Intercity Trade and Housing Prices in Us Cities
Urban models often examine the consequences of domestic trade for city structure. We consider how GDP growth impacts Metropolitan Statistical Area (MSA) housing price growth, while allowing for iceberg shipping costs. We develop a theoretical model of spatial equilibrium among cities where there is capital mobility between them and explore its empirical predictions. Using instrumental variables (IV), and a unique set of instruments including time-varying MSA-level military contract awards, we identify city-level GDP growth impacts on city house price growth. This equation follows from imposing spatial equilibrium across cities. In general, our empirical estimation results confirm the signs of the relationships predicted by the theory, i.e., greater GDP growth in a city leads to higher house prices. Our theoretical approach, synthesis of MSA-level data, and empirical analysis are novel
Year of publication: |
2022
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Authors: | Cohen, Jeffrey ; Ioannides, Yannis M. |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
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