Topic 6 Part 3 Housing and Business Cycles
Why is Housing Prone to Irrational Exuberance? Some additional
points.
The relationship between prices and activity why is housing so
cyclical?
Housing is influenced by the business cycle but is also a major
infl
Topic 2A Rural/Firm Model Problems
Name Group (Day, Number).
Problem 1. Bideford market town
The farmers in the hinterland of Bideford all produce corn. The farm land is equally
productive on all farms. All corn is transported to Bideford by a cart owners
Topic 2.1 Urban Monocentric Model Problems
All these problems relate to the closed urban model.
Problem 1. A Simple Monocentric City
Consider the city of Exeter. You are given the following information:
Population of households/workers (N) = 3.14 million
Set 3: Notes on Variations on the Mono-centric Model(s)
Part A: Variations on Closed Model
The simple monocentric model gives many insights into the structure and behaviour
of markets in cities. But it makes a number of assumptions. Here we relax some of
Topic 2: Basic Farm (Firm) Land Models
1. Rural Land Theory
Most of the course is focused on urban economics and the location
of households/houses (and firms).
But, its origins (and basic idea) lies in rural land theory
Also the rural model we will dev
Topic 6 - The Macroeconomics of the Housing Market : Some Notes
The notes for this topic do not cover all the points discussed in the lecture/ lecture slides
and/or used in answering the problems. The slide notes are in most instances fairly selfexplanato
Topic 2 Part A: Notes on the Mono-centric Model(s) as it
applies to Farms and Firms
These notes on the mono-centric models are central to the understanding of real estate
economics. In this first part (Part A) it presents the Rural Model, but the principl
Topic 4 - Discussion and (Guide to) Questions
In Topic 2 we developed a standard closed urban model for the rental gradient of land in a
monocentric city. With this model, we then showed how changes in population, income,
commuting costs and R(a) would ch
Urban Model can be used to determine the effect of changes in R(a),
Commuting Costs, Population and Income on the shape of a city
The working below uses the simple equations in the urban model (at back) to work
through the effects of changes in these fact
Topic 4 Land Use Controls Problems
Problem 1.
Market Failure
Intervention in the housing market is based on the idea of market failure.
a) What market failures does Brueckner identify? Why do/might these represent market
failure?
b) What concerns does Bru
Topic 5 Government Policy and Cities
Impact of Geographical Factors on Land Prices
Natural Amenities discussed before
Space constraints
Model with cost of conversion to urban use.
Impact of Government Policy on Land Prices
Transport policy next topi
Topic 2: The Closed Urban Model
1. Look at Model of Households decision (Model 3) choice of land,
capital (structure) and consumption.
2. What it means for rents, the rent gradient, the size of a city, etc.
3. Breuckner looks at housing and consumption. H
Topic 5 Cities and Transport Problems
Broader issues/ Public policy questions.
As cities grow, volume of commuting grows
Need to increase transport infrastructure
Which area most affected?
What if government does not increase infrastructure?
Public tra
Topic 6: Equilibrium? In Bubble Trouble? And
Other Questions
1. The history of Australia some
perspectives
Explaining the change since circa 1960
Putting the last 30 years in some
perspective
2. Measures of Equilibrium
3. Is the market in a b
Topic 6: A Macro Look at Housing
1.
Relationship between Rents, Prices and Interest rates (Financial
Perspective).
Questions: what is equilibrium in the housing market?
A Bubble implies disequilibrium with values above the estimate of
equilibrium.
Unde
Topic 5: Transport and Congestion Toll
Problems
Problem 1.
To Build or Not to Build?
As a city expands it needs additional transport infrastructure. (Here I make no distinction
between more roads or more rail.) If the government decides not to build that
Topic 3.2 : Open Model Problems
Topic 3.1 (week 4 short lecture) covered a number of variations on the Closed Monocentric
Model we developed in Topic 2. But the problems below do not relate to that part. Problems
1-4 look at Open Model which will be cover
Topic 6 - Macro-economic Problems
As with all topics, the questions in the final exam are embedded in the questions below. The
difference with this topic is that some knowledge of both theory and recent history is
required. This is in part the reason that
Topic 3.2 Open City Model Weeks 5, 6
Two key propositions
1. People will move to cities which offer higher utility
(open city model).
Problem 1, Notes parts 4,5 refer and Brueckner 2.7.3 Pages
48-50
2. Decisions about cities are made by both people
and fi
Topic 2 Notes on the Household Urban Mono-centric Model
These notes on the mono-centric models are central to the understanding of real estate
economics. In Part A we looked at Rural Model of Land Value. The principles in that model
carry through to Other
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