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Inequality and House Price

Speaker: Fudong Zhang
Speaker Intro:

Prof. Fudong Zhang is Assistant Professor at PBC School of Finance, Tsinghua University. He holds Ph.D. of Economics from University of Michigan. His research fields include macroeconomics and international economics.

Please click Prof. Zhang's CV for more information.

Host: Dingming Liu
Description:
This paper studies the interaction between inequality and house prices using an in-complete market model with heterogeneous households. The model links cross-sectional household portfolio saving decisions to housing market outcomes, and it can account for the positive empirical relationship between growth in inequality and changes in house prices. It also illustrates a new house price formation mechanism in which an investment motive among the wealthy plays a key role. A quantitative application of the theory rationalizes the recent substantial housing boom accompanied by rising household saving rates in China. The theory in this paper shows that market frictions can have a differential impact cross-sectionally, increasing inequality. Inequality can in turn amplify frictions in the market.
 

 

Time: 2017-05-18(Thursday)16:40-18:00
Venue: N303, Econ Building
Organizer: WISE&SOE