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Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown

Kyle F. Herkenhoff, Lee Ohanian () and Edward Prescott

No 23790, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the impact of state-level land-use restrictions on U.S. economic activity, focusing on how these restrictions have depressed macroeconomic activity since 2000. We use a variety of state-level data sources, together with a general equilibrium spatial model of the United States to systematically construct a panel dataset of state-level land-use restrictions between 1950 and 2014. We show that these restrictions have generally tightened over time, particularly in California and New York. We use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states. Counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased US GDP and productivity roughly to their current trend levels. California, New York, and the Mid-Atlantic region expand the most in these counterfactuals, drawing population out of the South and the Rustbelt. General equilibrium effects, particularly the reallocation of capital across states, accounts for much of these gains.

JEL-codes: E24 E3 E6 R11 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-his, nep-mac and nep-ure
Date: 2017-09
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
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Published as Kyle F. Herkenhoff & Lee E. Ohanian & Edward C. Prescott, 2017. "Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown," Journal of Monetary Economics, .

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