Local policy, income, and housing prices

Jürgen Göbel
Authors registered in the RePEc Author Service: Juergen Goebel ()

MPRA Paper from University Library of Munich, Germany

Abstract: In a local economy, the citizens can react on local policy by exit. Exit induces a shift in the housing demand. The local policy may thus capitalize into the housing prices. However, the citizens encounter specific coordination problems on the housing market. Therefore, it may be asked how effective their exit option is. To answer this question, we work with a sample of 234 U.S. counties, from 2002 and 2003. Our empirical analysis shows that the property tax revenue is the local fiscal variable which has the strongest connection with the housing prices. In contradiction to the general theory, this connection is positive and indirect. The essential element within this connection is the personal income.

Keywords: local policy; exit; housing price; capitalization (search for similar items in EconPapers)
JEL-codes: H30 H72 R21 (search for similar items in EconPapers)
Date: 2009-02-28
New Economics Papers: this item is included in nep-geo and nep-ure
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