The Macroeconomic Consequences of Microeconomic Phenomena in the Housing and Labor Markets

This dissertation consists of three independent chapters, each of which use microeconomic data and methods to inform an analysis of macroeconomic models and questions. The first two chapters study the short-run dynamics of housing markets, while the last chapter studies fluctuations in labor markets.;The first chapter examines house price momentum, the positive autocorrelation of price changes which in housing markets lasts for two to three years. The chapter introduces, empirically grounds, and quantitatively analyzes an amplification mechanism that can generate substantial momentum from small frictions: sellers with an incentive not to set a unilaterally high or low list price for their house gradually adjust their price so it remains close to the market average. In doing so, the chapter provides new evidence for explanations for price stickiness for which there is little direct evidence. Furthermore, the chapter demonstrates that the resulting momentum helps explain the short-run dynamics of price, volume, and inventory in housing markets.;The second chapter demonstrates how foreclosures can exacerbate a housing bust and delay the housing market's recovery and shows that such effects played a significant role in the recent housing downturn. Foreclosures drive down prices and freeze up the retail (non-foreclosure) market by raising the ratio of sellers to buyers and making buyers more selective. This can push more homeowners underwater and cause more defaults, amplifying an initial shock. When calibrated to the recent housing cycle, the model implies that foreclosures have much larger effects than previously estimated due to general equilibrium spillovers.;The third chapter analyzes why macroeconomic calibrations imply much larger labor supply elasticities than microeconometric studies, paying particular attention to the extensive (participation) margin which is frequently used to explain the divergence. The chapter uses a calibrated macro model to simulate the impacts of tax policy changes on labor supply. It also presents a meta-analysis of quasi-experimental estimates of extensive margin elasticities. Both approaches show that micro and macro are consistent for steady-state Hicksian elasticities, but micro estimates of extensive-margin Frisch elasticities are an order of magnitude smaller than the values needed to explain business cycle fluctuations in aggregate hours.