Essays on the Consumption and Investment Decisions of Households in the Presence of Housing and Human Capital - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Essays on the Consumption and Investment Decisions of Households in the Presence of Housing and Human Capital write by Sebastien Betermier. This book was released on 2010. Essays on the Consumption and Investment Decisions of Households in the Presence of Housing and Human Capital available in PDF, EPUB and Kindle. This dissertation consists of three essays in which I study the consumption and investment decisions of households in the presence of two major asset classes: housing and human capital. In the first essay, I analyze how the dual consumption-investment nature of housing affects the consumption dynamics of households. A key feature of the housing market is that for most households, the consumption and investment benefits of housing are non-separable. I propose a tractable theoretical framework to understand the impact of this constraint on the consumption allocation of homeowners who would ideally like to own just a fraction of their home. For these homeowners, the relative cost of living in their home is not just the imputed rental cost. It also includes an opportunity cost of having an unbalanced financial portfolio. This cost varies substantially over time, and it is especially high in good times, when available investment opportunities yield high returns and homeowners allocate a high fraction of their wealth to current consumption. As a result, this cost dampens variations in the level of their housing consumption, and it amplifies variations in both their level of non-housing consumption and the composition of their consumption baskets. I then test empirically this theory in the second essay. Using household-level data from the Panel Study of Income Dynamics (PSID), I test the hypothesis that homeowners who face a high opportunity cost choose ceteris paribus a low housing consumption volatility. I also develop a method to identify these constrained homeowners by comparing their characteristics to those of a subset of unconstrained homeowners: the landlords. The results are consistent with the predictions of the model. First, the characteristics of homeowners that determine how constrained they are in the model are strong predictors of those homeowners who choose to be landlords in the data. For example, homeowners with a low level of risk aversion, little value for housing consumption, and a long horizon are relatively more likely to be landlords. Second, I find evidence that the more constrained homeowners adjust their level of housing consumption much less over time. In the third essay, which was developed in collaboration with Thomas Jansson, Christine Parlour, and Johan Walden, we investigate the relationship between workers' labor income and their investment decisions. Using a detailed Swedish data set on employment and portfolio holdings we estimate wage volatility and labor productivity for Swedish industries and, motivated by theory, we show that highly labor productive industries are more likely to pay workers variable wages. We also find that both levels and changes in wage volatility are significant in explaining changes in household investment portfolios. A household going from an industry with low wage volatility to one with high volatility will ceteris paribus decrease its portfolio share of risky assets by 25%, i.e., 7,750 USD. Similarly, a household that switches from a low labor productivity industry to one with high labor productivity decreases its risky asset share by 20%. Our results suggest that human capital risk is an important determinant of household portfolio holdings.
Essays on Housing and Macroeconomics
Essays on Housing and Macroeconomics - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Essays on Housing and Macroeconomics write by Guozhong Zhu. This book was released on 2009. Essays on Housing and Macroeconomics available in PDF, EPUB and Kindle. This dissertation studies households' housing decision in the presence of income risks, and its implication on within-cohort income/consumption inequality and the nature of income risks facing households. It is composed of three chapters. The first chapter presents evidence from Panel Study of Income Dynamics (PSID) and Consumer Expenditure Survey (PSID) that housing consumption and housing investment are negatively affected by income risks. Within a household portfolio choice model, the negative effect can be attributed to the illiquidity of housing investment and the positive correlation between house price and income. The second chapter provides empirical evidence that the secular rise of income and consumption inequalities in the United States is age-dependent. It is more significant among younger households. With this feature, biasedness arises from the traditional methodology of decomposing inequality into age effect, year effect and cohort effect. A simple but effective remedy for the problem is proposed. The third chapter of the dissertation studies the age-profile of within-cohort income/consumption inequality, using the methodology proposed in the second chapter. It documents the age-profile of housing consumption inequality which is almost flat. This stands in contrast to the well-documented fact that within-cohort nonhousing consumption inequality rises with age, which has been argued to be evidence for persistent, uninsurable income shocks to households. This argument is challenged by the finding that housing consumption inequality has a flat age-profile. Within the framework of standard lifecycle model, the coexistence of rising nonhousing consumption inequality and flat housing consumption inequality constitutes a puzzle. A potential resolution lies in the negative effect of income uncertainty on housing decision which diminishes with age, as shown in the first chapter of the dissertation.
Essays on the Household-level Effects of House Price Growth
Essays on the Household-level Effects of House Price Growth - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Essays on the Household-level Effects of House Price Growth write by Claudia Ayanna Sitgraves. This book was released on 2009. Essays on the Household-level Effects of House Price Growth available in PDF, EPUB and Kindle. This dissertation explores the effects of fluctuations in housing values on household saving and investment decisions. Chapter 1 examines the relationship between changes in housing values and household saving decisions. Fluctuations in housing values may affect household saving and consumption by increasing households' perceived wealth, or by relaxing borrowing constraints. Moreover, the increased liquidity of home equity during the recent housing boom may have led household behavior to respond more than in past years to changes in housing wealth. This chapter is the first analysis to provide evidence from household-level microdata suggesting that the housing wealth effect may have increased in line with increased access to housing-collateralized debt. Using data from the Survey of Income and Program Participation for the years 1984 - 2003, I estimate an average elasticity of household active saving with respect to MSA-level house prices of -0.222, which corresponds to a 1 cent decrease in annual active saving when housing wealth increases by 1 dollar. When I estimate housing wealth effects separately between 1984 and 1990, and between 1996 and 2003, I find smaller effects during the earlier period, but large and significant effects during the later period. During the later period, I estimate an average elasticity of household active saving with respect to MSA-level house prices of -1.044, which corresponds to a 3 cent decrease in annual active saving when housing wealth increases by 1 dollar. Further evidence comparing the magnitude of the wealth effect between different subpopulations -- older homeowners versus younger homeowners, and recent homebuyers versus those with longer tenure -- suggests that a relaxation of liquidity constraints, rather than changes in the composition of the homeowner population, is a central factor contributing to the increase in the housing wealth effect. Chapter 2 explores the connection between growth in housing values, uncertainty over future housing values, and property owners' investments in housing. Residential housing is a significant share of most American households' asset holdings. As such, the decision to build, to buy, or to make significant improvements to a home is driven not only by consumption considerations, but is also an investment decision. By modeling property owners' housing investment decisions using a framework of optimal capital investment where investments are irreversible and there is uncertainty in future asset values, this analysis theoretically predicts and empirically estimates the extent to which property owners respond to changes in the profitability of housing investment by making investments in their stock of housing. Using a unique dataset of residential sales, geographic information, and the universe of building permits issued in Los Angeles between 1999 and 2008, and focusing on nonresident landlords and "improver-movers"--Owner-occupiers who make improvements to their properties and subsequently sell the property, I find that when housing values increase, property owners are more likely to make capital investments, and that the value and square footage of these investments is larger. When house price volatility is high, property owners are less likely to make investments. However, conditional on the decision to invest, the value and square footage of investments is larger. This result is shown to be a consequence of property owners' optimally delaying capital investment when uncertainty over future prices is high. Chapter 3 documents the extent to which residential real estate development is cyclical - exhibiting periods of rapid expansion followed by periods of rapid contraction - using New York City as a case study. This chapter provides an overview of residential development activity in New York City during the years 2000 - 2008. In this analysis, I describe the effects of this real estate "boom" on the housing market in New York City during these years, and characterize the long-term effects of the "boom" and subsequent "bust" in residential development on the composition of the City's housing stock. Economic theories of cyclicality in real estate markets, outlined in this chapter, show that uncertainty over the exact timing of price declines coupled with a long development lag can lead to buildings being completed and new units entering the market even as prices decline. Although the elasticity of housing supply is lower in New York City than in other areas, building activity tends to follow a boom-and-bust pattern similar to other areas. Neighborhoods with higher levels of amenities experienced more growth in residential housing supply, and public involvement in development activity (both to facilitate and to restrict development) became less important for builders as the boom progressed. As building activity slows, City officials and developers are taking steps to ensure that stalled construction sites, rather than becoming eyesores and safety hazards, are preserved for future use.
Handbook of the Economics of Finance
Handbook of the Economics of Finance - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Handbook of the Economics of Finance write by G. Constantinides. This book was released on 2003-11-04. Handbook of the Economics of Finance available in PDF, EPUB and Kindle. Arbitrage, State Prices and Portfolio Theory / Philip h. Dybvig and Stephen a. Ross / - Intertemporal Asset Pricing Theory / Darrell Duffle / - Tests of Multifactor Pricing Models, Volatility Bounds and Portfolio Performance / Wayne E. Ferson / - Consumption-Based Asset Pricing / John y Campbell / - The Equity Premium in Retrospect / Rainish Mehra and Edward c. Prescott / - Anomalies and Market Efficiency / William Schwert / - Are Financial Assets Priced Locally or Globally? / G. Andrew Karolyi and Rene M. Stuli / - Microstructure and Asset Pricing / David Easley and Maureen O'hara / - A Survey of Behavioral Finance / Nicholas Barberis and Richard Thaler / - Derivatives / Robert E. Whaley / - Fixed-Income Pricing / Qiang Dai and Kenneth J. Singleton.
Wealth and Homeownership
Wealth and Homeownership - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Wealth and Homeownership write by Mariacristina Rossi. This book was released on 2018-08-27. Wealth and Homeownership available in PDF, EPUB and Kindle. In almost every country, wealth is predominantly constituted by housing equity, but what are the possible risks and how does wealth accumulation vary across countries? In this timely book, Rossi and Sierminska analyse the complex relationship between gender, wealth and homeownership. By providing a conceptual framework to insert homeownership and housing decisions within an economic rationale, the authors explore how gender and family types have shaped wealth accumulation and homeownership.
