Milstein All Research

This paper exploits strict flood insurance coverage limits and staggered flood map updates to show that mortgage lenders offload flood risk to the government through flood insurance contracts, and to under-insured households through higher down payments. Lender risk management leads delinquency rates to equalize inside and outside of flood zones. The combination of insurance requirements and credit rationing shift the composition of mortgages in flood zones towards richer and higher credit quality borrowers.

We analyze the impact of credit risk and higher interest rates on U.S. bank solvency, expanding on the work of Jiang et al. (2023). Our variation of their bank-run model demonstrates how credit losses and asset declines from higher interest rates can trigger self-fulfilling solvency runs, even when banks hold fully liquid assets. Banks with high credit losses, greater exposure to interest rate increases, low capital, and high uninsured leverage are particularly vulnerable.

A rent guarantee insurance (RGI) policy makes a limited number of rent payments to the landlord on behalf of an insured tenant unable to pay rent due to a negative income or health expenditure shock. We introduce RGI in a rich quantitative equilibrium model of housing insecurity and show it increases welfare by improving risk sharing across idiosyncratic and aggregate states of the world, reducing the need for a large security deposits, and reducing homelessness which imposes large costs on society.

I propose a dynamic equilibrium model of the rental markets that endogenously gives rise to defaults on rents and evictions. In the model, eviction protections make it harder to evict delinquent renters, but higher default costs to landlords increase equilibrium rents. I quantify the model using micro data on evictions, rents, and homelessness. I find that stronger eviction protections exacerbate housing insecurity and lower welfare. The key empirical driver of this result is the persistent nature of risk underlying rent delinquencies.

What is it about Times Square that has inspired such attention for well over a century? And how is it that, despite its many changes of character, the place has maintained a unique hold on our collective imagination? In this book, which comes twenty years after her widely acclaimed Times Square Roulette, Lynne Sagalyn masterfully tells the story of profound urban change over decades in the symbolic space that is New York City's Times Square.

We develop an empirical methodology and conceptual framework to analyze the effect of rising interest rates on the value of U.S. bank assets and bank stability. We mark-to-market losses on banks’ assets due to interest rate increases from Q1 2022 to Q1 2023. Asset values declined on average by 10%, and the $2.2 trillion aggregate decline was on the order of aggregate bank capital. We present a model of solvency runs, which illustrates that interest rate increases can lead to self-fulfilling solvency bank runs even when banks’ assets are fully liquid.