In light of rapidly increasing prices of housing, gentrification and increasing regional inequalities within and across cities in many countries, I study the effectiveness of various public policies to counter these challenges. In particular, I will study the efficiency and distributional effects of seven different, commonly used policy instruments directly or indirectly targeted at the housing market: residential property taxes, commercial property taxes, real-estate transaction taxes, capital gains transaction taxes, local public spending, social housing programs and rent control. The overarching research question of the project is how do different public housing policies shape local housing markets and affect regional inequality. Analyzing the effects of these different instruments provides a comprehensive overview of available policy options. I analyze the policy effects combining state-of-the-art theoretical models with clean empirical evidence. The theoretical predictions about the different policy effects are based on widely used local labor market models, which I tailor and extend to the specific institutional context and specific research questions at hand. Guided by the resulting theoretical predictions, I exploit rich, micro-level data on housing markets, local labor markets, and local policy instruments in various European countries (Finland, Spain and Germany) and the United States. I selected the specific countries based on the availability of suitable data and, importantly, institutional features that allow exploiting quasi-experimental variation to identify the causal effects of the different policy instruments. I combine the empirical evidence with the theoretical insights to eventually derive the efficiency costs and redistributive effects of the respective policies. These results provide guidance for policymakers when addressing the challenges induced by the current housing crisis.

FRAME will develop a new generation of Dynamic Stochastic General Equilibrium (DSGE) models that will advance the state of the art by allowing for the first time realistic estimates of the impact of public research and innovation activities on innovation, productivity growth and unemployment. FRAME will begin by constructing a baseline model,which can be extended to address different policy issues. The baseline DSGE model incorporates important new features: it distinguishes between investment by companies in R&D and their investment in technology adoption; it allows public R&D and innovation activities not only to enhance the productivity of private R&D but also to facilitate the diffusion of technologies to private companies. FRAME will extend this baseline model to allow: multiple sectors; multiple countries; endogenous skills; and labour markets with search frictions and unemployment. These extensions allow us to investigate the effects of different policy interventions over the short, medium and long term. In addition to developing new models, FRAME will explore new approaches to estimate key model parameters, including: the elasticities of innovation with respect to private and public R&D; adoption lags; the elasticity of the speed of diffusion with respect to private adoption expenditures; and the elasticity of adoption with respect to public activities aimed at fostering the diffusion of new technologies to private companies. This last parameter will be estimated using a unique dataset combining information from firms on the introduction of new products with data on research contracts they have signed with the Fraunhofer Society. Public research and innovation activities have played a critical role in technological progress, yet we have little quantitative knowledge about their impact. FRAME will fill this gap and provide policymakers with a more realistic framework to study the impact of innovation policies and institutions on a broader range of variables.

MONROE aims at developing a modelling toolkit that would allow a broad range of stakeholders such as European and national governments, academia, regional and local bodies to quantitatively evaluate the impacts of their specific R&I policies and programmes. The toolkit will assess medium and long-term impacts of R&I policies and programmes on economic growth, job creation, competitiveness, social inequality and sustainability at various geographical levels ranging from word-wide to European, country and regional levels and for various economic sectors. Using innovative modelling methodologies and online visualisation techniques the developed toolkit will encourage collaboration between different societal actors in the process of co-creation for sustainable R&I driven economic growth.