Policy evaluation in housing market using Spatial Autoregression by Jungyoon Lee

Join us for this weeks Econometrics Research Seminar, Autumn Term 2022

Dr Jungyoon Lee from the Department of Economics, Royal Holloway University of London will present their research on Policy evaluation in housing market using Spatial Autoregression

Abstract

Housing is the biggest asset class of households in most countries and the study of house prices naturally carries its importance in policy making at all levels. Over the past decade, there has been a growing recognition of importance of spatial modelling in urban and real estate economics. A common class of spatial econometric methods applied is the so-called Cliff-Ord type models that encompass Spatial Durbin and Spatial Autoregressions (SAR). However, without micro-foundation, there is a limitation in this class of models in that they are deployed primarily as reduced form models, and hence causal interpretation of their parameter estimates is not warranted. This is especially problematic when one's aim is to analyse policy impacts. In this paper, we firstly provide derivation of SAR specification in housing prices determination based on economic modelling. Secondly, we highlight the general tendency of non-spatial models to overstate the impact of a policy on house prices, and illustrate how SAR methods can enable richer and more fine-tuned evaluation of policy effects. We present this in an empirical example involving evaluation of unemployment insurance (UI) policy on housing prices.

This seminar will be held in the Economics Common Room at 4pm on Wednesday 23rd November. This event is open to all levels of study and is also open to the public. To register your place and gain access to the webinar, please contact the seminar organisers.

This event is part of the Econometrics Research Seminar Series.