Assistant Professor, Wisconsin School of Business, University of Wisconsin-Madison, 2018-
Assistant Professor, Johns Hopkins Carey Business School, 2016-2018
Stanford University, PhD, 2016
New Economics School, MA, 2011
Higher School of Economics, MA, 2010
Higher School of Economics, BA, 2008
Real Estate, Urban Economics, Finance, Macroeconomics
My research studies the microstructure of housing markets, specifically search frictions and pricing mechanisms. Non-technical summary on the Wisconsin School of Business blog.
WORK IN PROGRESS
Bidding Wars in the Norwegian Housing Market: Evidence from Millions of Bids (joint with André K. Anundsen and Erling R. Larsen)
Asymmetric Information and Search Frictions in Housing Markets (joint with Shiyan Wei)
The Skyline Model of an Innovative City (joint with Nikolay Arefiev)
1. Job Growth from Opportunity Zones (joint with Morris Davis, Andra Ghent, and Minseon Park). 2020.
The Tax Cuts and Jobs Act of 2017 established a new program called Opportunity Zones (OZs) that created tax advantages for investing in businesses or real estate in a limited number of low-income Census tracts. We use a census of establishment-level data on employment to identify the effect of the program on job creation. We show that in metropolitan areas, the OZ designation increased employment growth relative to comparable tracts by between 3.0 and 4.5 percentage points and new jobs were created across many different industries and education levels. The OZ designation did not create jobs in rural areas.
2. How Auctions Amplify House-Price Fluctuations. 2019. Under revision.
I develop a dynamic search model of the housing market in which prices, determined by auction, exhibit greater volatility than prices in the search and matching model with Nash bargaining from the literature. This helps solve the puzzle of excess volatility of house prices. The outcomes of the two models differ in hot markets when buyers' house values are heterogeneous. With Nash bargaining, a buyer who gets a house is chosen randomly among interested buyers, so prices are determined by the average house values. In auctions, competition among buyers drives up prices to the willingness to pay of the buyer with the highest value. In hot markets, the highest values fluctuate more than the average values, making the auction prices more volatile than the negotiated prices. This high volatility is constrained efficient in the sense that the equilibrium allocation decentralizes the solution of the social planner problem constrained by the search frictions.
3. Information Disclosure in Housing Auctions (with Delong Meng) 2020. Submitted.
We study the optimal selling mechanism and information disclosure policy for a house seller. The seller can select any selling mechanism, including an auction, and release additional information about the house to buyers. The release of information adjusts the buyers' values and bids. We find that the optimal mechanism is a combination of the optimal auction and full information disclosure. But if the seller uses a second-price auction instead, concealing additional information about the house may be optimal for her. Moreover, the seller can extract buyers' private value adjustments by selling them contracts similar to European call options.
4. The Housing Search Model and Empirical Evidence. 2014.
This paper argues that the housing search and match model augmented with shocks of the discount factor and matching efficiency can fit the dynamics of the housing price-rent ratio in the US from 1960 to 2013. Specifically, the paper considers the transitory dynamics of the house price-rent ratio in the Piazzesi Schneider (2009) model augmented with the discount factor and matching efficiency shocks that follow a continuous-time Markov chain. The price-rent ratio in the model is the discounted present value of the rent minus a liquidity discount, where the liquidity discount is the expected present value of search and transaction costs. The liquidity discount depends on both the discount factor and the matching efficiency, which are negatively correlated based on the data on the time on the market for sellers. Then a drop in the discount factor raises the present value of the rent, increasing prices directly, but is also associated with the increase in the matching efficiency that decreases the liquidity discount, which also leads to higher prices. The joint dynamics of the discount factor and matching efficiency shocks help explain the big swings of the price-rent ratio that are observed in the data.
5. The buyer's barriers of entry to the U.S. owner-occupied housing market. 2014.
This paper quantifies the buyer's entry costs to the U.S. owner-occupied housing market from the housing search model. The entry costs are estimated to drop by $50 thousand dollars from the middle of 1980s to 2006 which may be associated with lowering of lending standards during that time, and those entry costs revert back to high levels right after the housing boom of 2005-2006.