Real Estate and Regional Economic Growth | MIT Center for Real Estate Week 12: Real Estate and Regional Economic Growth • Exports, transfers, investments and the determinants of regional growth: demand. • Population growth and migration: supply • 3-Q model of regional response. Factor supply elasticity and the role of real estate. • Wages, productivity and real estate costs – across MSAs. MIT Center for Real Estate Income and Product Accounts in States Summary of Output and Income Accounts for Florida and Pennsylvania, 1991 Florida ($ billions) Pennsylvania ($ billions) Income Accounts* Income (Y) 262 242 Wages (w) 126 127 Other Income (y + G) 136 115 Consumption (C) 260 193 Private 214 161 Government 46 32 Federal Taxes (T) 38 41 Savings (S) -36 8 Output Accounts** Output (Q) 219 211 Wages (w) 126 127 Profits and Rents (π) 93 84 Consumption (C) 260 193 Investment (I) 44 27 Imports (M) 175 153 Exports (X) 92 144 INCOME (Y) - OUTPUT (Q) 43 31 MIT Center for Real Estate Regional Accounts: Flow of Funds • Regions do not have to have individually balanced accounts. Surpluses in goods can be balanced by deficits in capital or government flows: the following cross border flows however must sum to zero. Trade surplus: X-M [exports - imports] Gov. surplus (Federal): G-T [spending – taxes] Capital surplus: I – S [investment - savings] Profits surplus: y - π [received - earned] • Notice the in Florida, huge trade deficit is made up with huge negative savings. MIT Center for Real Estate Sources of Regional Demand . • Some variables are determined directly by the size of a state’s economy (Income or Output) : imports (M), Federal Taxes (T), consumption or savings (S) and profits earned in the state (π). • Other variables are determined by forces largely outside of the region and serve to bring money into the state, generating growth and ultimately determining state size (level of income or output): - Exports (X) - Investment (I) - Federal spending (G) - Unearned income: SS, retirement (y) MIT Center for Real Estate .
