Will politics lead to over-building or under-building of transportation projects? In this paper, we develop a model of infrastructure policy in which politicians overdo things that have hidden costs and underperform tasks whose costs voters readily perceive. Consequently, national funding of...

Can open tournaments improve the quality of city services? The proliferation of big data makes it possible to use predictive analytics to better target services like hygiene inspections, but city governments rarely have the in-house talent needed for developing prediction algorithms. Cities...

Cities generate negative, as well as positive, externalities; addressing those externalities requires both infrastructure and institutions. Providing clean water and removing refuse requires water and sewer pipes, but the urban poor are often unwilling to pay for the costs of that piping....

Should China build mega-cities or a network of linked middle-sized metropolises? Can Europe's mid-sized cities compete with global agglomeration by forging stronger inter-urban links? This paper examines these questions within a model of recombinant growth and endogenous local amenities. Three...

A modest approximation by homebuyers leads house prices to display three features that are present in the data but usually missing from perfectly rational models: momentum at one-year horizons, mean reversion at five-year horizons, and excess longer-term volatility relative to fundamentals....

Housing markets experience substantial price volatility, short term price change momentum and mean reversion of prices over the long run. Together these features, particularly at their most extreme, produce the classic shape of an asset bubble. In this paper, we review the stylized facts of...

Historically, urban growth required enough development to grow and transport significant agricultural surpluses or a government effective enough to build an empire. But there has been an explosion of poor mega-cities over the last thirty years. A simple urban model illustrates that in closed...

Long before economics turned to psychology, environmentalists were nudging and framing and pushing their cause like highly gifted amateur psychologists. Their interventions seem to have changed behavior by altering beliefs, norms and preferences, but because psychological interventions are often...

Why are public-sector workers so heavily compensated with pensions and other non-pecuniary benefits? In this paper, we present a political economy model of shrouded compensation in which politicians compete for taxpayers' and public employees' votes by promising compensation packages, but some...

America's local governments spend about one-eighth of our national income, one-fourth of total government spending, and employ over 14 million people. This paper surveys the large and growing economics literature on local governments and their finances. A primary difference between local and...