Fiscal decentralization has brought many aspects of influence to China's economy,in this context,this paper discussed the relationship among fiscal decentralization,the government relationship and house price. First,we discussed house price determination mechanism under the partial equilibrium framework. Theoretical models show that house price depends on the degree of fiscal decentralization,the costs of construction investment,consumers' disposable income and so on. Then,by using the panel data of house price and the economic fundamentals of 30 provinces in China from 1999 to 2011,empirical studies show that fiscal decentralization and local government competition play a significant role in increasing house price,but the role exhibited different influence in different regions. In our opinions,to decrease the speed of house price growth,reducing the intensity of current fiscal decentralism appropriately and the incentives of local government land finance,promoting the reform of property tax which estate property acts as the core and transforming local government functions should be carried out.
China's real estate finance policy implementation and the expected effect has a certain gap. Very important reason is not form a system between policies, and policy decentralization of high factors. This article choosing real estate finance policy index, using the empirical analysis method, reveals China's real estate finance policy variables and the long-term equilibrium economic growth and stability. Finally considers that we should enhance China's real estate finance policy coordination between the variables in the implementation of policy, also should pay attention to the control variables are sensitive to achieve better interval effect.
In the last three decades, the supply of housing in Argentina has not kept pace with demand. This study analyzes the main drivers of Argentina's housing market and relates them to the macroeconomic environment in order to advance a policy agenda for housing policy reform. The demand for housing was calculated and tenure choice was analyzed. Structural characteristics affecting Argentina's housing market include the high concentration of the urban population in a few large metropolitan areas, te association of urban poverty with the housing deficit, and overcrowding. The mortgage market lost its appeal following the 2001-02 crisis due to widespread breaches of contract legitimized through protective legislation (still in place), insufficient long-term financing, and high inflation. The housing deficit could be eliminated in five to eight years if well-coordinated policy initiatives to develop the mortgage market and provide low-income housing were adopted under a decentralized, demand-driven, subsidized program.
Listed real estate companies, just like all other listed companies around the world, have to publish quarterly as well as annual reports, informing the public and especially the share and stake holders about the current development of the company. These reports are always awaited with great anticipation. Will there be bad news or good news in the report? And if there is bad news, is it as bad as suspected or better and vise versa are good financial news as good as everybody expected. Depending on this news, changes in the stock price are expected, as well as observed changes in stock price are often explained with an interpretation of the content of the reports. It is commonly expected and believed that bad news have a negative effect on the performance and vise versa with god news. As obvious as it seems, so difficult it is to proof, as god and bad is not an absolute definition but rather a relative one in the eye of the beholder. An interesting question arising from this is, if the publication of financial reports have an general impact, meaning ìalwaysî significantly positive or negative, basically regardless of the content. In order to verify whether the publication of these reports has an effect, an event study shall observe abnormal returns around the time of the publication. Further options are to test if relatively late / early publication has an effect ñ a problem here will be the definition of the ìnormalî time of publication ñ and if the timing within the week or the timing with regard to the period of the year have an influence. // ï The aim of this study is to find out whether a general effect (always positive or always negative) on stock performance can be observed caused by the publication of financial reports, although it is commonly expected to depend upon the content; ï Does it matter whether the reports are published relatively early or relatively late; ï Does timing matter with regard to day of the week or period of the year // On a scientific level, the contribution of this study lies in analyzing whether behavioral effects influence the stock performance of listed real estate companies. From a professional point of view, implications for an optimized investment strategy can be obtained as well as implications for the optimal information strategy of listed real estate companies with regard to their stock performance.
The collapse or perilous crumbling of our infrastructures, the basic building blocks of the nation's economy, underscores the investment and fiscal policies that confront the nation's leaders as well as the nation's cities' leaders. In this article, the authors focus on one key dimension of the “infrastructure crisis,” namely, the critical issues surrounding the financing of city infrastructure and a proposed set of sustainable options available to policy makers, particularly examining trends toward decentralization and fragmentation of governmental and financial institutions and toward market-based and consumer- or customer-oriented policies. Urban policy makers today find themselves in the position of negotiating with neighboring communities, competitive markets, and citizens in a fragmented governance system. What appears to be little more than organized chaos has evolved over decades into the complex, if not always rational, system of infrastructure finance and governance in which cities and other local governments find themselves today.
Changes in locations of FIRE and business services firms in Hong Kong during 1980–2000 could be characterized by trends of both centralization and decentralization. A heavy concentration of finance firms in the CBD is highly significant, implying the presence of strong forces promoting the spatial concentration of the finance firms. Insurance and business service firms tend to locate mainly in areas adjoining the CBD in order to enjoy the externalities or support services, which CBD offers. Volatility in rents has also provided opportunities for firms to relocate within the CBD at lower cost. In contrast, real estate firms tend to decentralize away from Hong Kong Island due to cheaper rents. The important finding of the sample survey analysis is that non-traditional factors such as office buildings with IT facilities have emerged as dominant factors determining choice of location. For instance. during the survey period, finance firms considered office buildings with IT facilities as the most important factor, while business service firms considered sufficient floor-space as the second most important factor after rent in choosing the present location.
With the high-speed development of the real estate of our country and single financing tool of our commercial banks, the loan balance of house mortgage of commercial banks in our country is become higher and higher, which brings enormous pressure to the commercial banks and in the long run, this single financing tool of our commercial banks will do harm to the fast improvement of the real estate of our country. So actively propelling the securitization of the real estate mortgage can effectively decentralize the banks finance risk and also can do favor for the improvement of the real estate industry. So this article tries to analyse the necessity and feasibility of implement of the seeuritization of the real estate mortgage in our country and relative suggestions.
Escalating costs of the pension system is forcing the Indian Government to reevaluate the formal programmes that provide social security to employees. The government has so far received three official reports (namely, OASIS, IRDA and Bhattacharya), which have examined the issue and suggested several measures to provide a safety net to the aging population. This paper examines the recommendations made in these reports and analyses the potential effects of them. It is organized around five policy questions: 1. Should the reformed system create individual (funded defined-contribution) accounts, or should it remain a single collective fund with a defined-benefit formula? The changeover involves a larger public policy choice issue: who should ultimately bear the risk? Should employees/retirees shoulder those risks alone arising from variations in asset yields and unexpected changes in longevity, or should these risks be shared more broadly across participants, if not society? Choice would depend upon to which group the individual belongs. Financially successful people may believe in individual ownership and choice, while low wage earners may want assured returns because they do not have other resources to fall back upon. Unfortunately most Indians, unlike those in many other countries, are in the latter category which cannot bear any risk, more so in the old age. 2. If individual accounts are adopted, should the reformed system move toward private and decentralized collection of contributions, management of investments, and payment of annuities, or should these functions be administered by a public agency? In privately managed funds, associated problems would be intermediation costs, agency problem (principal-agent fiduciary relationship), and greatly increased costs to administer the plan. Several studies across the world have shown that periodic fee may look deceptively low but, over longer time horizons, the cumulative effect can be dramatic, sometimes reducing the benefits by 30 to 50 per cent. 3. Should fund managers of retirement savings be allowed to invest in a diversified portfolio that includes stocks and private bonds? In recent years equity investments, particularly index investing, have become a favoured strategy. Index funds are subject to tracking error, and being loaded with few big stocks, there are much higher risks in index investing than people perceive. Over the period, real annual return on index funds may be more, but people retire only once. Equity markets are highly volatile and go through long periods of feasts and famine. Guarantees would have to be provided in the form of minimum return or providing minimum basic pension on retirement. World bank studies show that government ends up acquiring conjectural liabilities wherever a pension system based on private providers is mandated. How would that be different from the present system where a government agency (EPFO) provides retirement benefits? 4. Should the government move toward advance funding of its pension obligations for its employees, or should these obligations continue to be financed on pay-as-you-go basis? Studies have shown that a simultaneous implementation of funded, diversified, individual accounts is not a "free lunch" once you properly account for existing unfounded obligations and risk. The Bhattacharya Committees estimates show that the government would have to pay out more on account of pensions to its employees for the next 38 years before the new scheme starts showing reduced government expenditure. These amounts do not include the tax foregone by the government on the employees contribution. Several assumptions have been made about the scheme, which the committee hopes would remain valid and that the future governments would behave responsibly. The proposed scheme does not consider intermediation costs and agency risks; in fact, the committee presumes that agents would behave more responsibly than principals. 5. What should be the level of government fiscal support in the form of tax subsidy, foregone tax collections, grants, administrative costs incurred by its agencies, and level of assumed contingent liabilities in case the government guarantees minimum pension? The crucial question is: how much and to whom is this subsidy accruing? Are beneficiaries of the proposed system the ones who need subsidy? Tax treatment of pension is a critical policy choice. A generous tax treatment may promote savings but may be costly in terms of revenue foregone. Apparently, an exercise in balancing is necessary. The priority should, therefore, be putting in place a policy vision and road map with specific goals in relation to pre-determined milestones. These should include a tax financed and means-tested system for lower income groups. If government cannot afford it, then it has no moral or political justification to even consider providing further tax benefits to privileged income groups. If there are no government funds for the first pillar in the World Bank recommended multipillar system, the third pillar should remain out of policy discussions. Emphasis should be on strengthening the second pillar. Suggested reforms neither enhance efficiency nor make the social security system more equitable. It would only privatize the gains while costs and risk for the government would increase considerably. It would only help well-off segment of society in availing more tax concessions. Present problem in the government pension system is due to successive governments behaving like Santa Clauses ignoring the cost to exchequer. Fund managers would not be able to solve these problems. Specific fiscal and other measures for implementing a feasible and viable pension system in Indian conditions have also been suggested in the paper.
While the issue of school finance has been studied extensively, relatively little effort has been devoted to understanding how school finance policies impact the nature of communities. This is peculiar in light of substantial evidence that public school quality – at least in the U.S. – has much to do with residential choices by households, and in light of increasing empirical evidence that residential segregation perpetuates income inequality. In this paper, I emphasize in particular the importance of considering not only the level of government that is funding public schools but also the role played by the private sector as well as its interaction with the existing public school system. Somewhat surprisingly, simulation results based on U.S. data suggest that, in terms of producing spatial income segregation, the role of centralization versus decentralization of public school financing is quite secondary to the role played by the private sector. A purely public school system – regardless of the degree of centralization of school finance – results in substantially more spatial segregation than a purely private system. However, it is the combination of a (centralized or decentralized) public system with a private school market that yields the least residential segregation as housing price distortions from the capitalization of the public system generate incentives for middle and high income private school attendees to live with lower income public school attendees. Motivated by this insight, additional simulations involving explicit government support for private schools in the form of vouchers are reported, and the sensitivity of results to alternative school production models is tested. 1
* Infrastructure investment may indirectly affect firm productivity and household welfare through its impact on the location of economic activity. * State infrastructure policies currently favor decentralization--the opening of new territory to development and the movement of firms and households from dense urban environments to the surrounding suburbs. * Recent research, however, suggests that the clustering of producers and consumers in a given geographic area is economically and socially beneficial. * In light of this research, institutional reforms that would change the management and direction of public infrastructure investment may be in order. Agencies authorized to choose and finance investments that promote regional well-being would most likely target more investment to central cities and less to the surrounding suburbs. Public infrastructure is an important part of a well-functioning urban economy. Such infrastructure--defined here as publicly owned and maintained physical capital--has historically played a central role in allowing cities to grow by mitigating or reducing problems such as congested roadways, potholes, water-main breaks, and overcrowded schools. Yet while the benefit of some public works can hardly be disputed, a key policy issue is whether additions to our stock of public infrastructure provide overall benefits that exceed their costs. (1) That is to say, is the amount of infrastructure we have sufficient, or would we benefit from an increase? Another important question is, do our institutional structures promote efficient infrastructure investment decisions? As these questions suggest, the status of urban public infrastructure is an important topic. Education and highway facilities are being stretched to their limits in fast-growing cities and suburbs, while concerns are being raised about the level and physical condition of public works in slower growing, older central cities. (2) No doubt, public investment is an important function of government, and it is particularly crucial at the state and local level. In 1999, states and localities invested more than $210 billion in equipment, software, and structures (Table 1). By combining this amount with the nearly $43 billion in nondefense investments made by the federal government, we see that new gross public investment in 1999 exceeded a quarter-trillion dollars, or 2.7 percent of GDP. Moreover, the stock of publicly owned nondefense capital in 1999 exceeded $4.5 trillion, or nearly 50 percent of GDP. (3) Although complete data on the geographic distribution of this spending are not available, it is certain that a large share of these national totals, particularly the state and local portions, is going to public investment in and around America's metropolitan areas. More than 200 million people reside in these areas, and the public investments made there affect the lives of a large and growing share of the U.S. population. (4) Accordingly, the question of whether we should increase the amount of infrastructure available has received much attention from economists. This article puts that research into a broad perspective, attempts to draw policy conclusions from what is known, and suggests some directions for further research. Infrastructure investments can affect social welfare in two ways (see Appendix A). One way is by adding to economic growth. The relationship between infrastructure and economic growth has been the subject of intensive economic research over the past decade. The second way in which infrastructure investments can affect social welfare is by potentially improving the quality of life of those living in the invested area. For example, public parks, water systems, and other facilities can improve social welfare without having any effect on residents' incomes. This article also examines this second channel, which has received less attention in the research, in part because the value of quality-of-life improvements is difficult to measure. …
Financial services industries have been an important source of central-city employment, including new jobs. Although decentralization occurred in the 1970s and 1980s, widespread national growth in the sector generally resulted in central-city employment gains. In the 1990s, despite continuing national growth in the sector overall, financial services became a key source of job losses in many cities. From 1991 to 1996, financial services employment declined by 5% in a sample of 40 large cities but increased by 9% in corresponding suburbs. Twenty-five of these cities lost finance jobs, with losses exceeding 10% in 11 cities. Moreover, financial services were often a disproportionate contributor to total employment losses. This article describes these trends and explores the relationship between industrial structure, city size, and region on the suburbanization of financial services employment.
An alternative to centralized top‐down city governance is a multi‐level bottom‐up structure based on small neighborhood contractual communities. This paper analyzes the voting rules and public finances of decentralized, contractual urban governance and the likely outcome of such a constitutional structure, substantially reduced transfer seeking or rent seeking. Tax and service substitution, with lower‐level funding and services substituting for higher‐level public finance, is the general process by which the governance would devolve. Land rent is the most feasible source of such decentralized public finance, and local communities could also engage in local currency and credit services. Some empirical examples demonstrate the implementation of some of these governance structures.
This chapter reviews the literature on the boundary between urban economics and local public finance, defined as research that considers both a housing market and the market for local public services. The first part of the chapter considers positive theories. This part presents the consensus model of the allocation of households to jurisdictions, which is built on bid functions and household sorting, as well as alternative approaches to this issue. It also examines models of local tax and spending decisions, which exhibit no consensus, and reviews research in which both housing and local fiscal variables are endogenous. The second part of the chapter considers empirical research, with a focus on tax and service capitalization, on household heterogeneity within jurisdictions, and on the impact of zoning. The third part considers normative theories about a decentralized system of local governments. This part examines the extent to which such a system leads to an efficient allocation of households to communities or efficient local public service levels, and it discusses the fairness of local public spending. This review shows that the bidding/sorting framework is strongly supported by the evidence and has wide applicability in countries with decentralized governmental systems. In contrast, models of local public service determination depend on institutional detail, and their connections with housing markets have been largely unexplored in empirical work. Ever since Tiebout (1956), many scholars have argued that decentralized local governments have efficiency advantages over centralized forms. However, a general treatment of this issue identifies four key sources of inefficiency even in a decentralized system: misallocation of households to communities, the property tax, public service capitalization and heterogeneity. Few policies to eliminate these sources of inefficiency have yet been identified. Finally, this review explores the equity implications of household sorting and other features of a decentralized system.
The declining federal role in economic development in distressed urban areas and concerns over the problems associated with metropolitan decentralization necessitate increased attention to the intrametropolitan distribution of business development programs. We examine the distribution of business loans made by the U.S. Small Business Administration's 504 development company program in the Chicago metro-politan area over a 5-year period and find that, after controlling for firm density, firm size, and industrial mix, higher income areas and outlying zip codes receive more loans than lower income and closer-in areas. We suggest a number of supply-and demand-side explanations for such patterns, call for measures to direct the flow of 504 financing more to lower income areas, and call for examining more loan and subsidy programs for their effects on intrametropolitan business development patterns.
Pluralism and elitism are the two prevailing theories of policy making in the United States. The purposes of this article are to suggest an alternative framework linkage political economy and to evaluate that framework against both pluralist and elitist policy explanations. The evaluation will take place within the medium of a case study on housing policy. The linkage political economy framework addresses some of the weaknesses evident in both pluralist and elitist studies of public policy. For example, in the housing policy field, elite theorists assert that policy making is dominated by a cohesive, politically powerful corporate bloc made up of the construction, finance, and realty industries.I But the elite theorists are then hard pressed to explain policy failures of this dominant coalition such as the passage of the 1937 public housing program or the original low-income thrust of the 1949 urban redevelopment program. On the other hand, pluralist analysts find a much more open and balanced policy process with a wide spectrum of interests able to be heard through multiple channels available in a decentralized political process.2 Yet, this pluralist analysis cannot adequately explain the consistent bias in U.S. housing policies and out-
SINCE 1954 nearly all vestiges of legal segregation of public schools in the South have been eliminated. But, at the same time, the suburbanization of households in Southern cities has contributed to the de facto resegregation of some schools. Just as the Tiebout hypothesis (1956) suggests that households locate according to their preferences regarding local public goods, there is some evidence to indicate that preferences for segregated schools may have contributed to this resegregation. Glantz and Delaney (1973) found that, by one measure, metropolitan residential segregation increased more during the 1960's in Southern metropolitan areas -where city schools were substantially desegregated than in the Northern metropolitan areas studied. And for some organizations, a primary reason for supporting recently ordered metropolitan desegregation plans which would effectively combine city and suburban school systems is the belief that desegregation of city schools alone merely contributed to white flight from the city.' But, because there are other factors which may also cause suburbanization of whites, such as employment decentralization and the growth of Negro ghettos, it is not clear whether school desegregation has had an independent effect on the demand for housing by households. This paper presents an analysis of housing prices to determine whether desegregation has an independent effect on the price paid by whites for housing. Since the supply of housing is relatively inelastic in the short run, an effect of this kind would support the hypothesis that desegregation affects households' demand for housing. While shifts in demand will result primarily in price effects in the short run, quantity changes and locational rearrangement will be most important in the long run. In order to determine if shifts in demand have accompanied desegregation, this paper will examine such price effects. The metropolitan area studied is Atlanta, Georgia, a Southern city which experienced school desegregation and apparent white flight during the 1960's. In 1960, a year before desegregation was begun, 37.2 % of the students in the city school system were Negro. By 1970 this figure was 67.1%. During the decade the proportion of Negro families in the city rose from 34.0% to 47.7%o. These changes reflect a number of different locational trends, one of the most important of which was a rapid growth in the city's Negro population. In order to assess the independent effect of school desegregation on housing demand, it is above all necessary to separate the effect of school racial composition from that of neighborhood racial composition, as well as other supply and demand factors affecting housing prices. The analysis presented in this paper uses data on housing prices and characteristics drawn from 1960 and 1970 census tract reports for Atlanta. The comparatively rapid end to de jure segregation in that city during the decade of the 1960's provides a unique opportunity to separate the effects of neighborhood and school integration. The empirical analysis supports the hypothesis that school desegregation does have a significant effect on housing prices, independent of neighborhood racial change. Section I discusses the use of housing prices in determining the effect of public service characteristics on housing demand. Sections II and III describe the data and the empirical findings. Section IV summarizes the analysis. Received for publication December 3, 1973. Revision acaccepted for publication July 30, 1974. * I am grateful to Professors Martin Feldstein, John Kain, Richard Freeman, and Gregory Ingram, members of the public finance and urban economics seminars at Harvard, and referees for this Review for comments on earlier drafts of this paper. Financial support was provided by the Ford Foundation. 1 See, for example, the testimony of William L. Taylor, Director of the Center for National Policy Review in hearings before the Senate Select Committee on Equal Educational Opportunity, November 30, 1971, p. 10475 or Junie Brown, City School Case: No End in Sight, Atlanta Journal-Constitution, December 31, 1972, pp. IA, 6A.
completely from the question of why households decide to live within a particular jurisdiction. Although we have no satisfactory thleory of urban local government, economists have not been reluctant to propose reforms in existing institutions. Advocates of metropolitan government suggest that decisions must be made at the metropolitan level if externalities are to be internalized and economies of scale realized. Tn contrast, the proponents of decentralization argue that further political fragmentation is required in order to provide greater variety in local public services. The only consensus, if any exists at all, is that present institutions of local government are inefficient. However, nowhere in the literature do we find an explanation of why, in view of this inefficiency, change is so rare. Annexations to the cen-tral city, relatively common at the turn of the century, ceased rather abruptly in most metropolitan areas after 1918. Subdivision of the larger political jurisdictions in our metropolitan areas does not appear at all likely. Thus, it seeins reasonab)le to ask of an adequate theory of metropolitan political economy an answer to the question: why are existing jurisdictional bourndaries so impervious to change? To answer this question we must investigate the impact of local governmental structure not only on allocative efficiency but on the extent of redistribution from rich to poor as well. In a recent study of suburbs in the Philadelphia metropolitan area, Williams, et al. [5] report that, when heavy expenditures were involved, wealthy communities were unwilling to enter into cooperative agreements with less wealthy communities. Only when their wealth was about the same would cities agree to engage in a jointly financed program. Across the United States, proposals for nietro-