We use a model a la Bewly-Huggett-Ayagari to explore the effects of a credit crunch on consumer spending. Households borrow and lend to smooth idiosyncratic income shocks facing an exogenous borrowing constraint. We look at the economy response after an unexpected permananent tightening of this...

In this paper, we explore dierential changes in house prices across neighborhoods within a city to better understand the nature of house price dynamics across cities. First, we document in detail that there is substantial and systematic heterogeneity in house price dynamics within a city during...

We develop a theory of equilibrium in asset markets with adverse selection. Traders can buy and sell an asset at any price. Sellers recognize that their trades may be rationed if they ask for a high price, while buyers recognize that they can only get a high quality good by paying a high price....