Alina Arefeva

WORKING PAPERS

"The Effect of Capital Gains Taxes on Business Creation and Employment: The Case of Opportunity Zones," with Morris Davis, Andra Ghent, and Minseon Park). 2023. Slides. Revised and Resubmitted to the Management Science.

Media Mentions: Brookings, Pew Trusts, 

Briefing for the U.S. House of Representatives Committee on Financial Services. 

The Tax Cuts and Jobs Act of 2017 established a new program called Opportunity Zones (OZs) that reduces or eliminates capital gains taxes on investment in a limited number of low-income Census tracts. We provide a model illustrating how a change in capital taxation affects employment in existing and new establishments. We then use establishment-level data to show that, in its first two years, the OZ designation increased employment growth relative to comparable tracts by between 3.0 and 4.5 percentage points in metropolitan areas. The job growth occurred in multiple industries and persisted into 2021 rather than quickly disappearing. However, most of the jobs created by the program were likely taken by residents that live outside of the designated tracts, consistent with only 5% of US residents working in the same Census tract as the one in which they live.

"Housing Markets: Auctions, Microstructure Noise, and Weekly Patterns." 2022.  Slides. Under Review.

Media Mentions: Wisconsin School of Business Blog

This paper studies volatility in the housing markets by developing dynamic search and matching models with bidding wars, or auctions. The models’ moments are aggregated to the statistics on the offer acceptance dates and the closing dates to emphasize the differences between these statistics in the data. I find that up to 70% of the volatility of monthly home sales and listings in the Los Angeles metro area stems from the intra-week patterns in the data and the microstructure noise in the models. The remaining volatility can be generated by adding exogenous shocks to the models.

"Monetary Policy Reestimated," with Nikolay Arefyev. 2022. Under Review.

We propose a new method of identification of the monetary policy rule. Using this method, we argue that, before the Great Moderation, the Federal Reserve implemented the Friedman policy of steady money growth as could be interpreted and adopted by the policymakers in the 1960s and 1970s. During the Great Moderation, the monetary policy follows the Taylor rule with interest rate smoothing instead, where the type of smoothing is more general than discussed in the literature. The estimated impulse response functions for the monetary policy shock are large and significant, even when they are estimated on the Great Moderation data.

PUBLICATIONS

"Revealing Information in Auctions: the Optimal Auction versus the Second-Price Auction," with Delong Meng. 2021.  Economic Letters, 204, 109895. Slides.

Working Paper Versions: Information Disclosure in Housing Auctions (extended), Revealing Information in Auctions: the Optimal Auction versus the Second-Price Auction (short). 

Media Mentions: Wisconsin School of Business Blog

We study the optimal information disclosure policy in the optimal auction and the second-price auction when the seller has information that additively adjusts the independent private values of the bidders.  In this setting, information revelation could change the allocation of the good in both types of auctions.  However, in the optimal auction, the change in allocation makes the revenue function convex in the additive adjustments, so the seller should always reveal information.  In contrast, in the second-price auction, the change in allocation makes the revenue function non-convex, in which case the seller might benefit from withholding information.

WORK IN PROGRESS

• "Firm's Location and Social Connectedness," with Sean Flynn and Andra Ghent.

• "Discrimination during the Eviction Moratoria," with Qihui Hu and Chris Timmins.

• "Putting on the Ritz: Tax Increment Financing, Eminent Domain, and Local Economic Development," with Cameron LaPoint and Evan Mast.

• "Can Stay-at-Home Orders Create a Pandemic Housing Boom?" with Song Gao, Shengwei Guo, Lu Han, Victor Ortego-Marti. Slides and 10-min Audio Recording

• "Commercial Real Estate: Search and Matching Model."

• "House Price Momentum," with Dena Lomonosov.

• "The Effect of Zoning Relaxation in California on Housing Affordability," with Dayin Zhang and Franklin Qian.

• "Flood Risk and Commercial Real Estate: Channels of Impact," with Xudong An.

• "The Effect of the Flood Risk on the Firms and Establishments."

• "Bidding Wars in the Norwegian Housing Market:  Evidence from Millions of Bids," with André K. Anundsen and Erling R. Larsen.

• "The Skyline Model of an Innovative City," with Nikolay Arefyev.

• "Impact of COVID-19 on Commercial Real Estate."