NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Kurt Mitman

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Working Papers

October 2013Unemployment Benefits and Unemployment in the Great Recession: The Role of Macro Effects
with Marcus Hagedorn, Fatih Karahan, Iourii Manovskii: w19499
We exploit a policy discontinuity at U.S. state borders to identify the labor market implications of unemployment benefit extensions. In contrast to the existing literature that focused on estimating the effects of benefit duration on job search decisions by the unemployed – the micro effect – we are guided by equilibrium labor market theory and focus on measuring the general equilibrium macro effect that operates through the response of job creation to benefit extensions. We find that it is the latter effect that is very important quantitatively. In particular, benefit extensions raise equilibrium wages and lead to a sharp contraction in vacancy creation, employment, and a rise in unemployment.
October 2011Housing and the Macroeconomy: The Role of Bailout Guarantees for Government Sponsored Enterprises
with Karsten Jeske, Dirk Krueger: w17537
This paper evaluates the macroeconomic and distributional effects of government bailout guarantees for Government Sponsored Enterprises (such as Fannie Mae and Freddy Mac) in the mortgage market. In order to do so we construct a model with heterogeneous, infinitely lived households and competitive housing and mortgage markets. Households have the option to default on their mortgages, with the consequence of having their homes foreclosed. We model the bailout guarantee as a government provided and tax-financed mortgage interest rate subsidy. We find that eliminating this subsidy leads to substantially lower equilibrium mortgage origination and increases aggregate welfare, but has little effect on foreclosure rates and housing investment. The interest rate subsidy is a regressive policy: eli...

Published: Housing, Mortgage Bailout Guarantees and the Macro Economy (with K. Jeske and Kurt Mitman), Journal of Monetary Economics, Vol. 60, 917- 935.

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