Economic diversification and the resiliency hypothesis: Evidence from the impact of natural disasters on regional housing values.

We estimate the effect regional economic diversification has on the resiliency of the U.S. housing market, treating the spatial and temporal variation in natural disasters as exogenous shocks to regional economies. Our study demonstrates that diversity dampens both the magnitude and the duration of the effects of a disaster on local real estate values. Implications of our findings for the potential benefits of diversification in regional economies are discussed.

Optimal Drug Policy in Low-Income Neighborhoods.

The control of drug activity currently favors supply-side policies: drug suppliers in the U.S. face a higher arrest rate and longer sentences than demanders. We construct a simple model of drug activity with search and entry frictions in labor and drug markets. Our calibration analysis suggests a strong "dealer replacement effect." As a result, given a variety of community objectives, it is beneficial to lower supplier arrests and raise the demand arrest rate from current values. A 10% shift from supply-side to demand-side arrests can reduce the population of potential drug dealers by 22-25,000 and raise aggregate local income by $380-400 million, at 2002 prices. (JEL Classification: D60, J60, K42, H70).