Daniel Albuquerque

Working Papers

Entrepreneurship and the Racial Wealth Gap (with Tomer Ifergane)
Entrepreneurship promotes wealth accumulation. However, Black households face significant barriers, operating fewer and smaller businesses compared to White households. We propose and evaluate a general equilibrium model of entrepreneurship choice and wealth accumulation in which Black households experience adverse distortions as entrepreneurs and workers, both affecting entrepreneurship choice. We discipline the model using U.S. microdata, and find that it matches well the observed racial wealth gap and the correlation between wealth and entrepreneurship. We find that distortions faced by Black entrepreneurs are the key factor for understanding the average racial wealth gap and play a significant role in determining the median gap. Our analysis also indicates that addressing racial disparities in the U.S. can substantially increase output.

Monetary Transmission Through the Housing Sector (with Thomas Lazarowicz and Jamie Lenney)
The simultaneous rise in housing rents and interest rates over 2022–24 brought scrutiny to the interaction between monetary policy and the housing market. We start by providing evidence on this interaction using data from the United Kingdom and a high frequency identification. Our main empirical finding is that house prices and rents do not move together after an increase in interest rates. House prices fall strongly but gradually, reaching their trough after one year, while nominal rents are stable for one to two years, before eventually falling. Next, we develop a quantitative Heterogeneous Agent New Keynesian model that includes housing and rental sectors. In particular, we model individual landlords as the marginal providers of rental housing. We use the model to examine the housing channel of monetary policy where we find: (1) the housing channel is large and falls disproportionally on mortgagors; (2) deviations from rational expectations mean landlords largely fail to pass on mortgage costs and act more like wealthy hand to mouth; (3) these behavioural biases dampen the potential trade-off between prices and output induced by the rental market; and (4) that it may be optimal for monetary policy makers to look through and accommodate housing supply shocks. 

Work in Progress 

Portfolio Changes and Wealth Inequality Dynamics

A HANK Model for the UK (with Ed Hill, Sean Lavender, Jamie Lenney and Alberto Polo)