We examine the optimal allocation of assets in the portfolio of a Colombian homeowner conditional on various levels of the house value to net wealth ratio. The high rate of home ownership and low rates of investment in financial assets indicate that households allocate most of their wealth to...

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act limited homestead exemptions and imposed means test to discourage petitioners seeking financial benefits. We find that these restrictions were effective in steering petitioners away from Chapter 7 filings and into Chapter 13.

At 34%, Switzerland has the lowest home ownership rate in Western Europe. This is a puzzle given the economic strength of the country. We use 1998 household survey data for five Swiss cantons to explore some possible reasons for this. We estimate a tenure choice equation that allows us to...

This paper derives closed-form and numerical solutions for relative risk aversion in a standard consumption-based model enriched with housing. The presence of housing enables the household to hedge against unexpected shocks and may decrease relative risk aversion. In addition, housing may...

Movements in house prices and consumer spending are closely correlated in many developed nations. Much debate exists on whether this relationship is causal arising from either wealth effects or via borrowing constraints. This paper uses a unique survey question on consumer responses to house...

This article examines the effects of a tax on vacant dwellings. I use a search equilibrium model in which the distribution of rent is the result of the owners’ posting strategy. I show that this tax reduces the number of vacant dwellings and increases the average rent.

We identify the conditions where robust mean–variance preferences, which capture ambiguity aversion, are observationally nonequivalent to subjective mean–variance preferences. Conversely, we also provide an example showing that observational equivalence holds regardless of the degree of...

Using a stylized two-period model we compare portfolio solutions from two local solution approaches–the approach of Judd and Guu (2001) and the approach of Devereux and Sutherland (2010, 2011)–with the true nonlinear portfolio solution.

This study establishes necessary conditions for Almost Stochastic Dominance criteria of various orders. These conditions take the form of restrictions on algebraic combinations of moments of the probability distributions in question. The relevant set of conditions depends on the relevant order...

In this study, we examine the rationale that informed traders use in choosing various financial instruments in order to speculate on the volatility of the underlying asset, here a common stock. Using a continuous-time trading model, we demonstrate that the quality of the private information...