Cookies?
Library Header Image
LSE Research Online LSE Library Services

Capitalization of central government grants into local house prices: panel data evidence from England

Hilber, Christian A. L. and Lyytikainen, Teemu and Vermeulen, Wouter (2011) Capitalization of central government grants into local house prices: panel data evidence from England. Regional Science and Urban Economics, 41 (4). pp. 394-406. ISSN 0166-0462

Full text not available from this repository.

Identification Number: 10.1016/j.regsciurbeco.2010.12.006

Abstract

We explore the impact of central government grants on local house prices in England using a panel data set of local authorities (LAs) from 2001 to 2008. Electoral targeting of grants to LAs by the incumbent national government provides an exogenous source of variation in grants that we exploit to identify their causal effect on house prices. Our results indicate substantial or even full capitalization. We also find that house prices respond more strongly in locations in which new construction is constrained by physical barriers. Our results imply that (i) during our sample period grants were largely used in a way that is valued by the marginal homebuyer and (ii) increases in grants to an LA may mainly benefit the typically better off property owners (homeowners and absentee landlords) in that LA.

Item Type: Article
Official URL: http://www.elsevier.com/locate/regec
Additional Information: © 2011 Elsevier
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Date Deposited: 27 Jan 2011 10:07
Last Modified: 06 Apr 2017 12:13
URI: http://eprints.lse.ac.uk/id/eprint/31525

Actions (login required)

View Item View Item