Neha Gupta

This dissertation comprises of three chapters in macroeconomics and urban economics with a particular focus on the underlying monetary policy and fiscal policy in real estate economics. The first chapter considers user costs of housing as a major part of a household’s expenditure. I empirically investigate the heterogenous impact of an unanticipated expansionary monetary policy on housing markets and household tenurial decision by exploiting the user cost of housing channel. Drawing on a Swiss household panel data and daily interest rate futures, I find that the less financially constrained households are 3.45 percentage points more likely to become homeowners in case of unexpected decrease of 100 basis points in 3-month CHF Libor. The households in the upper income quartile with pillar 3a savings benefit the most in case of an unanticipated negative monetary policy shock. The real user cost expenses of renting also benefits significantly by a decrease of on average 19% from an unexpected expansionary monetary policy. Single family houses do not benefit from the shocks in the monetary policy. The findings highlight the importance of apartments and multifamily housing. The second chapter examines the dynamics of housing rents which are a major part of a slum household’s expenditure. I exploit a large scale ’big-push’ national urban renewal policy reform in India between 2005 and 2012 to empirically evaluate the multi-dimensional effect of rental reforms and housing provisions on home ownership, rental expenditures, women empowerment and quality of dwelling for slum households. Combining a novel pooled cross sectional household survey data for year 2002, 2008, 2012 and nighttime lights activity data at district level, I find the reform significantly increases the real rents by 18.2% and the probability to transition to homeownership by 16.7 percentage points. Females are more likely to be the head of the household. The findings highlight the role of market failure. The final chapter focuses on the slums as an integral part of urban spaces in India. Using state level nighttime light intensity as a measure of urbanisation I empirically evaluate the impact of urbanisation on slum growth from 1993 to 2012. In the process, I also exploit a large scale ’big-push’ national policy reform in India between 2005 and 2012 to further examine if such a policy was efficient in curbing the slum growth. Combining a novel pooled cross-sectional household survey data and nighttime lights activity at state level, I find the likelihood of being a slum household is 14.2 percentage points more in states lying within the third quartile of nighttime light intensity. After the introduction of the policy the likelihood decreases for all quartiles, where the effect for the 3rd quartile is reduced by 3.9 percentage points. The results are preliminary and highlights the role of underlying social phenomenon linked to migration and middle tier urbanised spaces.

Neha Gupta

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