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Macroeconomics Seminar Series: Heterogeneity, frictional assignment and home-ownership

Dates:
  • Fri 06 Mar 2020 11.30 - 12.45
  Add to Calendar 2020-03-06 11:30 2020-03-06 12:45 Europe/Paris Macroeconomics Seminar Series: Heterogeneity, frictional assignment and home-ownership

A model of frictional assignment is developed to study the composition of housing units and households across city-level ownership and rental markets. Heterogeneous houses are built by a competitive development industry and either rented competitively or sold through directed search to households which differ in wealth and sort over housing types. Even in the absence of financial restrictions and constraints on house characteristics, higher income households are more likely to own and lower quality housing is more likely to be rented. When calibrated to match average features of housing markets within U.S. cities, the model is qualitatively consistent with U.S. data on the relationships between observed differences in median income, inequality, median household age, and construction/land costs across cities and both home-ownership and the average cost of owning vs. renting. Policies designed to improve housing affordability raise both housing quality and ownership for lower income house-holds while lowering housing quality (but not ownership) for high income ones.

(with Allen Head and Derek Stacey)

Seminar Room - Villa La Fonte DD/MM/YYYY
  Seminar Room - Villa La Fonte

A model of frictional assignment is developed to study the composition of housing units and households across city-level ownership and rental markets. Heterogeneous houses are built by a competitive development industry and either rented competitively or sold through directed search to households which differ in wealth and sort over housing types. Even in the absence of financial restrictions and constraints on house characteristics, higher income households are more likely to own and lower quality housing is more likely to be rented. When calibrated to match average features of housing markets within U.S. cities, the model is qualitatively consistent with U.S. data on the relationships between observed differences in median income, inequality, median household age, and construction/land costs across cities and both home-ownership and the average cost of owning vs. renting. Policies designed to improve housing affordability raise both housing quality and ownership for lower income house-holds while lowering housing quality (but not ownership) for high income ones.

(with Allen Head and Derek Stacey)


Location:
Seminar Room - Villa La Fonte

Affiliation:
Department of Economics

Type:
Seminar series

Speaker:
Prof. Lloyd-Ellis Huw (Queen's University)

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