TY - JOUR
T1 - Tarnishing the golden and empire states
T2 - Land-use restrictions and the U.S. economic slowdown
AU - Herkenhoff, Kyle F.
AU - Ohanian, Lee E.
AU - Prescott, Edward
N1 - Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2018/1
Y1 - 2018/1
N2 - This paper studies the impact of state-level land-use restrictions on U.S. economic activity, focusing on how these restrictions have depressed macroeconomic activity since 2000. We use a variety of state-level data sources, together with a general equilibrium spatial model of the United States to systematically construct a panel dataset of state-level land-use restrictions between 1950 and 2014. We show that these restrictions have generally tightened over time, particularly in California and New York. We use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states. Counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased US GDP and productivity roughly to their current trend levels. California, New York, and the Mid-Atlantic region expand the most in these counterfactuals, drawing population out of the South and the Rustbelt. General equilibrium effects, particularly the reallocation of capital across states, account for much of these gains.
AB - This paper studies the impact of state-level land-use restrictions on U.S. economic activity, focusing on how these restrictions have depressed macroeconomic activity since 2000. We use a variety of state-level data sources, together with a general equilibrium spatial model of the United States to systematically construct a panel dataset of state-level land-use restrictions between 1950 and 2014. We show that these restrictions have generally tightened over time, particularly in California and New York. We use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states. Counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased US GDP and productivity roughly to their current trend levels. California, New York, and the Mid-Atlantic region expand the most in these counterfactuals, drawing population out of the South and the Rustbelt. General equilibrium effects, particularly the reallocation of capital across states, account for much of these gains.
KW - Capital reallocation
KW - Growth
KW - Land regulation
KW - Migration
KW - Productivity
KW - Spatial general equilibrium
UR - http://www.scopus.com/inward/record.url?scp=85034735228&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85034735228&partnerID=8YFLogxK
U2 - 10.1016/j.jmoneco.2017.11.001
DO - 10.1016/j.jmoneco.2017.11.001
M3 - Article
AN - SCOPUS:85034735228
SN - 0304-3932
VL - 93
SP - 89
EP - 109
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
ER -