Spatial Asset Pricing: A First Step

Ortalo-Magné, François and Andrea Prat
Authors registered in the RePEc Author Service: Francois Ortalo-Magne

No 7842, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: People choose where to live and how much to invest in housing. Traditionally, the first decision has been the domain of spatial economics, while the second has been analyzed in finance. Spatial asset pricing is an attempt to combine equilibrium concepts from both disciplines. In the finance context, we show how spatial decisions can be framed as an expanded portfolio problem. Within spatial economics, we identify the consequences of hedging motives for location decisions. We characterize a number of observable deviations from standard predictions in dinance (e.g. the definition of the relevant market portfolio for the pricing of risk includes homeownership rates) and in spatial economics (e.g. hedging considerations and the pricing of risk affect the geographic allocation of human capital).

Keywords: Asset pricing; Real estate; Urban economics (search for similar items in EconPapers)
JEL-codes: G10 (search for similar items in EconPapers)
Date: 2010-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Spatial Asset Pricing: A First Step (2016)
Working Paper: Spatial Asset Pricing: A First Step (2010)
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