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Discussion Paper
From Plans to Starts: Examining Recent Trends in Manufacturing Plant Construction
Manufacturing structures investment is the largest component by value of U.S. nonresidential structure investment and has been growing quickly in the post-pandemic period. Figure 1 documents the significant extent to which the construction of manufacturing plants has contributed to growth in overall nonresidential construction. The surge in investment in manufacturing construction has occurred despite the higher interest rate environment, driven by government incentives associated with the Inflation Reduction Act (IRA) and the CHIPS and Science Act (CHIPS), and market forces such as increased ...
Working Paper
Partial Homeownership: A Quantitative Analysis
Partial Ownership (PO), which allows households to buy a fraction of a home and rent the remainder, is increasing in many countries with housing affordability challenges. We incorporate an existing for-profit PO contract into a life-cycle model to quantify its impact on homeownership, households’ welfare, and its implications for financial stability. We have the following results: 1) PO increases homeownership rates. 2) Willingness to pay increases with housing unaffordability and is highest among low-income and renting households. 3) PO increases aggregate debt as renters become partial ...
Discussion Paper
Nonresidential construction spending is likely not as weak as it seems
Unlike any other major component of GDP, private investment in nonresidential structures excluding drilling and mining (henceforth "NRS") has steadily declined since the start of 2020. Figure 1 shows the evolution of GDP as well as the main components of private domestic final demand since 2019.
Working Paper
Illiquid Homeownership and the Bank of Mom and Dad
Housing is the largest asset in U.S. household portfolios, and first-time homebuyers increasingly rely on parental transfers. This paper quantifies the contribution of parental transfers to the homeownership rate of young households. I build and estimate a life-cycle overlapping generations model with housing, where adult children and parents interact without commitment. I find that parental transfers account for 13 percentage points (27%) of young households' homeownership. Transfers from wealthy parents not only help households overcome borrowing constraints, but also help sustain ...