Annual Conference

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Household Finance

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May 2022

Housing Finance, Boom-Bust Episodes, and Macroeconomic Fragility

Carlos GARRIGA, Aaron HEDLUND
Using an equilibrium macro-housing model with incomplete markets, defaultable mortgage debt, and endogenous liquidity, this paper analyzes how institutional details of the housing finance system impact macroeconomic fragility and the magnitude of boom-bust episodes. With a focus on the recent U.S. e...
Keywords: Housing, Consumption, liquidity, Debt, Great Recession
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Annual Conference

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Real Estate and Urban Economics, Senior Fellows/Fellows

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May 2018

Housing booms and shirking

Wenlan QIAN, Jia HE, Quanlin GU
This paper studies the incentive costs of housing booms. We use the type and actual time stamps of 9.3 million credit card transactions by over 200,000 cardholders from a large commercial bank to detect non-work-related behavior during work hours. After positive shocks to house prices, employees in ...
Keywords: Incentive costs, housing booms, distortionary effect, Elasticity
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Household Portfolio Underdiversification and Probability Weighting: Evidence from the Field

Stephen G. DIMMOCK, Roy KOUWENBERG, Olivia S. MITCHELL, Kim PEIJNENBURG
We test the relation between probability weighting and household portfolio choice in a representative household survey, using custom-designed incentivized lotteries. On average, people display Inverse-S shaped probability weighting, overweighting the small probabilities of tail events. As theory pre...
Keywords: Household Finance, portfolio underdiversification, probability weighting, rank dependent utility, cumulative prospect theory, salience theory, household portfolio puzzles, stock market participation
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Annual Conference

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Real Estate and Urban Economics, Senior Fellows/Fellows

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May 2018

Home Purchasing Subsidies, Adverse Selection and Mortgage Performance

Sumit AGARWAL, Pulak GHOSH, Souphala CHOMSISENGPHET, Man ZHANG
We find that home affordability policy induces the marginal buyers to take home loans and they are more likely to be delinquent in subsequent payments. India government increased total income tax exemption limit by 50,000 INR (US $ 833) in July 2014. The sectional exemption limits for both the princ...
Keywords: homeownership subsidy, Fiscal Policy, income tax, mortgage delinquency, household financial mistakes
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Annual Conference

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Investment Finance, Senior Fellows/Fellows

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May 2014

Home Away from Home? Foreign Demand and London House Prices

Cristian BADARINZA, Tarun RAMADORAI
Identifying the effects of “flights to safety” on asset prices using pure time-series methods is difficult because crises are infrequent. We develop a new cross-sectional identification approach, motivated by the insight that investors may differ in their “preferred habitats” within a broad ...
Keywords: house prices, foreign demand, safe-haven, London, political risk, price-pressure
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