Real estate prices and corporate investment: theory and evidence of heterogeneous effects across firms

In this paper, we investigate the effect of real estate prices on productive investment. We build a simple theoretical framework of firms’ investment with credit rationing and real estate collateral. We show that real estate prices affect firms’ borrowing capacities through two channels. An increase in real estate prices raises the value of the firms’ pledgeable assets and mitigates the agency problem characterizing the creditor-entrepreneur relationship. It simultaneously cuts the expected profit due to the increase in the cost of inputs. While the literature only focuses on the first channel, the identification of the second channel allows for heterogeneous effects of real estate prices on investment across firms. We test our theoretical predictions using a large French database. We do find heterogeneous effects of real estate prices on productive investment depending on the position of the firms in the sectoral distributions of real estate holdings. Our preferred estimates indicate that a 10% increase in real estate prices causes a 1% decrease in the investment rate of firms in the first decile of the distribution but a 6% increase in the investment rate of firms belonging to the last decile

Homeownership motivation, rationality, and housing prices: Evidence from gloom, boom, and bust‐and‐boom economies

By focusing on three types of homebuyers, we address three questions: (a) Do households drive housing prices? (b) Do households and landlords act rationally in their buying decisions? (c) Is the market conducive to promoting homeownership or is it a speculators' territory? We use system Generalized Method of Moments (GMM) estimations based on 1970–2016 data, for 34 economies clustered as gloom, boom, or bust‐and‐boom, and we provide novel evidence that all three types of homebuyers contribute significantly to the determination of housing prices. Households and landlords seem to act irrationally as their decisions are not greatly affected by housing affordability or shrinking yields

Politics and Economics of Land Reform in the Philippines: a survey

The Philippines has long been known for its high inequality in distribution of wealth and income; unlike many of its Asian neighbors characterized by relatively less inequality by international standards, the Philippine economy has often been compared to Latin American countries which are characterized by high inequality in land distribution. Partly due to its historically high inequality there has long been intermittent incidence of peasant unrest and rural insurgencies in the Philippines. As a result, the issue of land reform (or ‘agrarian reform’ as more commonly called in the Philippines, of which land reform constitutes the major part) has continuously been on political agenda at least since the early part of the 20th century; nevertheless land reform in the Philippines has been, and still is, an unfinished business. Against such a historical background, the main objective of this essay is to synthesize a broad range of existing literature on the various aspects of land reform policies in the Philippine context as relevant for today’s policy makers. The paper is meant as a stock taking exercise delineating what is known and what is not. We will pay attention to both political and economic issues arising from the land reform policies since both of these aspects are equally important for policy making. Furthermore, in our attempts to derive some lessons/implications for the current policy makers we will draw on both historical experiences in the Philippines and recent land reform experiences from other developing countries.land reform; agrarian reform; redistribution; share tenancy; Philippines

Equity Pooling and Media Ownership

This Article outlines a method of pooling equity for acquiring a portfolio of media properties. Each participant receives a security containing an investment return and a management right. The management right goes only to one successful bidder, offering a cash payment to other investors as an access price. By offering repeat bidding on several properties, different members of a pool achieve ownership while diversifying their risk. Alternatively, an investor not wishing management receives a higher compensating return. The procedure is particularly suited to media properties dependent on local advertising such as radio, free community newspapers, and television outlets. These properties are more vulnerable to downturns in local markets. The pooling procedure allows local risks to be diversified away into the larger economy. Forum: New Approaches to Minority Media Ownership, Columbia Institute for Tele-Information, Columbia University

Equity Pooling and Media Ownership

This Article outlines a method of pooling equity for acquiring a portfolio of media properties. Each participant receives a security containing an investment return and a management right. The management right goes only to one successful bidder, offering a cash payment to other investors as an access price. By offering repeat bidding on several properties, different members of a pool achieve ownership while diversifying their risk. Alternatively, an investor not wishing management receives a higher compensating return. The procedure is particularly suited to media properties dependent on local advertising such as radio, free community newspapers, and television outlets. These properties are more vulnerable to downturns in local markets. The pooling procedure allows local risks to be diversified away into the larger economy. Forum: New Approaches to Minority Media Ownership, Columbia Institute for Tele-Information, Columbia University