For households that face a possibility of moving across MSAs, the risk of home owning depends on the covariance of the sale prices of their current houses with the purchase prices of their likely future houses. We find empirically that households tend to move between highly correlated MSAs,...

Previous tests for liquidity constraints using consumption Euler equations have frequently used asset-based sample separation rules, arguing that low wealth consumers are more likely to be constrained. We propose an alternative sample separation rule using direct information on borrowing...