The impact of property rights and its limits

The empirical evaluation of the effect of land property rights typically suffers from selection problems. The allocation of property rights across households is usually not random but based on wealth, family characteristics, political clientelism, or other mechanisms built on differences between the groups that acquire property rights and the groups that do not. In this paper, we address this selection concern exploiting a natural experiment in the allocation of property rights. Twenty years ago, a homogenous group of squatters occupied a piece of privately owned land in a suburban area of Buenos Aires, Argentina. When the Congress passed an expropriation law transferring the land from the former owners to the squatters, some of the former owners surrendered the land (and received a compensation), while others decide to sue in the slow Argentine courts. These different decisions by the former owners generated an allocation of property rights that is exogenous to the characteristics of the squatters. We take advantage of this natural experiment to evaluate the effect of the allocation of urban land property rights. Our preliminary results show significant effects on housing investment, household size, and school attrition. Contradicting De Soto's hypotheses, we found nonsignificant effects on labor income and access to credit markets.

Credit borrowing constraints in a DSGE framework: income vs. housing

Credit market in Brazil distinguishes from advanced economies in many aspects. One of them is related to collaterals for households borrowing. This work proposes a DSGE framework, based on Gerali et al.(2010), to analyse one pecularity of Brazillian credit market: payroll-deducted personal loans. To original model, we added the possibility to households contract long term debt and compare to differents types of credit constrains: one based on housing and other based on future income. We callibrate and estimate the model to Brazil, using Bayesian technique. Results show that, in a economy where credit constraints are based on income, responses to shocks appear to be stronger, at first, but dissipate faster. This occurs because income responds quickly to shock than housing prices, so does amount available to loans. In order to smooth consumption, agents compensate lower income and borrowing by increasing working hours, restoring loans and debt in a shorter time.

The life-cycle effects of social security in a model with housing and endogenous benefits

This article develops a life-cycle general equilibrium model with heterogeneous agents who make choices of nondurables consumption, investment in homeowned housing and labour supply. Agents retire from an specific age and receive Social Security benefits which are dependant on average past earnings. The model is calibrated, numerically solved and is able to match stylized U.S. aggregate statistics and to generate average life-cycle profiles of its decision variables consistent with data and literature. We also conduct an exercise of complete elimination of the Social Security system and compare its results with the benchmark economy. The results enable us to emphasize the importance of endogenous labour supply and benefits for agents' consumption-smoothing behaviour.