Friday, Jan. 4, 2019 8:00 AM - 10:00 AM
- Chair: Sumit Agarwal, National University of Singapore
Housing Wealth, Health and Deaths of Despair
AbstractWe use household-level data to study the causal effects of exogenous changes in housing
wealth on health and the drug crisis in the US attributed to "deaths of despair". We find
that a one standard deviation positive shock in housing wealth increases the probability of
an improvement in self-reported health (mental health) by 1.0 (1.10) percentage points and
decreases the change in drug-related mortality rate by 4.3 percent. We also find that the impact of housing wealth on health varies across socioeconomic groups and is more pronounced in MSAs in which housing supply is more inelastic, which explains the differential effect of economic cycles across geographical areas.
Residential Investment and Recession Predictability
AbstractWe assess the importance of residential investment in predicting economic recessions for an unbalanced panel of 12 OECD countries over the period 1960Q1-2014Q4. Our approach is to estimate various probit models with different leading indicators and evaluate their relative prediction accuracy using the area under the receiver operating characteristic curve as our metric of forecasting performance. We document that residential investment contains information useful in predicting recessions both in-sample and out-of-sample. This result is robust to adding typical leading indicators, such as the term spread, stock prices, consumer confidence surveys and oil prices. It is shown that residential investment is particularly useful in predicting recessions for countries with high home-ownership rates. Finally, in a separate exercise for the US, we show that the predictive ability of residential investment is - in a broad sense - robust to employing real-time data.
The Effect of Tax Reform on Tax Liabilities of Owners and Renters
AbstractThe Tax Cuts and Jobs Act of 2017 roughly doubles the standard deduction, eliminates personal exemptions and limits/eliminates many deductions. These include deductions for local property taxes and state and local income taxes and the amount of mortgage interest that can be deducted on new purchases/refis. The higher standard deduction will substantially increase its use. The effects on households will vary by household type, number of personal exemptions, tenure, income and location of residence (level of house prices and state and local tax rates) and a number of other variables. We illustrate how the percentage change in a households taxes varies with these variables. We find that only households with AGIs over a million dollars living in high house price areas with high state taxes will pay higher taxes.
- C7 - Game Theory and Bargaining Theory
- I1 - Health