Copyright (c) 2009 All rights reserved. http://works.bepress.com/john_quigley Recent documents in John M. Quigley en-us Sun, 31 May 2009 07:32:13 PDT 3600 http://works.bepress.com/john_quigley/63 http://works.bepress.com/john_quigley/63 Sat, 09 Dec 2006 02:25:42 PST Mortgage terminations arise because borrowers exercise options. Empirically the extent to which the call is in the money is strongly associated with exercise of the prepayment option, and the probability that the put option is in the money is strongly associated with exercise of the default option. Nevertheless, evidence also shows that borrowers do not behave as "ruthlessly" as the theory predicts. This paper investigates the apparently irrational behavior of those borrowers who do not terminate their mortgages even when the option is deeply into the money. We develop an option-based empirical model to analyze this phenomenon -- the behavior of irrational "woodheads." Of course we do not observe "woodheads" explicitly in any body of data. Instead, we analyze the correlates of unobserved heterogeneity within a large sample of mortgage holders. We extend SMLE techniques proposed by Stinebrickner (1999) to estimate the competing risks of mortgage prepayment and default, recognizing unobserved heterogeneity, which is due in part to the behavior of "woodheads." The extended model is clearly superior to alternatives on statistical grounds. We then analyze the economic implications of this more powerful model. We analyze the predictions of the model for the valuation and pricing of mortgage pools and mortgage-backed securities. Based upon an extensive Monte Carlo simulation, we find that the SMLE model yields prices for seasoned mortgage pools that vary by as much as about forty basis points from more primitive estimates. The results indicate the empirical importance of heterogeneity and the implications of non-optimizing behavior for the valuation and pricing of mortgages and mortgage-backed securities. Yongheng Deng http://works.bepress.com/john_quigley/62 http://works.bepress.com/john_quigley/62 Sat, 09 Dec 2006 02:25:42 PST This paper presents estimates of willingness to pay for medical care, including the quality and intensity of medical treatment sought in response to illness or injury. The empirical analysis is based on some 5000 observations on the behavior of low income households in Ghana in 1986. The results indicate that the decision to seek medical treatment is responsive to household income. Prices have significant but inelastic influences on the choice among types of treatment and the intensity of treatment sought. Availability of treatment has a substantial effect upon the types of treatment and the utilization of facilities. These results are robust to changes in the structure of the estimating model. Victor Lavy http://works.bepress.com/john_quigley/61 http://works.bepress.com/john_quigley/61 Sat, 09 Dec 2006 02:25:41 PST During the past fifteen years, Swedish government policy has decentralized post-secondary education throughout the country. We investigate the economic effects of this decentralization policy on the level of productivity and innovation and their spatial distribution in the Swedish economy. We analyze productivity, measured as output per worker at the level of the locality, for 284 Swedish communities during a 14 year period, and innovation, measured by commercial patents awarded in 100 Swedish labor market areas during an 8 year period. These economic outcomes, together with data documenting the decentralization of university-based researchers, permit us to estimate the effects of exogenous changes in educational policy upon increases in productivity and the locus of innovative activity. We find important and significant effects of this policy upon economic output and the locus of knowledge production, suggesting that the decentralization has affected regional development through local innovation and increased creativity. Moreover, our evidence suggests that aggregate productivity was increased by the deliberate policy of decentralization. Roland Andersson http://works.bepress.com/john_quigley/60 http://works.bepress.com/john_quigley/60 Sat, 09 Dec 2006 02:25:40 PST Urban economics emphasizes: the spatial arrangements of households, firms, and capital in metropolitan areas; the externalities which arise from the proximity of households and land uses; and the public policy issues which arise from the interplay of these economic forces. John M. Quigley http://works.bepress.com/john_quigley/58 http://works.bepress.com/john_quigley/58 Sat, 09 Dec 2006 02:25:39 PST (no abstract available) John M. Quigley http://works.bepress.com/john_quigley/59 http://works.bepress.com/john_quigley/59 Sat, 09 Dec 2006 02:25:39 PST During the past fifteen years, Swedish higher education policy has emphasized the spatial decentralization of post-secondary education. We analyze this policy as a natural experiment, and we investigate the economic effects of this decentralization on productivity and output. We rely upon a twelve-year panel of output, employment and investment for Sweden's 285 municipalities, together with data on the location of university researchers and students, to estimate the effects of exogenous changes in educational policy upon regional development. We find important and significant effects of this policy upon output and productivity, suggesting that the economic effects of the decentralization on regional development are economically important. Roland Andersson http://works.bepress.com/john_quigley/57 http://works.bepress.com/john_quigley/57 Sat, 09 Dec 2006 02:25:38 PST We consider the general equilibrium implications of environmental regulations which result in a reduction of otherwise profitable residential development. Critical habitat designation under the Endangered Species Act is an important example. If the regulations affect a significant amount of land, they may have important effects on the rest of the regional economy - increasing rents and densities on lands not subject to the regulation, causing the conversion of lands from alternative uses, increasing the net developed area in the region, and decreasing consumer welfare. We develop a flexible general equilibrium simulation of the economic effects of critical habitat designation, explicitly considering the distributional effects upon owners of different types of land and upon housing consumers. The results of our simulation show that the most significant economic effects of critical habitat occur outside of the designated area. The prices and rents of non-critical habitat lands increase significantly. Incomes are redistributed across landlords, and the well being of housing consumers is further affected through these linkages. John M. Quigley http://works.bepress.com/john_quigley/56 http://works.bepress.com/john_quigley/56 Sat, 09 Dec 2006 02:25:36 PST Among the many sorting functions provided by institutions of higher education, there is a geographic dimension. During the years spent as students and residents of local communities, students develop specific networks and contacts, and perhaps their tastes change as well. After graduation, these students may be more likely to reside in the locality or region in which they have been educated.This paper presents evidence which suggests that the university is important in attracting human capital to the local area and in stimulating entrepreneurial talent in the region.We also measure the strength of the impact of the university on geographical location in one specific instance. For post-graduate professional business and engineering students at Berkeley, we compare the spatial distribution of residences before attending the university and again after graduation.The results are suggestive of the importance of academic institutions in the geographic pattern of agglomerations of footloose scientific firms, such as those in the Silicon Valley just south of San Francisco. The results also reinforce the self-interested reasons for government investment in high-quality educational institutions, as measured by the return on the augmented human capital stock in the region. David Huffman http://works.bepress.com/john_quigley/55 http://works.bepress.com/john_quigley/55 Sat, 09 Dec 2006 02:25:35 PST John M. Quigley http://works.bepress.com/john_quigley/54 http://works.bepress.com/john_quigley/54 Sat, 09 Dec 2006 02:25:34 PST Recent California legislation extends the application of prevailing wage regulations to subsidized low-income residential construction projects. This paper estimates the cost and supply effects of this legislation. Econometric evidence based on recently completed tax-credit projects in California demonstrates that construction costs increase substantially under prevailing wage requirements. Estimates of additional construction costs in our most extensive models range from 9 to 32 percent. The analysis controls for variations in cost by geographical location and for differences in project characteristics, financing, and developer attributes. We estimate the effect of uniform imposition of these regulations on the number of new dwellings for low-income households produced under the tax credit program. Under reasonable conditions, our mid-range estimate of this prospective decrease exceeds 2,600 units per year. Sarah Dunn