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Agents are often better informed than the clients who hire them and may exploit this informational advantage. Real-estate agents, who know much more about the housing market than the typical homeowner, are one example. Because real estate agents receive only a small share of the incremental profit when a house sells for a higher value, there is an incentive(More)
  • Karen Pence, Chris Mayer, Ken Brevoort, Brian Bucks, Glenn Canner, Karen Dynan +4 others
  • 2008
NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary materials circulated to stimulate discussion and critical comment. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. References in publications to the(More)
The views expressed in this paper are those of the author(s), not necessarily those of the Federal Reserve Bank of St. Louis or the Federal Reserve System. Abstract Using loan-level data, we analyze the quality of subprime mortgage loans by adjusting their performance for differences in borrower characteristics, loan characteristics, and house price(More)
This paper examines how incumbents respond to the threat of entry of competitors, as distinguished from their response to competitors' actual entry. It uses a case study from the passenger airline industry—specifically, the evolution of Southwest Airlines' route network—to identify particular routes where the probability of future entry rises abruptly. When(More)
By the end of January 2001, all NYSE stocks had converted their price quotations from 1/8s and 1/16s to decimals. This study examines the e¡ect of this change in price quotations on ex-dividend day activity. We ¢nd that abnormal ex-dividend day returns increase in the 1/16 and decimal pricing eras, relative to the 1/8 era, which is inconsistent with(More)
A reduction in in ‡ation can fuel run-ups in housing prices if people su¤er from money illusion. For example, investors who decide whether to rent or buy a house by simply comparing monthly rent and mortgage payments do not take into account the fact that in ‡ation lowers future real mortgage costs. We decompose the price-rent ratio into a rational(More)
Despite extensive public infrastructure spending, surprisingly little is known about its economic return. In this paper, we estimate the value of school facility investments using housing markets: standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing(More)
Do households bene…t from expansionary monetary policy? We investigate how indebted households' consumption and saving decisions are a¤ected by anticipated changes in monthly interest payments. We focus on borrowers with adjustable rate mortgages originated between 2005 and 2007 featuring an automatic reset of the interest rate after …ve years. The monthly(More)
The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. ABSTRACT Despite housing's importance to the economy and worries about recent financial and economic turmoil traceable to housing market difficulties, little has been written on how distress in the housing market,(More)