Duration and Intensity of Kindergarten Attendance and Secondary School Track Choice

This paper investigates the relationship between kindergarten attendance and secondary school track choice in West-Germany. Our analysis is based on a panel of 12 to 14-year olds with information from age two on, drawn from the German SocioEconomic Panel (GSOEP) 1984?2005. We estimate binary probit models to assess the impact of the duration (in years) and the intensity (half-day or full-day) of kindergarten attendance. Our results indicate that kindergarten non-attendance is associated with a significantly lower probability to attend the highest secondary school track (?Gymnasium?). Further, full-day attendance is associated with a decreasing probability of attending the highest secondary school track for every duration of preschool child care. Thus, intensity seems to matter more than duration. --kindergarten,preschool education,school placement

The Housing Market(s) of San Diego

This paper uses an assignment model to understand the cross section of house prices within a metro area. Movers’ demand for housing is derived from a lifecycle problem with credit market frictions. Equilibrium house prices adjust to assign houses that differ by quality to movers who differ by age, income and wealth. To quantify the model, we measure distributions of house prices, house qualities and mover characteristics from micro data on San Diego County during the 2000s boom. The main result is that cheaper credit for poor households was a major driver of prices, especially at the low end of the market.

Duration and Intensity of Kindergarten Attendance and Secondary School Track Choice

This paper investigates the relationship between kindergarten attendance and secondary school track choice in West-Germany. Our analysis is based on a panel of 12 to 14-year olds with information from age two on, drawn from the German SocioEconomic Panel (GSOEP) 1984–2005. We estimate binary probit models to assess the impact of the duration (in years) and the intensity (half-day or full-day) of kindergarten attendance. Our results indicate that kindergarten non-attendance is associated with a significantly lower probability to attend the highest secondary school track (“Gymnasium”). Further, full-day attendance is associated with a decreasing probability of attending the highest secondary school track for every duration of preschool child care. Thus, intensity seems to matter more than duration

Financial Regulation in a Quantitative Model of the Modern Banking System

How does the shadow banking system respond to changes in the capital regulation of commercial banks? This paper builds a quantitative general equilibrium model with commercial banks and shadow banks to study the unintended consequences of capital requirements. A key feature of our model are defaultable bank liabilities that provide liquidity services to households. The quality of the liquidity services provided by bank liabilities depends on their safety in case of default. Commercial bank debt is fully insured and thus provides full liquidity. However, commercial banks do not internalize the social costs of higher leverage in the form of greater bankruptcy losses (moral hazard), and are subject to a regulatory capital requirement. In contrast, shadow bank liabilities are subject to runs and credit risk and thus typically less liquid compared to commercial banks. Shadow banks endogenously limit their leverage as they internalize its costs. Tightening the commercial banks' capital requirement from the status quo leads to safer commercial banks and more shadow banking activity in the economy. While the safety of the financial system increases, it provides less liquidity. Calibrating the model to data from the Financial Accounts of the U.S., the optimal capital requirement is around 15%

Financial Fragility with SAM?

Shared appreciation mortgages (SAMs) feature mortgage payments that adjust with house prices. They are designed to stave off borrower default by providing payment relief when house prices fall. Some argue that SAMs may help prevent the next foreclosure crisis. However, home owners' gains from payment relief are mortgage lenders' losses. A general equilibrium model in which financial intermediaries channel savings from saver to borrower households shows that indexation of mortgage payments to aggregate house prices increases financial fragility, reduces risk‐sharing, and leads to expensive financial sector bailouts. In contrast, indexation to local house prices reduces financial fragility and improves risk‐sharing