Estimating Equilibrium Models of Local Jurisdictions

62 Pages Posted: 1 Jan 1999 Last revised: 24 Aug 2022

See all articles by Dennis Epple

Dennis Epple

Carnegie Mellon University; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Holger Sieg

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

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Date Written: December 1998

Abstract

Research over the past several years has led to development of models characterizing equilibrium in a system of local jurisdictions. An important insight from these models is that plausible single-crossing assumptions about preferences generate strong predictions about the equilibrium distribution of households across communities. To date predictions have not been subjected to formal empirical tests. The purpose of this paper is to provide an integrated approach for testing predictions from this class of models. We first test conditions for locational equilibrium implied by these models. In particular about the distribution of households by income across communities. We then test the models predictions about the relationships among locational equilibrium conditions and housing prices. By drawing inferences from a structural general equilibrium model approach of this paper offers a unified treatment of theory and empirical testing.

Suggested Citation

Epple, Dennis and Sieg, Holger, Estimating Equilibrium Models of Local Jurisdictions (December 1998). NBER Working Paper No. w6822, Available at SSRN: https://ssrn.com/abstract=141397

Dennis Epple (Contact Author)

Carnegie Mellon University ( email )

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Holger Sieg

University of Pennsylvania - Department of Economics ( email )

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