Estimating Equilibrium Models of Local Jurisdictions

Posted: 2 Aug 1999

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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Abstract

Research over the past several years has led to the 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, these 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, we test predictions about the distribution of households by income across communities. We then test the models' predictions about the relationships among locational equilibrium conditions, housing markets, and housing prices. By drawing inferences from a structural general equilibrium model, the paper offers a unified treatment of theory and empirical testing.

JEL Classification: C51, H31, R12

Suggested Citation

Epple, Dennis and Sieg, Holger, Estimating Equilibrium Models of Local Jurisdictions. Journal of Political Economy, Vol. 107, No. 4, August 1999. Available at SSRN: https://ssrn.com/abstract=169395

Dennis Epple (Contact Author)

Carnegie Mellon University ( email )

Tepper School of Business
Pittsburgh, PA 15213-3890
United States
412-268-1536 (Phone)
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National Bureau of Economic Research (NBER)

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

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Germany

Holger Sieg

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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