Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228250
Authors: 
Biswas, Arnab
Cunningham, Christopher R.
Gerardi, Kristopher
Sexton, Daniel
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 2019-20
Abstract: 
This paper tests the effectiveness of vacant property registration ordinances (VPROs) in reducing negative externalities from foreclosures. VPROs were widely adopted by local governments across the United States during the foreclosure crisis and facilitated the monitoring and enforcement of existing property maintenance laws. We implement a border discontinuity design combined with a triple-difference specification to overcome policy endogeneity concerns, and we find that the enactment of VPROs in Florida more than halved the negative externality from foreclosure. This finding is robust to a rich set of time-by-location fixed effects, limiting the sample to properties within 0.1 miles of a VPRO/non-VPRO border and to a number of other sample restrictions and falsification exercises. The results suggest that an important driver of the negative price effect of nearby foreclosures is a non-pecuniary externality where the failure to maintain or secure a property affects one's neighbors.
Subjects: 
mortgage default
foreclosure
externality
policy
vacancy
JEL: 
H23
K25
R52
R28
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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