The dramatic rise in the number of foreclosed properties since 2006 has come to assume the proportions of a national crisis. It is widely acknowledged that foreclosures hurt neighborhoods by devaluing the nearby properties through various channels. This paper offers a new way of conceptualizing and then estimating the potential effects of foreclosures on property values. Housing stock heterogeneity in the central city old neighborhood allows for the possibility that the impacts of nearby foreclosures may differ across types of housing. This study uses a dataset that covers twenty years of housing values from the City of Worcester (MA), and finds evidence that foreclosures of multi-family houses in close proximity influence the sales price of surrounding single-family properties after controlling for impact from foreclosure of nearby single-family houses. The most preferred estimate suggests that each multi-family foreclosure that occurs between 660 and 1320 feet away from the sale lowers the predicted sales price by approximately 3%. Nearby multi-family spillover impacts also persist over time. In addition, a new approach advocating for an alternative definition of housing submarket suggests that a distant foreclosure within the same submarket also lower sales price of a single-family home by 0.1%.
This article explores the impact of gender equality on economic growth. In particular, we focus on the multidimensional nature of gender equality with the object of identifying the relative salience of different aspects of equality. Using exploratory factor analysis on five measures of gender equality, we identify two distinct dimensions: equality of economic opportunities and equality in economic and political outcomes. Regression analysis conducted on an unbalanced panel of 101 countries taken over nonoverlapping five-year periods from 1990 to 2000 reveals that a standard deviation improvement in equality in economic opportunity increases growth by 1.3 percentage points and a corresponding improvement in participatory equality improves growth by an average of about 1.2 percentage points. However, this impact is contingent on a country's stage of development: while developing economies experience significant improvements in growth from greater equality in opportunity, developed societies see significant improvements resulting from greater equality in outcomes.
We investigate the impact of media freedom on gender equality in education for a sample of 63 countries taken over the period 1995–2004. Our analysis is motivated by the idea that the impact of media freedom on gender equality may differ over the conditional distribution of the response variable. Using instrumental variable quantile regression to control for endogeneity in per capita income, we find that greater freedom of the media improves gender equality only in the 0.25 and 0.50 quantiles of the conditional distribution. Countries with the greatest disparities in gender outcomes experience no significant impact of media freedom.
This paper explores the idea that the lack of robust evidence on the growth impact of civil war could partially be a consequence of considering civil war as a unified conceptual category, regardless of the ordinate of group identity invoked in mobilizing for war. To do so, we distinguish explicitly between episodes of internal conflict where contestants mobilized along the lines of ethnicity and ones where mobilization occurred along other markers of group identity. Using alternative definitions of civil war and System GMM estimation to address the endogeneity of conflict and per capita income, we obtain a negative contemporaneous impact of non-ethnic civil war on economic growth over the period 1975–2005. By contrast, the impact of ethnic war is statistically insignificant.
The loss on a distressed mortgage depends not only on economic and financial conditions but also on the value of the property and how it is transferred to a new owner. Using data from Fannie Mae, we investigate the differences in loss experience across alternative mechanisms for disposing of property (real estate owned or REO, deed in lieu, short sales, and foreclosure sales) from 2003 through 2017. In general, losses are lowest for short sales and foreclosure sales. But these lower losses depend on the overall distress level of the market. The more distressed the market is, the smaller the relative gains associated with these alternative approaches, as compared to traditional REO sales. In contrast, in markets with rapidly increasing distress short sales have lower losses relative to traditional REO sales. We use a variety of matching techniques to address selection issues associated with REO properties and find that the lower loss severities associated with non-REO sales remain.
Vacant Property Registration Ordinances (VPROs) were widely adopted by local U.S. governments to compel mortgage lenders to monitor and maintain foreclosed properties. Using a border discontinuity, triple difference identification strategy, we find that enactment of VPROs in Florida more than halved the negative spillover from proximate foreclosures on arms-length sale prices. This finding is robust to various time-by-location fixed effects, different distance buffers around VPRO/non-VPRO borders, alternative foreclosure measures, and two falsification exercises. Finally, we show that foreclosed properties subject to a VPRO sell at higher prices when ultimately returned to the market, consistent with an underlying physical externality.
We develop out-of-sample dynamic forecasting estimates for loss distribution for different components of residential mortgage loss such as loss from the sale, maintenance cost, and carrying interest cost. It particularly helps in unmasking the nature of loss for various disposition types in the event of default. We jointly model default and prepayment to calculate the probability of default conditional on various loan characteristics using 30-year single-family fixed-rate mortgages from Fannie Mae public data. We concurrently estimate the loss the given default for each loss component over alternative disposition types such as short-sales, third-party sales, and REO. Using the conditional probability estimates from the competing risk hazard model and the estimates obtained from the loss-given-default model, we employ simulation technique to find out how loss (probability) distribution for each loss component responds to random scenarios. Such a sensitivity analysis has a huge implication for reallocation of risk-based capital among different loss components under the new CECL standard.
Extensive literature on the impact of civil war on economic growth marked by lack of consensus on the true magnitude of the impact. Lack of clarity could be due to ignoring the distinction between ethnic and nonethnic conflict. While a System-GMM estimation of endogenous growth model reveals strong negative impact of nonethnic conflict on growth, ethnic conflict appears to have an insignificant impact. In this paper, we explicitly make use of the panel time-series methodology to test our hypothesis that ethnic conflict may have a long-term influence on growth and the failure to find any impact of ethnic conflict could be a limitation of the methodology which focuses on short term impacts.
We pay careful attention in identifying the channel through which foreclosures generate negative externalities. We specifically focus on nearby properties that are characterized by underwater loans. These properties are interesting from a policy perspective for various reasons. Negative equity is one of the primary drivers of default or foreclosure, which has been well-established in the literature. Negative equity can lead to “strategic defaults” and can contribute to “double-trigger” defaults as well. Given the elevated risk of default/foreclosure, underwater borrowers have a lower incentive to invest in and maintain their property. This, in turn, could lead to negative externalities in the local neighborhood in the form of lower home values, elevated crime, etc. The literature has primarily focused on estimating externalities caused by foreclosures. In contrast, in this research we focus specifically on negative equity, as it argues, is really the driver of defaults/foreclosures and is in part a direct result of high initial leverage.