Abstract

https://ssrn.com/abstract=2702481
 


 



Housing Bubbles and Zoning Corruption: Evidence from Greece and Spain


Antonis M. Koumpias


Georgia State University - Andrew Young School of Policy Studies

Jorge Martinez-Vazquez


Georgia State University - Andrew Young School of Policy Studies

Eduardo Sanz-Arcega


University of Zaragoza - Faculty of Business and Economics

November 8, 2015

Andrew Young School of Policy Studies Research Paper Series No. 15-11

Abstract:     
The adoption of the euro in 2002 led to an unprecedented supply of cheap mortgage credit in Greece and Spain. The housing bubbles that ensued amplified developers' incentives to offer bribes for illegal construction projects. We exploit the mortgage credit windfall as the shock that induced variation in housing prices to examine the effects of the latter on zoning corruption. The empirical analysis relies on objective measures of zoning corruption at the regional level from 2003 through 2008 for Greece and from 2006 through 2008 for Spain. We employ legal indictments of zoning officials from prosecution records for Greece, which are novel to the literature, and media reports of zoning corruption scandals for Spain. Adjusting for unemployment, population, population density and college attainment, our baseline negative binomial regression estimates indicate a positive and significant relationship between housing prices and zoning corruption. Our findings are robust to a series of checks that include zero-inflated variants of the negative binomial model, and linear models that address model misspecification, omitted variables and dynamic panel bias. In the case of Spain, we are also able to analyze the sensitivity of our findings using a provincial panel that provides substantially more cross-sectional variation.

Number of Pages in PDF File: 49

Keywords: Housing Bubbles, Corruption, Zoning, Land Use, Greece, Spain, Euro

JEL Classification: H83, K42


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Date posted: December 13, 2015  

Suggested Citation

Koumpias, Antonis M. and Martinez-Vazquez, Jorge and Sanz-Arcega, Eduardo, Housing Bubbles and Zoning Corruption: Evidence from Greece and Spain (November 8, 2015). Andrew Young School of Policy Studies Research Paper Series No. 15-11. Available at SSRN: https://ssrn.com/abstract=2702481 or http://dx.doi.org/10.2139/ssrn.2702481

Contact Information

Antonis Marios Koumpias
Georgia State University - Andrew Young School of Policy Studies ( email )
Department of Economics
35 Broad Street, 6th Floor
Atlanta, GA 30303-3083
United States
HOME PAGE: http://https://sites.google.com/site/amkoumpias/

Jorge Martinez-Vazquez (Contact Author)
Georgia State University - Andrew Young School of Policy Studies ( email )
University Plaza
PO Box 3992
Atlanta, GA 30302-3992
United States
404-651-3990 (Phone)
404-651-3996 (Fax)

Eduardo Sanz-Arcega
University of Zaragoza - Faculty of Business and Economics ( email )
Gran Via, 2
50005 Zaragoza, Zaragoza 50005
Spain
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