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Report
Fund managers, career concerns, and asset price volatility
We propose a model of delegated portfolio management with career concerns. Investors hire fund managers to invest their capital either in risky bonds or in riskless assets. Some managers have superior information on the default probability. Looking at the past performance, investors update beliefs on their managers and make firing decisions. This leads to career concerns which affect investment decisions, generating a positive or negative ?reputational premium.? For example, when the default probability is high, the return on the risky bond has to be high to compensate the uninformed managers ...
Conference Paper
Jackson Hole 2021 - Monetary Policy and Uneven Shocks
Working Paper
Within-city variation in urban decline: the case of Detroit
When a city experiences a decline in income or population, do all neighborhoods within the city decline equally? Or do some neighborhoods decline more than others? What are the characteristics of the neighborhoods that decline the most? We answer these questions by looking at what happened to neighborhoods within Detroit as the city experienced a sharp decline in income and population from the 1980s to the late 2000s. We find patterns of changes in income and population that are consistent with the model and empirical patterns of gentrification presented in Guerrieri, Hartley, and Hurst ...
Working Paper
Endogenous gentrification and housing price dynamics
In this paper, we begin by documenting substantial variation in house-price growth across neighborhoods within a city during citywide housing price booms. We then present a model which links house-price movements across neighborhoods within a city and the gentrification of those neighborhoods in response to a citywide housing-demand shock. A key ingredient in our model is a positive neighborhood externality: individuals like to live next to richer neighbors. This generates an equilibrium where households segregate based upon their income. In response to a citywide demand shock, higher-income ...