The effects of households' indebtedness on their house-selling decisions are studied in a dynamic equilibrium model with search in the housing market and defaultable long-term mortgages. In equilibrium, both sellers' asking prices and time-to-sell increase with the relative size of their...

The difference in unemployment rates between the U.S. and Europe is well documented. In this paper, we develop a model with frictional labor, goods and credit markets to understand how differences in unemployment rates across the U.S. and Europe can be explained by differences in income tax...