Welcome to my website! I am Bo Li
I am a Postdoctoral Fellow in Finance at Scheller College of Business, Georgia Institute of Technology. I obtained a Ph.D. in Finance at Arizona State University.
Research Interest:
Primary: Real Estate Finance, Household Finance, and Banking
Secondary: Business Cycle and Inequality
Georgia Tech Advisor:
Sudheer Chava Website; Email: sudheer.chava@scheller.gatech.edu
ASU Dissertation Committee:
Laura Lindsey (chair) Website; Email: laura.lindsey@asu.edu
Oliver Boguth Website; Email: oliver.boguth@asu.edu
Rawley Heimer Website Email: rawley.heimer@asu.edu
Job Market Paper: Credit Expansion and Housing Cycle
During the 1999-2009 U.S. housing cycle, two opposing empirical facts present a puzzle: the correlation between income growth and mortgage growth is negative across ZIP codes within metropolitan areas (some argue for the “credit expansion” view) but positive across metropolitan areas (others argue for the “speculation” view). First, I show that the cross-metropolitan phenomenon, in fact, supports the “credit expansion” view: by an instrumental variable approach, I show that net export growth across metropolitan areas causes income growth and credit expansion in mortgage growth, which eventually leads to the housing cycle. I also design five tests to show that credit expansion rather than speculation plays the dominant role. Second, I build a simple model to illustrate how credit expansion can reconcile the two seemingly opposing empirical facts. Third, my model generates new predictions of “double differences”: the differential stronger boom and bust cycle in mortgages (and house prices) in the low-income ZIP codes than in the high-income ZIP codes within the same metropolitan area is more pronounced in the high net-export-growth metropolitan areas. I provide empirical causal evidence for these predictions, further supporting the “credit expansion” view.