Morris Davis

Rutgers University
Rutgers Business School
Newark, NJ 07102

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Institutional Affiliation: Rutgers University

NBER Working Papers and Publications

July 2014Housing, Finance and the Macroeconomy
with Stijn Van Nieuwerburgh: w20287
In this chapter, we review and discuss the large body of research that has developed over the past 10-plus years that explores the interconnection of macroeconomics, finance, and housing. We focus on three major topics -- housing and the business cycle, housing and portfolio choice, and housing and asset returns -- and then review the recent literature that studies housing and the macroeconomy during the great housing boom and bust of 2000-2010. Our emphasis is on calibrated models that can be compared to data. In each section, we discuss the important questions, the typical set of tools used, and the insights that result from important papers. Although great progress has been made in understanding the important role that housing plays in understanding macroeconomic phenomena, work rema...

Published: “Housing, Finance and the Macroeconomy” (handbook chapter) with Stijn Van Nieuwerburgh, New York University. Handbook of Urban and Regional Economics, Edited by Gilles Duranton, J. Vernon Henderson and William C. Strange, 2015, Volume 5, p. 753-811.

August 2012Homework in Monetary Economics: Inflation, Home Production, and the Production of Homes
with S. Boragan Aruoba, Randall Wright: w18276
We study models incorporating money, household production, and investment in housing. Inflation, as a tax on market activity, encourages substitution into household production, and thus investment in household capital. Hence, inflation increases the (appropriately deflated) value of the housing stock. This is documented in various data sources. A calibrated model accounts for a fifth to a half of the observed relationships. While this leaves much to be explained, it demonstrates the channel is economically relevant. We also show models with home production imply higher costs of inflation than models without it, especially when home and market goods are close substitutes.

Published: Review of Economic Dynamics Available online 25 November 2014 In Press, Corrected Proof — Note to users Cover image Homework in monetary economics: Inflation, home production, and the production of homes ☆ S. Borağan Aruobaa, , , Morris A. Davisb, Randall Wrightc, d, e, f citation courtesy of

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