Estimating Equilibrium Models of Local Jurisdictions

62 Pages Posted: 1 Jan 1999  

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 )

Tepper School of Business
Pittsburgh, PA 15213-3890
United States
412-268-1536 (Phone)
412-268-7357 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Holger Sieg

University of Pennsylvania - Department of Economics ( email )

160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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