Housing boom-bust periods are often preceded by financial liberalizations. Nevertheless, credit conditions' role in explaining macroeconomic dynamics during housing boom-bust episodes is sharply debated. Building on a growing literature connecting entrepreneurial financing to housing market dynamics, I consider how entrepreneurial credit constraints affect the macroeconomy in a dynamic general equilibrium model with occasionally binding collateral credit constraints. A credit relaxation lifts productive entrepreneurs off their credit constraints, generating a sustained economic boom, explaining many of the market dynamics observed during the U.S. housing boom of the early 2000s, incl. a substantial and disproportionate increase in house prices (relative to other asset prices), decreasing interest rates during a sustained boom, a significant consumption boom, and an eventual endogenous bust resembling credit crunch dynamics, with decreasing output and a sudden drop in interest rates, but without an explicit additional credit shock.

Households' attachment to nominal anchors in the housing market creates aggregate nominal rigidities, with material economic consequences. A new statistic, the prevalence of "paper losses" in the stock of residential properties, captures cross-regional variation in important housing market quantities; the share of properties facing paper losses explains housing transactions volumes more effectively than price growth rates. To rationalize these patterns and study housing-market fiscal policy, we develop and structurally estimate a dynamic search and matching model with reference-dependent agents, rich heterogeneity, and realistic financial constraints. Behavioral frictions dampen the tax elasticity of property prices, and increase the revenue-maximizing level of property taxes.

This paper proposes a new theoretical mechanism for explaining how a relaxation of entrepreneurial collateral constraints on business capital can increase house prices disproportionately. Such a credit relaxation enables productive entrepreneurs to purchase business capital, triggering capital reallocation and increasing aggregate productivity. Extending the Evans and Jovanovic (1989) model of entrepreneurial financing with housing markets, I demonstrate how this may produce a housing boom through general equilibrium effects. Empirical analysis leveraging Community Reinvestment Act (CRA) business loan data suggests that the mechanism can plausibly explain a notable portion of the pre-crisis increase in U.S. house prices during the early 2000s.

This paper studies the macroeconomic significance of occupational talent allocation. I use Finnish administrative microdata to estimate a Roy model of occupational choice with unobservable skill and preference heterogeneity.  I show that workers' sorting behavior changes have not driven aggregate productivity growth in the recent past. Holding skill distribution fixed, potential future gains for aggregate productivity by improving sorting are also limited. However, different time trends on occupational sorting patterns explain up to 40% of relative wage growth in certain occupations during 1995 - 2005. In particular, differential occupational sorting between genders explains 3.5 percentage points, or 16%, of the gender earnings gap. When accompanied by changes in the skill distribution, workers' occupational sorting behavior also matters for aggregate output. Removing gender differences in skills, in particular, would lead to a 28% higher GDP effect than complete gender equalization with identical sorting patterns. I augment this analysis by leveraging the staggered implementation of the Finnish Comprehensive School Reform to discipline another counterfactual exercise. I use the model to decompose the reform effect into its skill and sorting components. I show that the reform's differential impact on women increased aggregate productivity by one percent, half of which was due to the sorting channel.

Onko kestävyysvaje todellinen? The Finnish Economic Journal, 118 (2022), 527-541.

Kestävyysvajeen määritelmä on teoreettinen kysymys: vastaus Lauri Kajanojalle. The Finnish Economic Journal, 119 (2023), 198-202.

Myllärniemi, M. & Eroon koronasta working group (2020). Corona-Free Finland: The rationale and methods for elimination of the coronavirus epidemic in Finland. Working group report. Available at https://www.eroonkoronasta.fi/en/report/.

10.  On the parabolic Harnack inequality for non-local diffusion equations (with D. Dier, J. Kemppainen, and R. Zacher). Math Z. 295 (2020), 1751–1769.

9. Boundary regularity for the porous medium equation (with A. Björn, J. Björn, and U. Gianazza). Arch. Rational Mech. Anal., 230 (2018), no. 2, 493-538.

8. On the interior regularity of weak solutions to the 2-D incompressible Euler equations (with J.M Urbano). Calc. Var. Partial Differential Equations, 56, 126 (2017).

7. Representation of solutions and large-time behavior for fully nonlocal diffusion equations (with J. Kemppainen and R. Zacher). J. Differential Equations, 263 (2017), no. 1, 149-201.

6. Everywhere differentiability of viscosity solutions to a class of Aronsson's equations (with C. Wang and Y. Zhou). Ann. Inst. H. Poincaré Anal. Non Linéaire, 34 (2017), no. 1, 119-138.

5.  Decay estimates for time-fractional and other non-local in time subdiffusion equations in R^d (with J. Kemppainen, V. Vergara, and R. Zacher). Math. Ann., 366 (2016), no. 3-4, 941-979.

4. Hölder continuity for parabolic Q-minima in metric measure spaces (with M. Masson). Manuscripta Math.,142 (2013), no. 1-2, 187-214.

3. Local Hölder continuity for doubly nonlinear parabolic equations (with T. Kuusi and J.M. Urbano). Indiana Univ. Math. J., 61 (2012), no. 1, 399-430.

2. Hölder continuity for Trudinger's equation in measure spaces (with T. Kuusi, R. Laleoglu, and J.M. Urbano). Calc. Var. Partial Differential Equations, 45 (2012), no. 1-2, 193-229.

1. Obstacle problem for nonlinear parabolic equations (with R. Korte and T. Kuusi). J. Differential Equations, 246 (2009), no. 9, 3668--3680.