among cities within the same country, not across countries.

JEL Codes: R13; R14; R31; R41; R42; O18; O2; O33

Keywords: Urbanization; Cities; Urban Giants; Population; Standard Urban Model; Measurement; Urban Technology; Building Heights; Sprawl; Housing; Transportation

An Examination of the Link between Urban Planning Policies and the High Cost of Housing and Labor

2018, Anthony Yezer, Development Economics, Working Papers

September 2018

Anthony Yezer, William Larson, Weihua Zhao 

IIEP Working Paper 2018-6

Abstract: Past research has established positive empirical relation between city-level land use regulations and housing costs. One interpretation of these findings is that building restrictions raise the cost of producing housing. Alternatively, these price effects could reflect greater willingness to pay for quality urban design. Disentangling and identifying cost versus amenity factors empirically is an unresolved challenge. This paper presents an alternative to empirical tests, relying instead on the predictions of neoclassical urban theory. Simulations of an open city model demonstrate that theoretical predictions differ substantially from those obtained from empirical testing in two main ways. First, restrictions on land use and housing density influence the price level but not the elasticity of housing supply. Second, the effects of land use restrictions on average house prices are ambiguous and depend on the precise location of the planning restriction. Furthermore, the model generates direct estimates of effects on wages and demonstrates that transportation impediments are more consequential for housing prices than land use restrictions. This indicates a potentially fruitful path for future empirical work, and the possibility of omitted variable bias if transportation impediments are correlated with land use regulation.

JEL Codes: R30, R31, R38

Keywords: monocentric city model, price gradient, zoning, standard urban model

5th Urbanization and Poverty Reduction Research Conference

Anthony Yezer, Development Economics and Poverty Alleviation Events, Past Events, Remi Jedwab, Research Conference

 

Friday, September 7, 2018
8:30am to 7:30pm

Preston Auditorium, The World Bank
1818 H Street, NW
Washington, D.C., 20433

Across the developing world, the growth of cities is outpacing effective policy. Low density land use results in rapidly expanding cities, raising the costs of infrastructure and service provision and limiting liveability and productivity. At the same time, limited investments in transport infrastructure such as roads limits the connectivity between individuals and opportunities that make cities engines for growth. Effective policy to address these challenges requires an understanding of the spatial organisation of cities, and how the distribution of private and public investments across a city affect economic growth.

On 7 September 2018, the 5th Urbanization and Poverty Reduction Conference will bring together academics and development practitioners to present and discuss questions relating to the spatial organisation of cities and economic growth. In particular, the conference will be focusing on effective land and transport policy in cities and the implications of urban development for national growth. This conference is hosted by the World Bank (Development Research Group), George Washington University (Institute for International Economic Policy),  the International Monetary Fund, and the International Growth Centre.

 

  • 8:30-9:00 – Coffee and Registration
  • 9:00-10:45 – Welcoming Remarks
    • Chair and Moderator: 
      Shantayanan Devarajan
      Senior Director, Development Economics, World Bank
    • Panelists:
      Aisa Kirabo Kacyira
      Deputy Director UN-Habitat, former mayor of Kigali
      Edward Glaeser
      Professor of Economics, Harvard and International Growth Center
  • 10:45-11:00 – Coffee Break
  • 11:00 -12:30 – Session One: Land
    • Mini Keynote: Informal Land Use
      Harris Selod
      Development Research Group, The World Bank
    • Backyarding
      Jan Brueckner, Claus Rabe, and Harris Selod
    • Compactness
      Vernon Henderson
    • Chair:
      TBC
    • Discussant: 
      Mariaflavia Harari
      Assistant Professor, University of Pennsylvania
  • 12:30-13:30 – Lunch
  • 13.30-14:15 – Keynote Address:
    • The Geography of Development
      Esteban Rossi-Hansberg
      Princeton University
    • Chair:
      Asli Demirguc-Kunt
      Research Director, Development Research Group, World Bank
  • 14:15 -15:45 – Session Two: Transportation
    • Mini Keynote: “Cars in Cities”
      Matthew Kahn
    • Transport in a Congested City – A Computer Equilibrium Model Applied to Kampala City
      Louise Bernard, Julia Bird, Tony Venables
    • Who Wins? Who Loses? Understanding the Spatially Differentiated Effects of Belt and Road within Central Asia
      Bader El Hifnawy, Somik Lall, Mathilde Lebrand
    • Chair:
      Marianna Fay
      Chief Economist, Climate Change
    • Discussant:
      Leah Brooks
      Assistant Professor, George Washington University
  • 15:45-16:00 – Coffee Break
  • 16:00-17:30 – Session Three: Urbanization, Growth, and Development
    • Mini Keynote:
      Douglas Gollin
    • In Search of a Spatial Equilibrium in the Developing World
      Douglas Gollin, Martina Kirchberger, David Lagakos
    • Modern Urban Technology and the Future of the New Urban Giants
      Remi Jedwab, Prakash Loungani, Anthony Yezer
    • Chair:
      Chris Papageorgiou
      International Monetary Fund
    • Discussant:
      Deniz Igan
      Deputy Division Chief, Research Department’s Macro Financial Division, IMF
  • 17:30-18:00 – Break
  • 18:00-19:30 – Cocktail Reception and Welcome Speech by Maggie Chen
    • At George Washington University, Lindner Commons Room (6th Floor) of the Elliott School of International Affairs, 1957 E St. N.W. (at the intersection of E and 19th Streets, on E Street), Washington, DC.

Can Differences Deceive? The Case of “Foreclosure Externalities”

2017, Anthony Yezer, Working PapersLeave a Comment on Can Differences Deceive? The Case of “Foreclosure Externalities”

July 2017

Anthony Yezer and Yishen Liu

IIEP Working Paper 2017-29

Abstract: Foreclosure externalities, in which recent foreclosures proximate to a housing unit depress its sales price, are well accepted in the literature. These papers use a geographic differencing strategy to eliminate the problem of selection into treatment. They also assume that the partial and total derivatives of the outcome (house value) with respect to the treatment (foreclosure) are constant and equal. This paper relaxes these assumptions producing very different results. These findings likely generalize to a larger body of research where differencing often in the form of regression discontinuity, propensity score matching, or synthetic controls is used to achieve identification while assuming total and partial derivatives of the outcome with respect to the treatment are constant and equal.

JEL: R23, R30, R31.

Keywords: Foreclosure; Specification error; Loan-to-value ratio; Externalities.

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