Public Finance in the Era of the COVID-19 Crisis
18-20 August 2021 | Online, Organized by University of Iceland, Reykjavík
Overview and details of the sessions of this online conference.
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Some information on the session logistics:The last speaker of each session is the session chair. The discussant is always the following speaker, with the first speaker being the discussant of the last paper. Each paper has a 22-minutes-block in all sessions. There should be 15 minutes and no more than 18 minutes for the presenter. The discussion is then started by the discussant. Please note that the role of the discussant is different compared to previous years: The discussant has only 1-2 minutes and s/he is not allowed to give a lengthy summary of the paper together with comprehensive comments. Instead, her/his task is to raise one single question/comment and, in doing so, start the general discussion! All participants are asked to be strict in timing to allow people to change sessions during the general discussion. For a (rare) session with less papers in the session than the time slot allows, stick to the congress schedule and use 22 minutes per presentation to allow listeners to smoothly change between sessions. Only registered participants can attend this online conference. Further information available on the congress website https://iipf2021.hi.is/ .
Please note that all times are shown in the time zone of the conference. The current conference time is: 2nd Dec 2021, 12:37:14pm GMT
2:15pm - 2:37pm
Market Rate Housing Construction In Urban Neighborhoods
Statistics Norway, Norway
Many urban neighborhoods are characterized by soaring housing prices and gentrification. Can construction of market rate residential housing be a remedy? New housing increases local supply, and could lead to falling prices if local demand is limited. However, new housing generally has higher standard than older housing and may therefore attract wealthier residents, which could increase the prices of existing housing through positive neighborhood externalities. Using detailed housing data from Norway's capital Oslo, we study how housing prices and residential composition of existing housing are affected by market rate construction nearby. We deal with endogeneous location of new constructions by instrumenting with available space for development and controlling for micro neighborhoods. We find that the effects on housing prices and incomes of residents are negative, but small, suggesting that the supply effect is larger than any positive neighborhood effect.
2:37pm - 3:00pm
Housing Affordability and Transaction Tax Subsidies
1University of Luxembourg, Luxembourg; 2Stockholm School of Economics
House prices have increased faster than average income in many countries over the last decade, raising concerns on the affordability of housing. We study the impact of transaction taxes on the real estate market and the effectiveness of tax subsidies to make housing more affordable. We show how the demand and supply elasticities for housing determine the price impact of tax subsidies and the distribution of gains between buyers and sellers. We then use data on all real estate transactions in Luxembourg from 2007 to 2018 to estimate the elasticity of housing supply and demand. For identification, we exploit discontinuities in the transaction tax schedule as well as rules on tax subsidies for new constructions. Our estimates suggest that the elasticity of house prices to transaction taxes is 0.27, so buyers capture a large part of the surplus from the subsidies.
3:00pm - 3:22pm
The Virus That Devastated Tourism: the Impact of Covid-19 on the Housing Market
Nova School of Business and Economics, Portugal
We estimate the impact of the sudden and sharp decrease in tourism caused by the pandemic on housing rental and sales in Lisbon, a tourist-intensive capital with a high density of short-term rentals. We use a panel that spans the 24 civil parishes between the third quarter of 2018 and the third quarter of 2020. We estimate difference-in-differences specifications, with both a binary treatmentand a treatment intensity relying on the pre-pandemic intensity of short-term rentals in the civil parishes. Our results are robust to an IV that deals with selection into treatment concerns, and to the inclusion of the second largest city of the country. We show that in the long-term rental market, prices decrease 4.1%, while quantities increase 20% in the treated areas vis-à-vis comparison ones. We also find evidence of an incremental negative impact onsale prices of 4.8% in treated areas, with no effect on quantities.
3:22pm - 3:45pm
Intrinsic Real Option Value: Empirical Evidence from Commercial Real Estate Investors
1Massachusetts Institute of Technology; 2University of Connecticut; 3Laval University
We investigate how local information externalities affect investments in tangible durable assets via real options. Using geocoded transaction-level data on US commercial properties from 2000 to 2018, we find that investors have a higher propensity to invest in a property for immediate redevelopment when its capital intensity and type of commercial activity differ from those of recently built nearby properties. Information externalities affect 'buy-to-redevelop' investment strategies as much as the asset capital depreciation -- the main determinant of real option exercise highlighted in the literature -- and can increase up to 30 percent the investors' willingness to pay to invest in the property.
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