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Working Paper
Preferences over the Racial Composition of Neighborhoods: Estimates and Implications
We estimate the parameters of a dynamic, forward-looking neighborhood choice model in 197 metro areas where households have preferences over the racial composition of neighborhoods. Our inclusion of multiple metro areas in the estimation sample enables us to develop a new, shift-share IV strategy to estimate the impact of the racial composition of neighborhoods on location choice that relies only on across-metro comparisons of similarly situated neighborhoods. For the “shift,” we use national data to determine the probabilities different types of households live in different neighborhoods ...
Journal Article
Computing Dynamic Heterogeneous-Agent Economies: Tracking the Distribution
Theoretical formulations of dynamic heterogeneous-agent economies typically include a distribution as an aggregate state variable. This paper introduces a method for computing equilibrium of these models by including a distribution directly as a state variable if it is finite-dimensional or a fine approximation of it if it is infinite-dimensional. The method accurately computes equilibrium in an extreme calibration of Huffman's (1987) overlapping-generations economy where quasi-aggregation, the accurate forecasting of prices using a small state space, fails to obtain. The method also ...