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Working Paper
Mortgage Debt, Consumption, and Illiquid Housing Markets in the Great Recession
Using a model with housing search, endogenous credit constraints, and mortgage default, this paper accounts for the housing crash from 2006 to 2011 and its implications for aggregate and cross-sectional consumption during the Great Recession. Left tail shocks to labor market uncertainty and tighter down payment requirements emerge as the key drivers. An endogenous decline in housing liquidity amplifies the recession by increasing foreclosures, contracting credit, and depressing consumption. Balance sheets act as a transmission mechanism from housing to consumption that depends on gross ...
Journal Article
Pork-Barrel Politics and Polarization
This article explores how earmarks shape the ideological composition of elected officials in Congress. Relative to the classic median voter theorem, the framework developed here introduces multiple legislative districts and incorporates a desire for local earmarks in the specification of voter preferences. The main theoretical result demonstrates that competition among politicians to ?bring home the bacon? substantially reduces Congressional polarization. Data from after the earmark ban of 2011 provide supporting evidence for this mechanism.
Working Paper
Crises in the Housing Market: Causes, Consequences, and Policy Lessons
The global financial crisis of the past decade has shaken the research and policy worlds out of their belief that housing markets are mostly benign and immaterial for understanding economic cycles. Instead, a growing consensus recognizes the central role that housing plays in shaping economic activity, particularly during large boom and bust episodes. This article discusses the latest research regarding the causes, consequences, and policy implications of housing crises with a broad focus that includes empirical and structural analysis, insights from the 2000's experience in the United ...
Journal Article
Are U.S. Housing Markets Hot, Hot, Hot?
Some areas of the U.S. housing market are hotter now than during the 2002-06 boom.
Journal Article
Construction Permits and Future Housing Supply: Implications for 2020
A decline in housing permits and supply expectations may lead to softening in the 2020 housing market.
Journal Article
The Geography of Housing Market Liquidity During the Great Recession
Using detailed micro data at the ZIP code level, this article explores the regional variation in housing market performance to account for the severity of the Great Recession. The granularity of the data, relative to a more traditional analysis at the county level, is useful for evaluating the performance of the housing market because credit and local macroeconomic variables are tied to housing valuations. The deterioration of the ability to transact (buy and sell) housing units, often referred to as housing liquidity, is an important link that connects housing outcomes with real and credit ...
Briefing
Do Student Loans Drive Up College Tuition?
To what extent do student loans drive up college tuition? In ongoing research, we find the answer has varied substantially over time. Following large expansions in student loan limits in 1993 and 2007, our results show further increases in loan limits would have essentially zero effect. In contrast, in the years before those expansions, our estimates indicate tuition would have increased $0.10 for every $1 increase in borrowing limits.