Department of Finance
UT Austin McCombs School of Business
Austin, TX 78712
Institutional Affiliation: University of Texas at Austin
NBER Working Papers and Publications
|November 2019||Economic Consequences of Housing Speculation|
with Zhenyu Gao, Wei Xiong: w26457
By exploiting variation in state capital gains taxation as an instrument, we analyze the economic consequences of housing speculation during the U.S. housing boom in the 2000s. We find that housing speculation, anchored, in part, on extrapolation of past housing price changes, led not only to greater price appreciation, economic expansions, and housing construction during the boom in 2004-2006, but also to more severe economic downturns during the subsequent bust in 2007-2009. Our analysis supports supply overhang and local household demand as two key channels for transmitting these adverse effects.
|February 2017||China's Gradualistic Economic Approach and Financial Markets|
with Markus K. Brunnermeier, Wei Xiong: w23194
China’s gradualistic approach allowed the government to learn how the economy reacts to small policy changes, and to adjust its reforms before implementing them in full. With fully developed financial markets, however, private actors’ may front-run future policy changes making it impossible for the implement policies gradually. With financial markets the government faces a time-inconsistency problem. The government would like to commit to a gradualistic approach, but after it observes the economy’s quick reaction, it has no incentive to implement its policies in small steps.
Published: Markus K. Brunnermeier & Michael Sockin & Wei Xiong, 2017. "China's Gradualistic Economic Approach and Financial Markets," American Economic Review, vol 107(5), pages 608-613. citation courtesy of
|March 2013||Informational Frictions and Commodity Markets|
with Wei Xiong: w18906
This paper develops a model to analyze information aggregation in commodity markets. Through centralized trading, commodity prices aggregate dispersed information about the strength of the global economy among goods producers whose production has complementarity, and serve as price signals to guide producers' production decisions and commodity demand. Our analysis highlights important feedback effects of informational noise originating from supply shocks and futures market trading on commodity demand and spot prices, which are ignored by existing empirical studies and policy discussions.
Published: MICHAEL SOCKIN & WEI XIONG, 2015. "Informational Frictions and Commodity Markets," The Journal of Finance, vol 70(5), pages 2063-2098.