Housing bubbles and land planning corruption: evidence from Spain’s largest municipalities

Koumpias A. M. ; Martínez-Vázquez J. ; Sanz-Arcega E. (Universidad de Zaragoza)

Resumen: Purpose: The purpose of this paper is to quantify to what extent the housing bubble in the early-to-mid 2000s in Spain exacerbated land planning corruption among Spain’s largest municipalities. Design/methodology/approach: The authors exploit plausibly exogenous variation in housing prices induced by changes in local mortgage market conditions; namely, the rapid expansion of savings banks (Cajas de Ahorros). Accounting for electoral competition in the 2003–2007 and 2007–2009 electoral cycles among Spanish municipalities larger than 25, 000 inhabitants, the authors estimate a positive relationship between housing prices and land planning corruption in municipalities with variation in savings bank establishments using instrumental variables techniques. Findings: A 1% increase in housing prices leads to a 3.9% points increase in the probability of land planning corruption. Moreover, absolute majority governments (not needing other parties’ support) are more susceptible to the incidence of corruption than non-majority ones. Two policy implications to address corruption emerge: enhance electoral competition and increase scrutiny over land planning decisions in sparsely populated. Originality/value: First empirical evidence of a formal link between the 2000s housing bubble in Spain and land planning corruption.

Idioma: Inglés

DOI: 10.1108/AEA-11-2020-0159

Año: 2022

Publicado en: Applied Economic Analysis 30, 89 (2022), 132-150
ISSN: 2632-7627

Factor impacto JCR: 2.3 (2022)

Categ. JCR: ECONOMICS rank: 169 / 380 = 0.445 (2022) - Q2 - T2

Factor impacto CITESCORE: 2.7 - Economics, Econometrics and Finance (Q2)

Factor impacto SCIMAGO: 0.535 - Economics, Econometrics and Finance (miscellaneous) (Q1)

Tipo y forma: Artículo (Versión definitiva)

Área (Departamento): Área Economía Aplicada (Dpto. Economía Aplicada)