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David Gomtsyan (Université de Rouen) – “Building the city under financial frictions”

April 19, 2022 @ 12:15 pm - 1:30 pm

Microeconometrics Seminar: Every Tuesday
Time: 12:15 pm – 13:30 pm
Date: 19th of April 2022
Room : 3001

David Gomtsyan (Université de Rouen) – “Building the city under financial frictions”

Abstract: In African cities the construction process of many small and medium-sized buildings proceeds very slowly and may take decades. To explain this phenomenon and understand its consequences, this paper introduces endogenous house construction into a heterogeneous agent model with idiosyncratic risk and borrowing constraints. Investments in construction serve as a means for asset accumulation and income generation. The model is calibrated to match key characteristics of the housing market in Nairobi. Counterfactual simulations show that improvements in credit provision can substantially speed up the expansion of the housing stock of the city and increase the average number of floors in newly constructed buildings.

Benoît SCHMUTZ (Pôle d’économie du CREST)
Roland RATHELOT (Pôle d’économie du CREST)