The marginal cost of plant capacity, measured by the price of equity is significantly procyclical. Yet, the price of a major intermediate input into expanding plant capacity, investment goods, is coutercyclical. The ratio of these prices is Tobin's q. We interpret the fact that Tobin's q differs...

Household investment leads nonresidential business fixed investment over the U.S. business cycle. Because real business cycle theory has not been able to account for this observation, it represents a potent challenge to the view that transitory productivity disturbances are the main source of...

This paper builds a dynamic general equilibrium model of cities and uses it to analyze the role of local housing markets and moving costs in determining the character and extent of labor reallocation in the US economy. Labor reallocation in the model is driven by idiosyncratic city-specific...

Cities experience significant, near random walk productivity shocks, yet population is slow to adjust. In practice local population changes are dominated by variation in net migration, and we argue that understanding gross migration is essential to quantify how net migration may slow population...

Cities experience significant, near random walk productivity shocks, yet population is slow to adjust. In practise local population changes are dominated by variation in net migration, and we argue that understanding gross migration is essential to quantify how net migration may slow population...

We combine publicly available data from Freddie Mac, the Decennial Census of Housing, and the Bureau of Economic Analysis to construct the first constant-quality aggregate price index for the stock of residential land in the United States. We uncover five main results: (a) since 1970,...

We test if a standard representative agent model with a home-production sector can resolve the equity premium or value premium puzzles. In this model, agents value market consumption and a home consumption good that is produced as an aggregate of the stock of housing, home labor, and a...

Combining data from several sources, we build a database of home values, the cost of housing structures, and residential land values for 46 large U.S. metropolitan areas from 1984 to 2004. Our analysis of these new data reveal that since the mid-1980s residential land values have appreciated...

Cities exist because of the productivity gains arising from clustering production and workers, a process called agglomeration. How important is agglomeration for aggregate growth? This paper constructs a dynamic stochastic general equilibrium model of cities and uses it to estimate the effect of...