City characteristics, land prices and volatility

Sheridan Titman and Guozhong Zhu

Journal of Urban Economics, 2024, vol. 140, issue C

Abstract: We develop a model that describes how city characteristics affect the volatility of real estate rents and values. The model includes agglomeration externalities, which amplify the effect of productivity shocks on population growth and rents, as well as city characteristics that constrain population growth. While growth constraints make rents more subject to productivity shocks because of the inelastic supply, they can also suppress the benefits of agglomeration, which has the effect of decreasing the sensitivity of rents to productivity shocks. Our dynamic model exhibits persistent rent growth and rent-to-value ratios that vary across cities and over time. In particular, we show that productivity shocks have a larger initial effect on rents in more constrained cities, but a greater long-term effect in less constrained cities.

Keywords: City characteristics; Agglomeration externality; Supply constraint; Land rent volatility (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0094119024000159
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:140:y:2024:i:c:s0094119024000159

DOI: 10.1016/j.jue.2024.103645

Access Statistics for this article

Journal of Urban Economics is currently edited by S.S. Rosenthal and W.C. Strange

More articles in Journal of Urban Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().