Buckley, Robert M.Mathema, Ashna S.2012-06-082012-06-082007-12https://hdl.handle.net/10986/7521A recent study of house price behavior in U.S. cities by Gyourko, Mayer, and Sinai (2006) raises questions about so-called superstar cities in which housing is so inelastically supplied that it becomes unaffordable, as higher-income families outbid residents. We consider the case of Accra, Ghana, in this light, estimating the elasticity of housing supply and discussing the implications for growth and income distribution. There is not a great deal of data available to examine trends in Accra, so our method is indirect. First, we use a variant of the traditional monocentric city model to calculate the elasticity of Accra's housing supply relative to those of other similarly-sized African cities. This suggests that housing supply responsiveness is much higher elsewhere. This muted supply responsiveness is consistent with the observed higher housing prices. Second, we estimate a number of traditional housing demand equations and reduced form equations. Placing a number of restrictions on the equations allows us to infer Accra's housing supply elasticity. Taken together, our approaches suggest that lower-income families in Accra have such poor housing conditions because the market is extremely unresponsive to demand. Although the outcomes we have traced-high housing prices and low quality-are not unusual relative to the other developed country superstar cities, they are extreme. The welfare costs are considerable, so much so that in addition to direct housing market effects, these policies also appear to have potentially significant implications for the achievement of more equitable growth.CC BY 3.0 IGOADVERSE EFFECTSADVERSE SELECTIONAFFORDABLE HOUSINGANNUAL INFLATION RATEASSET PRICINGBALANCE SHEETSBANKING SECTORBANKSBENCHMARKINGBORROWINGCALCULATIONCAPITAL ADEQUACYCAPITAL FLIGHTCAPITAL GAINSCASH TRANSFERSCITIESCITY SIZECOMMUNITIESCOMPETITIVENESSCOST INCREASESCOST OF LIVINGCOUNTRYSIDEDEVELOPMENT BANKDEVELOPMENT ECONOMICSDIRECT INVESTMENTDIRECT INVESTMENTSDISCOUNT RATEEARNINGSECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC ORDERECONOMIC RESEARCHECONOMICSELASTICITYEMPLOYMENT OPPORTUNITIESEQUATIONSFEDERAL RESERVEFEDERAL RESERVE BANK OF NEW YORKFINANCIAL DEPTHFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SECTORSFINANCIAL SYSTEMGDPGROSS DOMESTIC PRODUCTGROWTH RATEHOMEOWNERSHIPHOUSE PRICESHOUSEHOLD EXPENDITUREHOUSEHOLD INCOMEHOUSEHOLD STRUCTUREHOUSEHOLDSHOUSESHOUSINGHOUSING AFFORDABILITYHOUSING CENSUSHOUSING CONDITIONSHOUSING COSTSHOUSING DEMANDHOUSING DEVELOPMENTHOUSING FINANCEHOUSING MARKETHOUSING MARKETSHOUSING PRICESHOUSING PROBLEMSHOUSING SUPPLYINCOMEINCOME DISTRIBUTIONINCOME ELASTICITYINCOME ELASTICITY OF DEMANDINCOME GROUPSINCOME INCREASEINCOME LEVELSINDUSTRIAL ECONOMICSINFLATIONINFLATION RATEINFORMAL SETTLEMENTSLABOR MARKETSLAND DEVELOPMENTLAND MANAGEMENTLAND USELARGE CITIESLIVING CONDITIONSLIVING COSTSLIVING STANDARDSLOCAL NEWSPAPERLOCALITIESLOW INCOMELOW-INCOMELOWER INCOMELOWER INCOMESLOWER-INCOME FAMILIESWorld Bank10.1596/1813-9450-4453