EconPapers    
Economics at your fingertips  
 

Financial Frictions, the Housing Market, and Unemployment

William Branch (), Nicolas Petrosky-Nadeau and Guillaume Rocheteau ()

No 2014-26, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: We develop a two-sector search-matching model of the labor market with imperfect mobility of workers, augmented to incorporate a housing market and a frictional goods market. Homeowners use home equity as collateral to finance idiosyncratic consumption opportunities. A financial innovation that raises the acceptability of homes as collateral raises house prices and reduces unemployment. It also triggers a reallocation of workers, with the direction of the change depending on firms? market power in the goods market. A calibrated version of the model under adaptive learning can account for house prices, sectoral labor flows, and unemployment rate changes over 1996-2010.

Keywords: liquidity; limited commitment; credit; unemployment (search for similar items in EconPapers)
JEL-codes: D83 E50 D82 E40 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2014-11, Revised 2014-11
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.frbsf.org/economic-research/publications/working-papers/wp2014-26.pdf Full text (application/pdf)

Related works:
Journal Article: Financial frictions, the housing market, and unemployment (2016) Downloads
Working Paper: Financial Frictions, the Housing Market, and Unemployment (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2014-26

Ordering information: This working paper can be ordered from

DOI: 10.24148/wp2014-26

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().

 
Page updated 2020-04-01
Handle: RePEc:fip:fedfwp:2014-26