We study how employment documentation requirements and out-of-pocket closing costs constrain mortgage refinancing. These frictions, which bind most          severely during recessions, may significantly inhibit monetary policy pass-through. To study their effects on refinancing, we exploit an FHA policy change that      excluded unemployed borrowers from refinancing and increased others' out-of-pocket costs substantially. These changes dramatically reduced refinancing rates, particularly among the likely unemployed and those facing new out-of-pocket costs. Our results imply that unemployed and liquidity-constrained borrowers        have a high latent demand for refinancing. Cyclical variation in these factors may therefore affect both the aggregate and distributional consequences of monetary policy.

City level differences in industry-adjusted Tobin's q, an estimate of the value created for shareholders, are large, and have widened sharply over the last twenty years. Proxies for a city's appeal to high value-added workers, such as existing education rates and favorable weather, are strongly associated with Tobin's q, both in levels and changes. These results indicate that shareholders have captured a significant portion of the benefits associated with superior locations. The higher stock prices of firms in these locations appear to be driven by future growth opportunities, rather than improvements in current operating efficiency.

We examine the potential for the price-to-rent ratio to be used as a macro-prudential tool. Standardized appraisal methods, such as the comparable sales and replacement cost appraisal are not designed to identify speculative housing markets. In addition to these methods, appraisers could estimate the current market rent for a property.  We argue that the resulting price-to-rent ratio would provide a useful signal for speculative pressures. We show this by estimating price-to-rent ratios for home purchases using the American Housing Survey. We document that the distribution of price-to-rent ratios shifted up dramatically during the housing boom. We illustrate how the price-to-rent ratio could be incorporated into a lending policy so as to generate counter-cyclical loan-to-value ratios.

Secure and complete property rights are considered a key determinant of long-term economic growth, investment and financial development. We exploit a unique feature of residential house markets in China, where dual property rights coexist due to dual land ownership in the constitution, that is, urban land belongs to the state whereas rural land is collectively owned. The price difference between dual property rights for otherwise identical properties reflects the present value of cash ow differentials due to market liquidity, collateralization opportunities in borrowing, and uncertainty associated with future disposition. We estimate the relative price of different property rights to be 66 percent between limited and full property rights. We also study the effect of a municipal zoning change as a natural experiment on the relative price. Zoning codes reduce the uncertainty related to compensation from future demolition. Our estimates indicate government                                          regulation plays an important role in a housing market that has experienced rapid appreciation over a long period.

What are the welfare costs of inflation? The evidence to date shows smalls costs of moderate inflation due to two leading explanations: inefficient price dispersion and the inflation tax on liquid assets. In this paper, we argue that the costs of capital misallocation resulting from moderate, low-frequency changes in inflation are in fact orders of magnitude larger than the costs due to the above two explanations. We begin by constructing a novel dataset for more than 50 countries using a variety of sources. We document that for low to medium inflation: (i) housing is a good hedge against inflation risk whereas the stock market is not, (ii) their differential inflation exposure follows from their underlying cash-flows, i.e., rents are highly correlated with inflation whereas corporate profits are not, and (iii) household's portfolios, as well as the composition of aggregate investment, are tilted towards real estate. These results do not vary with the level of a country's financial development and are robust to using food prices as an instrument for aggregate inflation as well as restricting to countries without active monetary policy. Finally, we use this evidence to discipline a canonical model of portfolio choice with Epstein-Zin preferences and IID log-normal returns. We find that the welfare cost of capital misallocation resulting from moderate inflation risk is equivalent to about 0.2 percent reduction in the economy’s growth rate.