The goal of this paper is to show that household-level financial distress (FD) varies greatly, meaning there is unequal exposure to macroeconomic risk, and that FD can increase macroeconomic vulnerability. To do this, we first establish three facts: (i) regions in the U.S. vary significantly in...

What determines wealth inequality and mobility and how can the policy maker influence it? This paper quantifies in closed form the bottom and the top (Pareto) tail of the distribution in a continuous-time heterogeneous agent model. Financial market imperfections play a key role, for which...

Today the financial services sector has become highly diversified offering the investor with a wide range of investment avenues. With proper investment strategies and financial planning investor can increase personal wealth which will contribute to higher economic growth. Economic growth is...

Behavioural Finance combines psychology with financial theory to comprehend the associations between markets, emotions, personality and reason. Investors have dissimilar outlook when they choose about investing in a specific avenue. Through appropriate investment strategies and financial...

Home ownership is widely stimulated by policy yet its effects are poorly understood. Exploiting privatization decisions of municipally-owned apartment buildings, we obtain random variation in home ownership for otherwise similar buildings with similar tenants. Granular data on demographics,...

Can inflation cure mortgage debt overhang and mitigate the severity of housing busts? Focusing on the Great Recession, I address this question through the lens of a quantitative macroeconomic model of illiquid housing, endogenous mortgage pricing, and equilibrium default. First, I show that an...

This paper quantitatively accounts for the cyclical dynamics of key macroeconomic housing and mortgage market variables using a tractable, search-theoretic model of housing with equilibrium mortgage default. To explain these dynamics, the model highlights the importance of liquidity spirals...

The size distributions of many economic variables seem to obey the double power law, that is, the power law holds in both the upper and the lower tails. I explain the emergence of the double power law - which has important economic, econometric, and social implications - using a tractable...

This paper investigates the macroeconomic effects of search risk in the housing market. To do so, I introduce a tractable directed search model of housing with multidimensional buyer and seller heterogeneity. I incorporate this framework in an incomplete markets macroeconomic model with...

We provide a systematic analysis of the properties of individual returns to wealth using twelve years ofpopulation data from Norway's administrative tax records. We document a number of novel results.First, during our sample period individuals earn markedly different average returns on their...