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Abstracts are included below the table of contents. |
Table of Contents
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Symposium: Housing Markets
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Articles
| 8. |
Basel Endgame: Bank Capital Requirements and the Future of International Standard Setting |
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Stephen Cecchetti, Jeremy Kress, and Kermit Schoenholtz |
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Full-Text PDF | Additional Information |
| 9. |
Carbon Rollercoaster: A Historical Analysis of Decarbonization in the United States |
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Karen Clay, Akshaya Jha, Joshua Lewis, and Edson Severnini |
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Full-Text PDF | Additional Information |
| 10. |
Text as Data in Economic Analysis |
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Tarek A. Hassan, Stephan Hollander, Aakash Kalyani, Laurence van Lent, Markus Schwedeler, and Ahmed Tahoun |
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Full-Text PDF | Additional Information |
Features
Abstracts of Articles
| 1. |
How Regional Inequality and Migration Drive Housing Prices and Rents |
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Greg Howard and Jack Liebersohn |
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We argue that rising regional inequality contributes to higher average housing prices and rents. We show three key empirical facts that contribute to this mechanism: first, income growth has been faster in already high-income cities; second, people are drawn to these cities by the income growth, raising relative housing demand and relative housing prices and rents; and third, housing supply in these cities is inelastic due to density and regulation, so these cities have not produced the housing to match the rising demand. We illustrate the resulting changes using a graphical spatial model in which rising regional inequality reallocates population toward high-income, supply-constrained areas. This shift raises national average housing prices and rents. |
| 2. |
Curbing Rising Housing Costs: A Model-Based Policy Comparison |
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Boaz Abramson and Tim Landvoigt |
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Recent decades have seen house prices grow strongly relative to incomes, making housing ever less affordable. We develop and quantify a model of segmented housing markets to study the drivers of rising housing costs and to evaluate policies aimed at curbing these costs. We show that rising wealth dispersion, together with stagnating housing supply, can explain the observed increase in housing costs. Demand-side policies such as down payment assistance and mortgage interest deductions inadvertently cause upward pressure on house prices and exacerbate unaffordability. Supply-side policies such as tax credits for development or construction of affordable housing lower house prices by increasing the housing stock. Which type of new housing is built matters: new construction in the high-end segments improves affordability by more in all segments of the housing market compared to new construction in bottom-end segments. |
| 3. |
The Folk Economics of Housing |
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Christopher S. Elmendorf, Clayton Nall, and Stan Oklobdzija |
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Why is housing supply so severely restricted in US cities and suburbs? Urban economists offer two primary hypotheses: homeowner self-interest and political fragmentation. Homeowners, who outnumber and have organizational advantages over renters, are said to lobby against development to protect their property values. The fragmentation hypothesis emphasizes that development's negative externalities are borne locally while most of the benefits accrue regionally or nationally, leading localities to block housing. This paper offers another explanation: ordinary people simply do not believe that adding more housing to the regional stock would reduce housing prices. Across three original surveys of urban and suburban residents, only a minority of respondents say that a large, positive, regional housing supply shock would reduce prices or rents. These beliefs are weakly held and unstable (suggesting people have given the issue little thought), but respondents do have stable views about who is to blame for high housing prices: developers and landlords. Large, bipartisan supermajorities support price controls, demand subsidies, and restrictions on putative bad actors, policies which they believe would be more effective than supply liberalization for widespread affordability. We discuss the implications of these findings for efforts to expand the supply of housing. |
| 4. |
Building Costs and House Prices |
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Brian Potter and Chad Syverson |
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We take a long, broad, and theoretically agnostic view toward the connection between building costs and house prices in the US housing market. We find that building costs have never had all that much explanatory power over US housing prices, but even the imperfect correlations of the past have weakened further in recent decades along multiple dimensions. |
| 5. |
International Dimensions of Housing Markets |
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Cristian Badarinza and Tarun Ramadorai |
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We make the case that an international perspective on housing markets can help us understand why house prices and transactions volumes sometimes vary in ways that cannot easily be attributed to local economic factors. We first document cross-country and cross-time variation in house price-to-income ratios, and selectively discuss a growing literature which quantifies how international capital flows affect domestic housing markets. While this literature helps rationalize some of the rhetoric on globalization's effects on housing markets, it seems difficult at first glance to attribute price variation at the aggregate housing market level to the relatively small absolute magnitudes of cross-border housing capital flows. We argue using a search and matching framework that housing market frictions can magnify the effect of seemingly modest shocks and lead to more widespread reverberation through the housing market, linking local outcomes to the global distributions of wealth, risk, and productivity. |
| 6. |
Interview with Anne O. Krueger |
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Dylan Matthews |
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Matthews interviews eminent international economist Anne O. Krueger, tracing her life in academia and her service at multilateral economic institutions, and explaining her myriad intellectual contributions to the field. Krueger recounts her early skepticism of import substitution, informed by her experiences in Turkey and India, culminating in her influential 1974 paper on rent-seeking. Krueger discusses her tenure at the World Bank in the 1980s and her time at the IMF in the 2000s, where she influenced the fund's response to the financial crisis in Argentina. She also explains her career-long interest in trade liberalization efforts, her concerns about the decline of the World Trade Organization and multilateral trade negotiations, and her skepticism about the United States' recent turn toward industrial policy. Krueger ends by reflecting on the evolution of the economics profession and offering advice for young economists. |
| 7. |
Protecting Antiquities: A Role for Long-Term Leases? |
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Michael Kremer and Tom Wilkening |
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In order to preserve cultural patrimony for future generations, most countries ban exports of antiquities. However, this may drive trade underground, particularly in low-income and low-state capacity contexts, and cause irreversible damage to cultural heritage. We argue that complementing export bans with fixed-duration, long-term leases can strengthen incentives for maintenance and revelation of antiquities, while preserving cultural patrimony. Allowing only leases rather than sales limits potential losses from corrupt deals between foreign collectors and government officials. Standardized contracts with set lease lengths, insurance requirements, and care requirements may also be necessary to limit corruption and establish a well-functioning market. |
| 8. |
Basel Endgame: Bank Capital Requirements and the Future of International Standard Setting |
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Stephen Cecchetti, Jeremy Kress, and Kermit Schoenholtz |
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In 2023, US regulators proposed the "Basel Endgame," a long-awaited overhaul of bank capital requirements. The proposal aimed to bring the United States into compliance with international standards established by the Basel Committee on Banking Supervision in response to the 2008 Global Financial Crisis. However, fierce industry opposition to what banks viewed as a costly increase in capital requirements effectively killed the proposal. In this essay, we describe the purpose of bank capital and the history of international standard-setting in bank regulation. We then highlight the most important aspects of the Basel Endgame, as well as the arguments for and against adopting the rule. We show that the debate unnecessarily conflated two distinct questions: (1) whether the United States should comply with international regulatory standards, and (2) whether the United States should raise large banks' capital requirements. While there are strong grounds to answer both questions in the affirmative, they need not be addressed together. That is, the United States can implement international standards in a capital-neutral manner to preserve global cooperation in bank regulation, leaving the separate question of raising capital requirements for another day. |
| 9. |
Carbon Rollercoaster: A Historical Analysis of Decarbonization in the United States |
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Karen Clay, Akshaya Jha, Joshua Lewis, and Edson Severnini |
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This paper documents the changing trends in US carbon emissions and discusses the main factors that contributed to the historical carbon emissions rollercoaster. We divide the discussion into four periods: up to 1920, 1920–1960, 1960–2005 and after 2005. For each period, we discuss the main drivers of national carbon emissions. We then discuss trends in carbon emissions in the electricity sector. Electricity sector emissions were initially very small, but would become the largest source of US carbon emissions over the period 1980–2015, and the largest contributor to decarbonization since 2007. In the last section, we offer some lessons for what developing economies might learn from the US experience. |
| 10. |
Text as Data in Economic Analysis |
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Tarek A. Hassan, Stephan Hollander, Aakash Kalyani, Laurence van Lent, Markus Schwedeler, and Ahmed Tahoun |
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This article discusses how to apply computational linguistics techniques to analyze largely unstructured corporate-generated text for economic analysis. As a core example, we illustrate how textual analysis of earnings conference call transcripts can provide insights into how markets and individual firms respond to economic shocks, such as a nuclear disaster or a geopolitical event: insights that often elude traditional non-text data sources. This approach enables extracting actionable intelligence, supporting both policy-making and strategic corporate decision-making. We also explore applications using other sources of corporate-generated text, including patent documents and job postings. By incorporating computational linguistics techniques into the analysis of economic shocks, new opportunities arise for real-time economic data, offering a more nuanced understanding of market and firm responses in times of economic volatility. |
| 11. |
How Congress Designed the Federal Reserve to Be Independent of Presidential Control |
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Gary Richardson and David W. Wilcox |
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Conventional wisdom traces the origins of the Federal Reserve's independence to the 1951 Treasury-Fed Accord. That rendition of history is inaccurate. The principal source of the Fed's monetary-policy independence is the Banking Act of 1935, which created the Fed's modern leadership structure and placed monetary-policy decisions beyond Presidential control. Congressional intent is clear in this case because the initial draft of the bill vested control of monetary policy with the President. After extensive debate, Congress amended the legislation and crafted the institutional features that enshrine the Fed's independence. The central role of the Banking Act of 1935 suggests that only an act of Congress or a Supreme Court ruling could fundamentally strengthen presidential influence over monetary policy. |
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