Author : Shaofeng Xu
Publisher :
ISBN 13 : 9781267760944
Total Pages : pages
Book Rating : 4.7/5 (69 download)
Book Synopsis Essays on Housing Markets and Location Activities by : Shaofeng Xu
Download or read book Essays on Housing Markets and Location Activities written by Shaofeng Xu and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation studies the impact of housing markets on the macroeconomy and the role of transport technologies in the firm location activities. The first chapter of this dissertation examines the contributions of population aging, mortgage innovation and historically low interest rates to the sharp rise in U.S. house prices and mortgage debt between 1994 and 2005. I construct an overlapping generation general equilibrium model with fully specified demographic characteristics and mortgage markets, and compare the steady state equilibrium of the economy in 1994 to that in 2005. Population aging contributes to rising house prices and mortgage debt but it only accounts for a very small portion of their observed changes. Meanwhile, mortgage innovation significantly increases the mortgage borrowing of various age cohorts, but it has a trivial effect on house prices because interest rates rise due to rising demand for mortgage loans. This increases households' saving in financial assets and leaves their housing assets nearly unchanged. However, the rise in house prices can be justified in an open economy where interest rates fall due to a global saving glut. Declining interest rates force households in primary saving ages to reallocate their wealth from financial assets to housing assets which dramatically drives up house prices. The second chapter of this dissertation analyzes the effects of idiosyncratic income shocks on the housing tenure decision of a risk-averse household who chooses an optimal time to own a house as well as an optimal house size. I provide an explicit decomposition of the household's optimal saving rule to formalize various motives for holding financial wealth during her housing tenure transition. It's shown that the timing flexibility of homeownership enables the household's saving for future home purchase to buffer her non-housing consumption against income risks. The model also lends support to the previous empirical finding of a negative uncertainty-homeownership relationship. Rising income volatility increases a risk-averse household's option value to wait and postpones her home acquisition. The third chapter of this dissertation investigates the impact of economies of scale in transportation on a firm's location decision. I relate the location problem to weighted Fermat problems and ramified optimal transportation problems and provide an explicit analysis of how transport technologies affect the firm's transportation and location choices. It's found that in general when the level of transport economies of scale is high, the firm locates its factory in the interior of the Weber triangle with a branching transport structure. Two examples are constructed to illustrate how interactions between transport technology and production technology would influence the firm's choices on input purchase and factory location.