Research

Supply Constraints and Failure to Refinance (with Ryan Goodstein)

link to paper

We show that supply-side capacity constraints in the mortgage market contribute to the well-documented “failure to refinance” among borrowers who would benefit financially from doing so. Supply constraints have little impact on most borrowers but substantially reduce the quarterly prepayment rate among “marginal” borrowers (those with lower loan balances, incomes, or credit scores), after accounting for the financial benefit of refinancing and a rich set of observable characteristics. Our estimates imply that supply constraints led to 12 percent of marginal borrowers failing to refinance during the 2020-2021 boom. We provide suggestive evidence that lenders ration credit to these borrowers, particularly in the early stages of the application process.

Synergy, Scale, and Competition in Bank Mergers (with Jeremy Fox)

Hesitating at the Altar: An Update on Taxes and the Timing of Marriage (with Margaret McKeehan)

This paper provides evidence that U.S. tax codes dependence on marital status continues to generate an implicit marriage tax and distort marital decisions. By looking at the timing of marriage rather than the decision to marry (see Alm and Whittington (1997)) we capture a specific distortion while allowing for heterogeneity in other costs of marriage. Using data on couples from the Panel Study on Income Dynamics between 1986 and 2011, we find that a one percent rise in the size of the marriage tax relative to a couple’s income increases the probability of delay by 1.2 percentage points. We further demonstrate the robustness of this result across a variety of alternative specifications and assumptions regarding tax-filing behavior. (2018, Public Finance Review) Code available on Github