1. Home Purchases with and without Mortgage Credits: Implications for Portfolio Investment, with A. Gunes (2024) (submitted)
This paper is an empirical assessment of the effects of home purchases on portfolio allocation at the time of purchase as buying a home is one of the largest purchasing decisions over the lifetime of a typical household in the US. Using the Panel Study of Income Dynamics data, the results indicate significant differentiation between portfolio behaviours of mortgage purchasers and non-mortgage purchasers at the time of purchasing decision. While mortgage purchasers are more inclined to save for the down payment in the form of riskless assets, non-mortgage purchasers who are planning to purchase a home without any mortgage loans invest mostly in the risky assets. The results imply that an optimal portfolio allocation for mortgage purchasers could help them make the purchase earlier or buy larger houses with the same duration of the saving.
2. Debt Payments and Real Economic Activity over Short and Medium Run with M. Kilinc, (2022) (submitted)
In this paper, we investigate the role of household debt service burden on the short and medium run economic growth of a sample of advanced countries. Using debt service ratio data provided by the Bank for International Settlements, we find that debt service burden depresses economic growth over both short and medium run. This finding is in contrast to the effect of household debt level, which boosts economic growth in the short run while depressing in the long run as in Mian et al. (2017). We further find the same protracted effect of debt service burden on unemployment and household consumption. Therefore, our paper uncovers a new transmission channel of the debt markets (i.e., debt service channel) on economic growth, and shows that this channel is quantitatively much stronger than the household debt level channel. When faced with a rise in the debt service burden, households need to adjust other decision variables in order to satisfy their budget constraints. The present results indicate that they decrease their consumption levels significantly, with adverse effects on economic output and employment.
3. Exchange Rate Pass-through to House Prices with M. Kilinç (2024) (submitted)
This paper examines the role of exchange rates in explaining house prices in a sample of emerging market economies. We use a panel VAR methodology to understand economic dynamics in response to exchange rate shocks. The impulse responses show that when the local currency depreciates unexpectedly, GDP is adversely affected and consumer prices rise sharply in the following quarters. Monetary policy responds by raising interest rates. House prices also rise, but their dynamics are very different from those of consumer prices. The house price response peaks in about a year and then follows a slow downward process. In contrast, consumer price response is larger in magnitude but shorter in duration than the house price response. Moreover, we find that the exchange rate pass-through level reaches to about 5% in one year, almost 10% in the second year and about 17% in five years. In addition, the cross-country analysis documents significant pass-through heterogeneities across emerging markets. Overall, the empirical analysis provides supportive evidence for the important role of exchange rates in explaining house prices in emerging economies.
4. Pass-through of Different Shocks into Domestic Prices with N. Solakoglu, S. Babuscu, and A. Hazar (2025) (submitted)
This paper estimates the pass-through effects of oil prices and exchange rates on domestic producer and consumer prices in Turkey for 2003Q1–2014Q3. It utilizes both a recursive VAR model with Cholesky decomposition and a Structural Vector Autoregressive (SVAR) model with block exogeneity feature. The impulse responses of both models suggest that the SVAR model represent the dynamics of a small open economy better than the recursive VAR model. The results indicate that the pass-through from oil prices is small and statistically insignificant, whereas the pass-through from exchange rates is both significant and substantial. It further finds that the pass-through estimates have dramatically increased as we have observed a sharp increase in the inflation rate over recent years. The results have important policy implications for Turkiye, as inflation is the country's most fundamental challenge
5. Portfolio Choice Under Health Risk: The Role of Insurance Across Age Groups with A. Gunes (2026) (submitted)
This paper examines how health insurance moderates the adverse effect of poor health on household risky asset holdings over the life cycle. Using panel data from the Panel Study of Income Dynamics for 1997-2023, we find that poor health significantly reduces households’ holdings of risky financial assets, while health insurance partially offsets this negative effect. However, this buffering role is concentrated among younger households, for whom insurance fully offsets the adverse effect of poor health on risky asset holdings. By contrast, for middle-aged and older households, the moderating effect of health insurance is substantially weaker and statistically insignificant, respectively.
6. Endogenous Life-Cycle Portfolio Allocation in the Presence of both Housing Investment and Tax-deferred Accounts with D. Pelletier (2026)
This paper develops a life-cycle portfolio allocation model to address the joint effects of housing investment and tax-deferred accounts on the portfolio allocation of households. Besides the distinction between the taxable accounts and tax-deferred accounts, the model employs a comprehensive housing investment structure and Epstein-Zin recursive preferences. The baseline model results show moderate risk taking behavior of households in the presence of both housing investment and tax-deferred account. The results further show that while housing investment has sizable crowding out effect on the risky asset investment, the presence of tax-deferred account displays a smaller crowd in effect.