Annual Conference

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Real Estate and Urban Economics, Senior Fellows/Fellows

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May 2019

We show how the standard PE compensation contract is used to create incentives for GPs to utilize leverage so that LP investors can meet their return targets. A theory of fund capital structure is developed in which investors trade off alpha with costs of financial distress. We then show how carried...
Keywords: private equity, Investment, pension fund, carried interest
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Annual Conference

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Real Estate and Urban Economics

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May 2019

This paper examines how the creation of asset-backed security tranches disperses ownership of an asset–the pool of mortgages–subsequently impeding renegotiation of the underlying delinquent loans. I describe how multiplicity of tranches worsens the agency problem between a residential mortgage s...
Keywords: Securitization, Mortgage Servicing, Loan Modifications, financial crisis
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Annual Conference

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Real Estate and Urban Economics, Senior Fellows/Fellows

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May 2019

This paper empirically tests information asymmetries and learning in global commercial real estate markets. We find that foreign investors pay a premium of 3.6%, on average, relative to local investors for comparable properties in local markets. The premiums reflect information disadvantages of fore...
Keywords: Learning, Information asymmetry, Foreign Investors, Commercial Real Estate Markets, Cross-border investments
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Annual Conference

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Real Estate and Urban Economics, Senior Fellows/Fellows

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May 2019

We propose a new explanation for the persistence of gravity in international investment flows based on new facts about large cross-border commercial real-estate transactions. Buyers in these transactions preferentially match with counterparties from own or proximate countries; such affinity-based ma...
Keywords: gravity, Foreign investment, Commercial real estate, Investment frictions, trust, Matching, Cross-border flows
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Senior Fellows/Fellows

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Senior Fellows/Fellows

We develop a new monthly panel survey of business executives and a new question design that elicits subjective probability distributions over own-firm outcomes at a one-year look-ahead horizon. Our Survey of Business Uncertainty (SBU) began in 2014 and now covers 1,500 firms drawn from all 50 states...
Keywords: Business Uncertainty, Subjective Forecast Distributions, Surveys
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