دارایی واقعی و سیاست های عمومی مطلوب در یک اقتصاد با محدودیت اعتباری
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|6690||2007||24 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Housing Economics, Volume 16, Issue 2, June 2007, Pages 143–166
This paper articulates a general equilibrium model of a two-sector economy where entrepreneurs borrow from households subject to a credit constraint. Real estate is a productive factor in the entrepreneurial sector and serves as collateral in entrepreneurs’ debt contracts. We consider two types of public policies that have the potential of improving upon the economy’s equilibrium outcome, one of subsidizing entrepreneurial real estate holding and the other subsidizing household interest income. It is found that the former policy opens up a wide range of possibilities for Pareto improvement when the supply of real estate is endogenous.
An important fact in the economy is that agents are separated into different types—entrepreneurs and households for example. In this paper we highlight a linkage between these two type of agents, which is the borrowing–lending relationship. In particular, entrepreneurs borrow from households to fulfill their need for funds. Real estate plays dual roles for the entrepreneurial sector. It is a productive factor input and it also serves as collateral in the entrepreneurs’ debt contracts. Entrepreneurs’ borrowing and therefore their economic activities, including purchasing labor from the household sector, are constrained by the market value of the real estate they own. This paper articulates a general equilibrium model of such an economy and raises the following question. Is the unintervened outcome of this economy optimal? Is there scope for public policy to improve upon the general equilibrium outcome in this economy? We consider two types of policies, one of subsidizing entrepreneurial real estate ownership, the other subsidizing household interest income. It is found that these policies have the potential to raise at least some welfare measures of the economy. Importantly, the former policy opens up a wide range of possibilities for Pareto improvement when the supply of real estate is endogenous. Understanding the effects of these policies hinges critically on recognizing the fact that entrepreneurs’ borrowing limit is positively related to the market value of their real estate holding and inversely related to the interest rate. The policy of subsidizing entrepreneurial real estate ownership, equivalent to a negative property tax, effectively lowers the depreciation rate for entrepreneurial real estate. It stimulates entrepreneurs’ real estate demand and bids up real estate price, allowing entrepreneurs to borrow more, hire more labor, and produce more output. The policy of subsidizing household interest income directly lowers the interest rate faced by entrepreneurs, drives up real estate price, and redistributes real estate holding from the household sector to the entrepreneurial sector, causing output to increase in equilibrium. Our results indicate that for certain ranges these policies have positive welfare consequence. There are already many studies that discuss the implications of credit constraints for economic performance. Prominent examples include Stiglitz and Weiss, 1981, Bernanke et al., 1999 and Kiyotaki and Moore, 1997, among others. Yet there is little discussion about what public policy can do in economies with credit constraints on particular types of agents. This paper raises this question and attempts to provide a first-step answer to it. Our consideration of the two policies mentioned above is based on the important roles played by asset holding, asset price, and the interest rate in determining entrepreneurs’ credit limits. Both the policy of subsidizing entrepreneurial real estate ownership and the policy of subsidizing interest income directly impact the discounted collateral value and therefore entrepreneurial borrowing and production. They have important welfare consequences as they influence the economy’s production, consumption, and asset allocation. Since our goal is to find out what the optimal intervention is for economies with credit-constrained entrepreneurs, it occurs natural for us to investigate the effects of both policies. The policy of subsidizing entrepreneurial real estate holding is our emphasis as it has a large potential to bring about Pareto improvement. Our paper is related to a fast growing literature on the nexus between real estate and the macroeconomy. The literature is coming to a consensus that the real estate market does play an important role in the aggregate economy.2 A couple of channels through which real estate affects the economy have been emphasized. An important one is the wealth effect: as real estate price increases, agents increase their consumption and hence stimulate the macroeconomy. Recent empirical works on this line include Bostic et al., 2005, Case et al., 2005 and Edelstein and Lum, 2004, among others. Another channel, more closely related to our paper, is the collateral effect: as real estate price rises, the net worth of credit-constrained agents increases. These agents then raise their consumption and/or investment (in capital or in real estate). Recent works such as Kiyotaki and Moore, 1997, Ortalo-Magne and Rady, 2006, Iacoviello, 2005 and Jin et al., 2006, among others, investigate this channel in dynamic general equilibrium settings. In addition, Davis and Heathcote, 2005 and Jin and Zeng, 2004 find that real estate is important for understanding business cycle fluctuations. For tractability, the classification of agents into entrepreneurs versus households is fixed in our paper. There are models, such as Aghion and Bolton, 1997, Banerjee and Newman, 1993, Iyigun and Owen, 1998 and Quadrini, 2000, that allow agents to choose their occupations and arrive at an endogenous classification. Like these studies, our paper emphasizes entrepreneurs as a special group and their interaction with other agents through the credit market, labor market, goods market, etc. The rest of the paper is organized as follows. Section 2 lays out the baseline model where the supply of real estate is exogenously fixed. Optimal public policy within this context is then analyzed in Section 3. Section 4 introduces endogenous supply of real estate and distortionary-tax financing. The last section concludes. All proofs are relegated to the Appendix.
نتیجه گیری انگلیسی
In this paper we have articulated a general equilibrium model of a two-sector economy where entrepreneurs borrow from households subject to a credit constraint, with their real estate serving as collateral in their debt contracts. Undertaking policy analysis using this model has the advantage of capturing general equilibrium, rather than partial equilibrium, effects of the policies in question. We have highlighted the effects of the two subsidy policies we consider on asset price, real estate ownership, credits, employment, and output, as well as sectoral and social welfare. The positive effects on real estate price and entrepreneurial real estate holding are quite robust: they are present in both the baseline and the full models and are applicable for both policy experiments. In our numerical findings, the only policy experiment that opens up a wide range of possibilities for Pareto improvement is the subsidy policy on entrepreneurial real estate ownership in the model economy with endogenous supply of real estate. We have for simplicity assumed that entrepreneurs and households compete for the same type of real estate, an assumption which is apparently unrealistic. A possibility to make our analysis more in line with reality is to follow Chen and Leung (2006) to distinguish commercial real estate from residential real estate. We believe, however, that extending our analysis in this way will not change our basic findings. Even when commercial real estate and residential real estate are developed separately, they are ultimately competing for the same types of resources—labor, capital, intermediate inputs, etc. Their prices are expected to comove with each other and the mechanisms identified in our paper for asset price movement and asset holdings will still be valid. As is the case with all policy analysis using general equilibrium models, the answers depend on the models researchers employ. Introducing different features often change the answers quantitatively, and sometimes qualitatively. Being aware of this, we view our analysis as exploratory: It constitutes a first-step attempt in the literature to investigate the scope for public policy in economies where real estate is an important element for the determination of both sectoral and aggregate economic activities. We do believe that the key features emphasized in our analysis—the two-sector structure, the borrowing–lending relationship, the roles of real estate, etc.—are relevant abstractions of actual economies. More research in this direction is called for.