Abstract

http://ssrn.com/abstract=2237525
 
 

References (59)



 
 

Footnotes (31)



 


 



Financial Frictions, the Housing Market, and Unemployment


William Branch


University of California, Irvine - Department of Economics

Nicolas Petrosky-Nadeau


Carnegie Mellon University - David A. Tepper School of Business; Federal Reserve Banks - Federal Reserve Bank of San Francisco

Guillaume Rocheteau


University of California, Irvine; Federal Reserve Banks - Federal Reserve Bank of Cleveland

November 2014


Abstract:     
We develop a two-sector search-matching model of the labor market with imperfect mobility of workers, augmented to incorporate a housing market and a frictional goods market. Homeowners use home equity as collateral to finance idiosyncratic consumption opportunities. A financial innovation that raises the acceptability of homes as collateral raises house prices and reduces unemployment. It also triggers a reallocation of workers, with the direction of the change depending on firms' market power in the goods market. A calibrated version of the model under adaptive learning can account for house prices, sectoral labor áows, and unemployment rate changes over 1996-2010.

Number of Pages in PDF File: 47

Keywords: credit, unemployment, housing, limited commitment, liquidity

JEL Classification: D82, D83, E40, E50

working papers series





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Date posted: March 24, 2013 ; Last revised: November 15, 2014

Suggested Citation

Branch, William and Petrosky-Nadeau, Nicolas and Rocheteau, Guillaume, Financial Frictions, the Housing Market, and Unemployment (November 2014). Available at SSRN: http://ssrn.com/abstract=2237525 or http://dx.doi.org/10.2139/ssrn.2237525

Contact Information

William Branch
University of California, Irvine - Department of Economics ( email )
3151 Social Science Plaza
Irvine, CA 92697-5100
United States
757-221-2432 (Phone)
Nicolas Petrosky-Nadeau (Contact Author)
Carnegie Mellon University - David A. Tepper School of Business ( email )
5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
HOME PAGE: http://sites.google.com/site/npetroskynadeau/

Federal Reserve Banks - Federal Reserve Bank of San Francisco ( email )
101 Market Street
San Francisco, CA 94105
United States
Guillaume Rocheteau
University of California, Irvine ( email )
Campus Drive
Irvine, CA 62697-3125
United States
Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )
East 6th & Superior
Cleveland, OH 44101-1387
United States
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References:  59
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