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G19-O3 Urban, Regional and Local Policy Evaluation

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Ordinary Session
Thursday, August 28, 2025
9:00 - 10:30
G3

Details

Chair: Prof. Mr Mauricio Oyarzo


Speaker

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Dr. Zoulfikar Mehoumoud Issop
Associate Professor
University Of La Réunion

Impacts of inequalities in living standards on sectoral production: an input-output analysis applied to the Overseas Departments and mainland France

Author(s) - Presenters are indicated with (p)

Zoulfikar Mehoumoud Issop (p), Yves Croissant, Philippe Randriamasimanjato

Discussant for this paper

Tainá Pacheco

Abstract

The objective of the article is to study the impact on sectoral production of the French overseas departments (DOM) and mainland France according to the differences in living standards of households.

We use the input-output approach extended to differences in living standards to compare, according to the territories and sectors, the links between household consumption and the production of the different sectors of the economy, and to identify the sectors that are most sensitive to changes in living standards. The interest for public decision-makers to know such multipliers is to effectively target economic policies (Docks dues as “octroi de mer”, sectoral subsidies, etc.) towards the sectors with the greatest effects and towards the categories of households having the greatest impact on production. It is known, for example, that low-income households may spend a larger share of their budget on food and housing, while high-income households may spend more on leisure, education and health. Targeting the categories of households with the greatest multiplier effects makes it possible to better target fiscal policies in a context of budgetary constraints.

The extended input-output approach combines data in consumption according to household living standard quintiles provided by the Household Budget Surveys (HBS) and the intersectoral links provided by the symmetrical Input-Output Tables (IOT), coming from the 2017 HBS surveys and the 61-sector symmetrical IOTs for Reunion Island in 2019 and the 18-sector symmetrical IOTs for the other overseas territories (French Guiana, Guadeloupe and Martinique) and mainland France. We then evaluate the multiplier effects on the production of each sector of a change in final demand, breaking down the direct and indirect effects (from the Leontief matrix). The direct effect represents the change in production by sector that responds immediately to the demand shock. The indirect effect represents the change in production due to the intermediate consumption of the previous sectors as well as the changes in production due to these last intermediate consumptions and so on. The production multipliers obtained are then combined with the budget coefficients according to the shares of income that each quintile of households allocates to different types of products and sectors.

Multipliers estimated in the DOM show a downward trend with the increase in the standard of living quintile. Multipliers for France stand out from those for the DOM because households in all quintiles tend to spend a larger proportion of their income, which reinforces the multiplier effects there.
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Ms Tainá Pacheco
Ph.D. Student
Autonomous University of Barcelona

Can land use and parking regulation reshape a city's structure? Evidence from São Paulo, Brazil

Author(s) - Presenters are indicated with (p)

Tainá Pacheco (p)

Discussant for this paper

Gerson Javier Perez Valbuena

Abstract

Urban policies influence the balance between agglomeration benefits and congestion costs, shaping how cities develop. Land use regulations can encourage density, fostering economic and social interactions, while transportation policies affect whether congestion offsets these benefits. Higher density has been associated with various outcomes, including productivity, wages, crime, travel speed, pollution, and overall well-being. At the same time, congestion leads to negative externalities such as employment losses, reduced productivity, environmental degradation, and road safety concerns.
This paper examines whether land use and parking regulations can reshape a city's structure without worsening congestion. In 2014, São Paulo introduced a Transit-Oriented Development (TOD) policy, which allowed higher density around high-capacity transit networks while limiting on-site parking requirements. Previously, developments were required to include at least one parking space per housing unit or per 35 square meters of commercial space. The reform enabled developers to build at greater densities without mandatory parking, with Floor-to-Area Ratios (FAR) reaching up to 4.0 near transit hubs, compared to a citywide limit of 2.0.
Prior research has shown that developers responded to the reform with a short-term increase in applications for multi-family construction permits in areas where higher densities were permitted (Anagol et al., 2023). In the medium term, an increase in housing availability (1.9%) and a reduction in house prices (0.5%) were observed in neighborhoods where densification was allowed. However, it remains unclear whether the increase in construction translated into greater population density. Additionally, the welfare gains estimated by the authors depend on the magnitude of congestion effects.
Using the same identification strategy and policy shock as Anagol et al. (2023), this paper examines whether TOD and zoning reforms successfully attracted more residents to areas with greater public transit access, increasing population density without raising congestion costs. The findings will contribute to discussions on the effectiveness of land use policies in managing urban expansion. Policymakers may draw insights into whether TOD initiatives can achieve sustainable growth while avoiding unintended congestion effects. Additionally, this research may inform future regulatory designs that seek to balance density incentives with transportation infrastructure capacity.
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Mr Gerson Javier Perez Valbuena
Senior Researcher
Banco de la Republica (the Central Bank Of Colombia)

Evaluating natural resource funds at subnational level: the case of Colombia

Author(s) - Presenters are indicated with (p)

Gerson Javier Perez Valbuena (p), Alejandro Ome , Laura Giles, Cristhian Larrahondo

Discussant for this paper

Luiz Carlos de Santana Ribeiro

Abstract

Natural resource funds (NRFs) are special-purpose investment funds that have become increasingly important fiscal and public asset management tools in resource dependent countries. They are generally used for fiscal and macroeconomic stabilization, as well as savings and investment. This study seeks to analyze municipal governments that participated in the Colombian Savings and Price Stabilization Fund (FAEP in Spanish). The fund was created to smooth out the effect of oil revenue on national and subnational expenditure. Interestingly, between 1995 and 2012, subnational municipal governments (SG) that were eligible for the FAEP were not only oil producing ones, but also those municipalities through which oil was exported. This study provides valid comparison groups, both with and without the presence of natural resources and for SGs with oil resources, those with and without an NRF. Specifically, it studies the FAEPs effectiveness in smoothing the effect of oil revenues on subnational public finances and on whether fiscal performance improved or worsened with the presence of royalties and then the FAEP. Data on the FAEP is obtained from two sources: (1) the Central Bank, which holds records of the contributions and withdrawals for each municipality between 1996-2003; and (2) the National Hydrocarbons Agency, as starting in 2004 the administration of the FAEP was transferred to this agency. To analyze the impact of FAEP on fiscal indicators, we use an instrumental variable approach since royalties might be endogenous to our outcomes of interest. The endogeneity problem of using royalties is solved by instrumenting royalties with the product between the international price of oil and oil production before the period of analysis, where port municipalities do not contribute to the regression, so identification of the impact of FAEP is based only on the relatively few FAEP oil producing municipalities. We address this by imputing the oil producing-equivalent of what port municipalities would need to produce to receive the royalties they receive. Since FAEP was a forced mechanism to save windfalls coming from the oil exploitation to be able to be spent during future downturns, the results we are expecting are the reductions in social investments and in the gross capital formation in FAEP municipalities when compared with non-FAEP (royalties-recipient) municipalities. I order to have a clearer view of the effects we will be able to decompose total investment (social and gross capital formation) by sector (14 sectors in total). Heterogeneous effects and robustness checks will be performed.
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Prof. Luiz Carlos de Santana Ribeiro
Assistant Professor
Federal University of Sergipe

Systemic and Temporal Assessment of the Oil and Gas Sector in Sergipe, Brazil

Author(s) - Presenters are indicated with (p)

Luiz Carlos de Santana Ribeiro, José Ricardo de Santana (p)

Discussant for this paper

Mauricio Oyarzo

Abstract

Oil and gas (O&G) production in Brazil has its origins in the state of Sergipe, located in the country's Northeast region. The state's production began in 1963 in the municipality of Carmópolis, which also hosted Brazil’s first offshore production. O&G exploration has become one of the main drivers of economic development in Sergipe, with Petrobras playing a central role in generating income and employment in the state's economy. Recently, Petrobras has restructured its operations in the region, selling onshore exploration assets. In the offshore segment, the company announced a divestment plan for shallow-water fields, with projected investments of USD 2.0 billion, alongside the commencement of deepwater exploration, with expected investments of USD 5.0 billion.
This study aims to conduct a systemic and temporal assessment of Sergipe’s O&G sector. To this end, input-output indicators and methods will be employed, based on two compatible interregional matrices for the years 2011 and 2018. These matrices comprise 67 sectors and two regions: Sergipe and the rest of Brazil. This study provides a novel contribution by using these matrices in a comparative framework, enabling the identification of the O&G sector’s role within Sergipe’s production chain and assessing whether significant structural changes have occurred over the period analyzed. The findings are expected to inform sectoral policies by identifying intersectoral characteristics and specificities of Sergipe’s O&G sector, thereby enhancing public and private investment strategies in light of the state’s evolving economic landscape.
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Mr Mauricio Oyarzo
Associate Professor
Universidad de Concepción

How the distribution of mining windfall mechanisms shapes the spatial economy of extractive countries?

Author(s) - Presenters are indicated with (p)

Mauricio Oyarzo (p), Dusan Paredes, Sebastián Cuellar

Discussant for this paper

Zoulfikar Mehoumoud Issop

Abstract

The mining industry plays a crucial role in extractive economies by providing essential resources for economic development. However, mining activities often generate concerns about their environmental impacts and social implications for local communities. In order to ensure the long-term stability of mining, it is essential to strike a balance between supporting the sustainable development of mining activities and fostering a positive impact on the local quality of life. We assess the extent to which mining windfalls generate welfare gains by optimizing the current compensation mechanism scheme to distribute windfalls among municipalities through a quantitative spatial economic model that incorporates environmental consequences due to mining activity. By integrating environmental externalities and additional revenues into a calibrated spatial economic model, our results will provide a novel explanation for studying the poor performance of mining windfall compensation for negative externalities and potential welfare gains if an optimal design were implemented.
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