This paper reviews the linkages between urbanization and economic development. It articulates the relationship between urban density and potential increases in productivity, through specialization, complementarities in production, through the diffusion of knowledge and mimicry, and simply through size and scale. The factors limiting the efficient sizes of cities are analyzed. The paper reviews empirical knowledge, from underdeveloped countries as well as high-income industrial societies, about the importance and magnitudes of these productivity gains. The analysis documents the close link between gains in economic efficiency and the urbanization of populations in most parts of the world.
The most significant and most expensive housing policy in the United States is the treatment of owner-occupied housing for tax purposes. This treatment of housing under the tax code is analogous to that in many other countries (for example, Sweden), but certainly not in all developed countries (for example, Canada). Federal subsidies to US renter households are much smaller. Policy has evolved from programmes in which the government built, owned, and managed dwellings to programmes emphasizing housing demand through vouchers and rent certificates awarded to eligible households.
This paper reviews the evolution of the major credit and insurance programs undertaken by the U.S. government in support of urban housing. As the review makes clear, the Federal Housing Administration (FHA), Veterans Administration, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation have played major roles in the development of liberal and efficient primary and secondary mortgage markets in the United States. The development of capacity in mortgage lending and securitization in the private sector does suggest, however, that federally subsidizing mortgage market activities can be restrained with little effect on homeownership- the principal goal of this federal activity. In particular, the orderly reduction in the mortgage investment activities of the government-sponsored enterprises (GSEs) and the imposition of guarantee fees on mortgage-backed securities insured by the GSEs are first steps in restraining federal activity. More generally, a concentration of FHA and GSE activity on first-time homebuyers would reduce federal risk exposure while preserving the economic rationale for government activity.
This paper reviews the evolution of the major credit and insurance programs undertaken by the U.S. government in support of urban housing. As the review makes clear, the Federal Housing Administration (FHA), Veterans Administration, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation have played major roles in the development of liberal and efficient primary and secondary mortgage markets in the United States. The development of capacity in mortgage lending and securitization in the private sector does suggest, however, that federally subsidizing mortgage market activities can be restrained with little effect on homeownership-the principal goal of this federal activity. In particular, the orderly reduction in the mortgage investment activities of the government-sponsored enterprises (GSEs) and the imposition of guarantee fees on mortgage-backed securities insured by the GSEs are first steps in restraining federal activity. More generally, a concentration of FHA and GSE activity on first-time homebuyers would reduce federal risk exposure while preserving the economic rationale for government activity.