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daniel.hartley@clev.frb.org

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Daniel Hartley |

Research Economist

Daniel Hartley, Research Economist

Daniel Hartley is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. He is primarily interested in urban/regional economics and labor economics. His current work focuses on crime, public housing, and neighborhood housing market dynamics.

He completed his PhD at the University of California, Berkeley. He has an M.B.A. in economics and finance from the University of Chicago and an M.Eng. and a B.S. in electrical engineering from the Massachusetts Institute of Technology.

  • Fed Publications
Title Date Publication Author(s) Type
Endogenous Gentrification and Housing-Price Dynamics

 

 July, 2010 Federal Reserve Bank of Cleveland, Working Paper no. 1008 Daniel Hartley; Veronica Guerrieri; Erik Hurst; Working Papers
Abstract: In this paper, we explore differential changes in house prices across neighborhoods within a city to better understand the nature of house-price dynamics across cities. First, we document in detail that there is substantial and systematic heterogeneity in house-price dynamics within a city during citywide housing-price booms and busts. Second, we propose a new model of within-city house-price dynamics that is consistent with the empirical facts. We assume that there is a positive neighborhood externality: people like to live close to richer neighbors. We show that there is an equilibrium in which households fully segregate based on their income. In response to positive housing-demand shocks, the model predicts that the poor neighborhoods on the boundary with the rich ones are the most price elastic. We refer to this process as gentrification. We then empirically test this new mechanism against other mechanisms that could explain within-city house-price differences. We find strong support for the existence of endogenous gentrification in explaining housing-price dynamics within a city. Finally, we show that even after controlling for other important determinants of land prices, the endogenous gentrification mechanism is still important in explaining cross-city differences in house-price dynamics. (Online robustness appendix)
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