Abstract:We develop a model of the housing market that features both financial and matching frictions. In the model, risk-averse households may save or borrow in order to smooth consumption over time and finance owner housing. Each household either rents or owns its house. Some renter households...

Most households have most of their wealth in the form of housing. We analyze how this distributional feature shapes the political economy of housing taxation. We build a simple dynamic general equilibrium model where households vote over the tax treatment of housing and business capital. The...

The draft treaty establishing a constitution for the European Union states that each member state may withdraw from the European Union following its own constitutional requirements. We argue that such a rule could lead into an increased use of threat of withdrawal to extract concessions in...

We analyze housing taxation from a political economy perspective. Our aim is to understand why the US tax system favors owner housing with respect to business capital despite the efficiency losses involved. The starting point of our analysis is the observation that housing wealth is much more...

This paper examines strategic alliances (SAs) involving joint investments in and sharing of production capacity. We consider a situation where market entry is limited by the availability of an essential production capacity. New capacity becomes sequentially available, and the incumbent firms may...

In a dynamic setting, housing is both an asset and a consumption good.But should it be taxed like other forms of consumption or like other forms of saving?We consider the optimal taxation of the imputed rent from owner housing within a version of the neoclassical growth model.We find that the...

We study how a household borrowing constraint the the form of a down payment requirement affects house price dynamics in an OLG model with standard preferences. We find that in certain situations the borrowing constraint shapes house price dynamics substantially. The importance of the constraint...

​We study the interaction of matching and credit frictions in the housing market. In the model, risk-averse households may save or borrow in order to smooth consumption over time and finance owner housing. Prospective sellers and buyers meet randomly and bargain over the price. We analyze how...