PLAN 603 Fall Economic Analysis for Urban Planning and Policy: Principles, Public Finance and Economic Geography

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1 PLAN 603 Fall 2011 Economic Analysis for Urban Planning and Policy: Principles, Public Finance and Economic Geography Time: Wednesday 9:00 am 11:45 am Location: Saunders 116 Instructor: James H. (Jim) Spencer Associate Professor Departments of Urban & Regional Planning Political Science University of Hawai i at Manoa jhs@hawaii.edu (808) Office: Saunders 633b Office Hours: Tuesday 9 11am or by appointment. Teaching Assistant: Rebecka Arbin Department of Urban & Regional Planning University of Hawai i at Manoa rebeckaj@hawaii.edu Office Hours: Thursday 1:00-4:00 (TBC) or by arrangement. Course Description This course is one of the three core requirements of the MURP program and is intended to provide students with the basic principles of economics applied to urban contexts. It will review the general economic forces affecting cities, relevant microeconomic theories for planners, and spatial economic theories explaining economic growth and regional development. The learning objectives of the course are to provide students with the language to discuss the market forces affecting cities, urban development, and urbanization by exploring the principles of 1) Factors of Production: Land, labor and capital markets; 2) Externalities, Welfare, and Public finance 3) Economic geography

2 This course will not provide a mathematical review of these concepts and there is no laboratory. The material will focus on the broad spatial and economic concepts and how they shape the form and economy of cities. There will be a midterm exam and a final paper analyzing a particular urban economy using the principles explored in the class. Students will also be required to complete periodic problem sets. There are no required textbooks, and readings will be posted on the Laulima website for students to download. In general, we will plan to upload the readings two weeks prior to the class during which they are to be discussed. Preparation While there are no requirements for this course, a basic understanding of conventional terms used in economics such as, Elasticity, Sensitivity, Marginal Utility, Externalities, Pareto Optimization, for example, is helpful. It may be useful to purchase a dictionary of economic terms. Course Structure and Requirements Grading Breakdown Midterm Exam 20% Final Term Paper 35% Homework/Problem Sets 25% In-Class Participation 10% Attendance 10% Readings Textbooks (selections from) Carbaugh, Robert J International Economics, 7 th Ed. New York: South- Western College Publishing. Di Pasquale, Denise and William C. Wheaton. Urban Economics and Real Estate Markets. Englewood Cliffs, NJ: Prentice Hall Ehrenberg, Robert G. and Robert S. Smith Modern Labor Economics: Theory and Public Policy, 6 th Ed. Reading, MA: Addison Wesley. Fabozzi, Frank J. and Franco Modigliani Capital markets: institutions and instruments. Upper Saddle River, NJ: Prentice Hall. Mankiw, Gregory Principles of Microeconomics (3 rd Ed.). Mason, OH: Thomson Southwestern. O Sullivan, Arthur Urban Economics. Homewood, IL: Irwin

3 Topical Papers in scientific journals and popular media Class Schedule Week 1: August 24 Introduction: Microeconomics, Economic Geography, Public Finance None. In class listen to National Public Radio The Giant Pool of Money. UNIT 1 - ECONOMIC PRINCIPLES FOR PLANNERS: LAND, LABOR AND CAPITAL FACTORS Week 2: August 31 Urban Economics: The Market System Readings to be discussed O Sullivan, Ch. 1. Krugman, Paul Development, Geography and Economic Theory. Cambridge, MA: MIT Press. Chapters 1 and 2. Week 3: September 7 Micro-review: Supply/Demand, Markets, Incentives Readings to be referenced and discussed Mankiw, Ch. 1, 2, 4, 5 Week 4: September 14 Real Estate Markets I: Overview of Land and housing; Residential Real Estate DiPasquale and Wheaton, Ch. 1-4 Immergluck, Daniel The Foreclosure Crisis, Foreclosed Properties, and Federal Policy: Some implications for housing and community development planning, in Journal of the American Planning Association 75(4): Week 5: September 21 Real Estate Markets II: Non-Residential Real Estate; Segregation

4 DiPasquale and Wheaton, Ch Vesselinov, Elena Members Only: Gated Communities and Residential Segregation in the Metropolitan United States. Sociological Forum 23(3): Massey, Douglas S. and Nancy A. Denton The Dimensions of Residential Segregation, Social Forces 67(2): Week 6: September 28 (Prof Spencer in all-day workshop) *** Guest Speaker (tentative) Shem Lawlor, Honolulu Department of Planning and Permitting *** Week 7: October 5 Labor Markets: Overview, Supply and Demand for Labor Ehrenberg, Ch. 2-4, 10, Week 8: October 12 Capital Markets: Institutions, Credit, Debt, Foreign Investments In class listen to National Public Radio The Invention of Money. Fabozzi and Modigliani, Ch. 1-9, 17, 24-26, 30 Carbaugh, Ch. 10 Week 9: October 19 *** Midterm Exam*** Week 10: October 26 (Prof Spencer out of town; review class) UNIT 2 EXTERNALITIES, WELFARE AND PUBLIC FINANCE Week 11: November 2 Externalities and Public Goods

5 Mankiw, Ch 10, 11, 12. Week 12: November 9 Inequality and Poverty Mankiw, Ch 20. Oliver and Shapiro, TBD Stoll, Michael A Geographical Skills Mismatch, Job Search and Race. Urban Studies 42(4): Spencer, James H. (2000). Why the Spatial Mismatch Hypothesis Still Matters, in Critical Planning vol.7: Kain, John F The Spatial Mismatch Hypothesis: 3 Decades Later. Housing Policy Debate 3(2): Spencer, James H. (2010). An Emergent Landscape of Inequality in Vietnamese Cities. Globalizations 7(3): Week 13: November 16 Taxes (personal, business, corporate, consumption, property), Managerial Privatization, Tax credits, tax increment financing Sclar, Eliot You Don t Always Get What You Pay For: The economics of privatization. Ithaca, NY: Cornell University Press. Ch s 1,2,4,6,7. Spencer, James H. (2007). Neighborhood Economic Development Effects of the Earned Income Tax Credit in Los Angeles: Poor places and policies for the working poor. Urban Affairs Review 42(6): Week 14: November 23 Lumpy Investments and Debt, Bonds, Capital Improvement Privatization McCarron, John Taking in Private, in Planning: The magazine of the American Planning Association 76(8): October. Hayton, Bill In Capitalist Vietnam, Death to Bankers, Online Asia Times, August 24. Available at < Spencer, James H. and Craig Guzinsky. (2010) Periurbanization, Public Finance and Local Governance of the Environment: Lessons from small-scale water

6 suppliers in Gresik, Indonesia. Environment and Planning A 42(9): Week 18: May 9 UNIT 3 OVERVIEW OF ECONOMIC GEOGRAPHY: TRADE, DIVISION OF LABOR. TRANSACTION COSTS, SPATIAL INEQUALITY Week 15: November 30 Industrial Districts, Clustering, Agglomeration economies O Sullivan, Ch 3 Carbaugh, Ch. 7 Regional Economic Development: The Cumulative Causation School Assigned readings: Myrdal, Gunnar Rich Lands and Poor: the Road to World Prosperity. New York, NY: Harper and Brothers. Pp. 3-66, Further readings: Kaldor, Nicholas The Case for Regional Policies, in The Scottish Journal of Political Economy, pp Scott A.J Metropolis: From Division of Labor to Urban Form. Berkeley, CA: University of California Press, Selected chapters. Regional Economic Development: The Transactions School Assigned readings: Williamson, Oliver E Transaction Cost Economics: the Governance of Contractual Relations, in Journal of Law and Economics 22, pp Further readings: Becattini, G The Marshallian Industrial District as a Socio-Economic Notion, in F. Pyke et al. Industrial Districts and Inter-Firm Cooperation in Italy. Geneva: International Institute for Labor Studies. Pp Storper, Michael and Allen J. Scott The Wealth of Regions: Market forces and policy Imperatives in Local and Global Context, in Futures 27, pp Trade and the Ricardian School of Regional Economic Development Assigned readings: North, Douglass Location Theory and Regional Economic Growth, in Regional Development and Planning, edited by John Friedmann and William Alonso. Cambridge, MA: The MIT Press. Storper, Michael and Richard Walker The Capitalist Imperative. Oxford, UK: Blackwell Publishers. Ch. 2.

7 Further readings: Carbaugh Ch 2 Week 16: December 7 ***Final Term Paper Due***

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