The Impact of Commercial Real Estate Regulations on U.S. Output / Fil Babalievsky, Kyle F. Herkenhoff, Lee E. Ohanian, Edward C. Prescott.

Format:

Book

Author/Creator:

Babalievsky, Fil.

Contributor:

National Bureau of Economic Research.

Herkenhoff, Kyle F.

Ohanian, Lee E.

Prescott, Edward C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31895.

NBER working paper series no. w31895

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

Commercial real estate accounts for roughly 20% of the U.S. fixed asset stock, and commercial land use is highly regulated. However, little is known about the quantitative impact of these regulations on economic activity or consumer welfare. This paper develops a spatial general equilibrium model of the U.S. economy that includes commercial real estate regulations and congestion effects, the latter of which provide a rationale for such regulations. The model is tailored to exploit the near-universe of CoreLogic's commercial, parcel-level, property tax records to construct a quantitative index of commercial real estate regulations for nearly every commercial property. We use the model to evaluate the positive and normative impacts of commercial land use deregulations. Moderately relaxing commercial regulations across all U.S. cities yields large allocative efficiency effects, with output gains of about 3 percent to 6 percent and welfare gains of about 3 percent to 9 percent of lifetime consumption. We also find significant positive and normative gains from deregulation with 40 percent of the labor force working remotely.

Notes:

Print version record

November 2023.