Mark Toth

About me

Papers

Households are spatially exposed to each other by living in urban agglomerations, generating residential externalities which distort housing demand. In the short run, the spatial structure of a city is constant and determines the strength of these externalities. I embed city structure and residential externalities into a monetary business cycle model of a city within a currency area. A more concentrated city structure generates stronger distortions in housing demand, which transmits into dampened consumption responses to monetary policy shocks. Monetary policy is therefore less effective in more concentrated cities - more generally, in regions in which cities are more concentrated. Using geospatial data based on satellite imagery, I empirically verify this theoretical finding for the United States and the euro area.

This paper examines the relation between location, liquidity, and prices in urban housing markets. We build spatial datasets for German and U.S. cities and show that housing liquidity and prices decrease with distance to the city center. Using transaction-level data, we estimate a spatial housing search model and show that the cost of travel to the city center determines the spatial distribution of housing liquidity and prices. In a counterfactual analysis, we find that frictional illiquidity lowers prices in the outskirts by 7% relative to the city center and explains 19% of the spatial price gradient.

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