Abstract We test whether investors rationally react to rent news when pricing houses. Previous literature on house pricing uses aggregated housing price and rent data to estimate the rent news. We analytically demonstrate that using aggregated data biases the rationality test because it forces researchers to estimate the rent news using the cross‐project average dynamic relationship among the housing return, rent growth, and macroeconomic dynamics and, hence, misses the heterogeneity in the dynamic relationship. Our empirical tests using proprietary project‐level housing data from China's megacities find that the bias from missing the heterogeneity is economically substantial.

Abstract The article investigates the effect of crime on firm entry rates in Italian provinces over the period 2007–2016. The extant literature focuses mainly on the relationship between crime and the sorting of new businesses. The present paper contributes to this stream of work by estimating the effect of crime on the overall propensity to engage in entrepreneurial activities across a national territory. We measure the extent to which property and violent crime affect firm entry rates using an instrumental variable approach in which the instrument for criminal activity is the effective abortion rate. Our findings suggest that crime has a negative, sizable impact on firm entry. The results are robust to alternative instrumental variables and firm entry indicators. This empirical exercise emphasizes the need to consider loss of new business activities as a downstream effect when computing the social costs of crime.

Abstract In this study, we leverage on the ancient Roman roads network as a source of exogenous variation to identify the causal effect of the modern highways network on innovative performance of Italian NUTS‐3 regions. Empirical findings suggest that a 10% increase in the highways stock in a region generates an increase in the number of patents of about 3%–4%, over a 5‐year period. Further analysis suggests that our findings can in part be explained by a reduction in travel costs that fosters collaborations among inventors living in different regions and by an increase in the degree of centrality in the regional innovation network associated to denser highways networks. Finally, we find that the innovation‐enhancing effect of highways declines over time, possibly because of the introduction of information and communication technology, or the increasing congestion on the Italian network.

Abstract Many academic papers have looked at the economic effects of the EU cohesion policy, which still remain an open empirical issue. The focus of the most recent literature has been on the heterogeneous effects of the policy and the identification of regional conditioning factors. However, most of the existing studies generally assume slope homogeneity for different cross‐sectional units (i.e., regions) and they estimate the average effects of the policy for all the European regions and/or selected groups of regions. Past works also employ data covering few programming periods. This paper has two main goals. First, we study the heterogeneous consequences of EU cohesion policy on regional economic growth in Europe over the past three decades, by applying a heterogeneous coefficient approach to new panel‐time series data. We calculate the region‐specific effects of the policy in terms of long‐run gross domestic product growth. Second, we study regional differences in terms of policy effects depending on the level of assistance received by the regions. We make a distinction among cases of effective, ineffective, trigger and marginal policy. We also document that the effectiveness of EU cohesion policy in the long run can be explained by some of the key factors used in the literature. Finally, we discuss the need for ineffective cases to learn from effective and trigger ones.

Using province‐level establishments and employment data from the Korean Employment Insurance Database, this paper investigates how the regional spread of COVID‐19 affects local businesses and unemployment by establishment size and industry. We find that the number of small establishments declines substantially after the COVID‐19 pandemic through a decrease in new establishment creation and a surge in establishment closures. By contrast, large establishments are not affected significantly. Examining the numbers of unemployment benefits (UB) applicants, an indicator of unemployment, we find that the higher the rate of COVID‐19 confirmed cases in a province, the higher the number of UB applicants, regardless of their previous workplace size. Our analysis of employment insurance subscribers further confirms that the regional spread of COVID‐19 leads to a significant reduction in employment and job mobility in small establishments. Regarding industry heterogeneity in the COVID‐19 effects, we find that local COVID‐19 outbreaks affect local industries more through the reduction in establishment creation and new employment than through an increase in establishment closures. Industries that require face‐to‐face operations, such as lodging & restaurant, experience a substantial adverse impact in the early phase, and the impact also tends to last longer as COVID‐19 situations prolong.

Abstract This paper analyzes the relationship between government efficiency—an important dimension of quality of government—and economic growth at the municipal level in 1,820 Spanish municipalities during the period 2008–2015. At this level of disaggregation, the literature is virtually nonexistent due to severe data constraints. The efficiency of local government provides an accurate indicator of how good local authorities are in managing their budget. This variable is expected to be highly correlated with other more traditional quality of government indicators, such as corruption. After computing our measure, we then use it in a growth regression framework. We find a dominant positive effect of government efficiency on income per capita growth, which is robust to a wide variety of scenarios. Our findings also suggest that increases in local government quality are particularly rewarding for the poorest municipalities.

Abstract Amenities have been linked to economic growth, which has been studied at the level of nations, regions, and urban areas. We look instead at economic development at the highly localized level of cities, villages, and townships. We use regression discontinuity to estimate the effect of renewing and cutting parks and recreation spending. We find an initial effect of $2.6 million in additional residential construction 1 year after voting to renew tax funding, with diminishing effects in subsequent years. We use votes to renew tax levies, arguing that the timing of tax proposals for new funding has endogenously chosen timing.

Abstract We analyze the effect of the Öresund Bridge, a combined railway and motorway bridge between Swedish Malmö and the Danish capital Copenhagen, on inventive activity in the region of Malmö. Applying difference‐in‐difference estimation on individual‐level data, our findings suggest that the Öresund Bridge led to a significant increase in the number of patents per individual in the Malmö region as compared with the two other major regions in Sweden, Gothenburg, and Stockholm. We show that a key mechanism is the attraction of highly qualified workers to the Malmö region following the construction of the bridge.