Search Results
Working Paper
Accounting for changes in the homeownership rate
After three decades of being relatively constant, the homeownership rate increased over the period 1994 to 2005 to attain record highs. The objective of this paper is to account for the observed boom in ownership by examining the role played changes in demographic factors and innovations in the mortgage market which lessened downpayment requirements. To measure the aggregate and distributional impact of these factors, we construct a quantitative general equilibrium overlapping generation model with housing. We find that the long-run importance of the introduction of new mortgage products for ...
Journal Article
Gauging Debt Levels in the U.S. and Eighth District
In this article, we look more closely at the recent developments in household debt accumulation nationally and in the Eighth District. One of the key findings is that household debt is increasing, but it has not yet reached the level observed in 2008 if adjustments are made for inflation. Also, the cause of the debt run-up in 2008 was mortgage debt. By contrast, consumer credit card debt and auto debt are the key drivers in the more recent increase.
Working Paper
Exchange rates and international relative prices and quantities in equilibrium models with alternative preference specifications
Dynamic open economy models with time-separable, deterministic utilities fail to account for observed dynamics of exchange rates and international relative prices and quantities. This paper examines the ability of extensions of existing open economy models to account for exchange rates, international relative prices, and international trade quantities. The extensions involve preferences with taste shocks and nontime-separable utilities in habit persistence form. Quantitative properties of calibrated versions of the models are examined in light of time series properties of key international ...
Discussion Paper
A monetary, open-economy model with capital mobility
This paper examines a two-country, monetary general-equilibrium model that includes a financial sector, capital mobility, and shocks to technologies and money-growth rates. Capital mobility allows agents in both countries to participate in rewards from relatively favorable shocks realized in either country. Currency exchange facilitates currency-intermediated international trade of consumption and capital goods. Qualitative and quantitative implications of the model for evolutions of variables are investigated. The quantitative analysis is performed by numerically solving and simulating the ...
Journal Article
Do Firms Switch Their Legal Form of Organization When Taxes Change?
Tax-law changes can cause firms to change their organizational structure.
Journal Article
Household Debt and the Great Recession
In the mid-2000s, household private debt reached a new level 1.2 times larger than personal income? before collapsing during the Great Recession. This paper uses microeconomic data to document the main changes in personal debt and explore the behavior of debt across generations over two periods: before and after the Great Recession. Special emphasis is placed on participation rates by category of debt (the extensive margin), volume borrowed (the intensive margin), and default behavior. Key findings include that between 1999 and 2013 the fraction of individuals with only unsecured (e.g., ...
Journal Article
Recent trends in homeownership
The homeownership rate began to trend upward in 1995 after years of being relatively constant, near 64 percent. This article describes recent changes in the share of U.S. housing that is owner-occupied and explores the reasons for the surprising rise over the past decade. Explanations that have been offered include demographics, low mortgage rates, changes in housing policy, and innovations in the mortgage financial market. Of all these explanations, the most plausible one is that innovations in the financial markets increased access to mortgage finance, mainly by reducing downpayment ...
Discussion Paper
Liquidity and real activity in a simple open economy model
We examine nominal and real exchange rates, interest rates, prices, and evolutions of real variables in a two-country, monetary general-equilibrium model that includes a financial sector and shocks to technologies and money growth rates. Qualitative properties of the model are provided and moment predictions from a calibrated version of the model are compared to moments of time series drawn from actual economies. We focus on international monetary shock transmissions, and effects of monetary innovations on nominal and real exchange rates and nominal interest rates.
Working Paper
Equilibrium mortgage choice and housing tenure decisions with refinancing
The last decade has brought about substantial mortgage innovation and increased refinancing. The objective of the paper is to understand the determinants and implications of mortgage choice in the context of general equilibrium model with incomplete markets. The equilibrium characterization allows us to study the impact of mortgage financing = decisions in the productive economy. We show the influence of different contract characteristics such as the downpayment requirement, repayment structure, and the amortization schedule for mortgage choice. We find that loan products that allow for low ...
Journal Article
Measuring Levels of Debt in the Eighth District’s Key Metro Areas
Debt growth and delinquency rate data do not seem to indicate that a severe debt problem may be brewing in these cities.