Zhenyu Gao, Michael Sockin, Wei Xiong, 26 January 2020

Housing speculation became a national phenomenon in the low interest rate environment of the US during the mid-2000s. This column argues that speculation, which was largely independent of the credit expansion to subprime households, contributed significantly to US housing and economic cycles in the 2000s. It led not only to greater price appreciation, economic expansions, and housing construction during the boom in 2004–2006, but also to more severe economic downturns during the subsequent bust in 2007–2009. 

Vladimir Asriyan, Luca Fornaro, Alberto Martin, Jaume Ventura, 30 September 2019

We live in a world of low interest rates and volatile asset values. This column argues that in such a bubbly world, we can no longer disregard the role of money as a store of value, and the role of monetary policy as a supplier of stores of value. Indeed, monetary policy plays a key role by expanding and stabilising the supply of unbacked assets at an optimal level.  

Atif Mian, Amir Sufi, 19 August 2018

Charles P. Kindleberger wrote that “asset price bubbles depend on the growth in credit”. This column looks at the acceleration of the US private label mortgage securitisation market in the US in the late summer of 2003, which disproportionately reduced the cost of financing by lenders that did not traditionally rely on deposit financing for mortgage lending. The sharp rise in lending in zip codes with greater exposure to such lenders generated a boom and bust in house prices. Easier credit also appears to have been a crucial ingredient in explaining bubble cities that experienced both house price and construction booms.

Gustavo Adler, Nicolas Magud, 04 July 2013

Commodity exporters have been both blessed and cursed by the boom-and-bust nature of commodity-price and demand swings. This column presents a new metric that computes the additional income arising from changes in the real purchasing value of output as a result of changes in relative prices. Focusing on Latin America, it’s clear that although its recent terms-of-trade boom is of similar magnitude to that seen in the 1970s, the associated income windfall has been much larger. The current weakening of external current-account balances in Latin America – even if driven by higher domestic investment – warrants close monitoring.

Olivier Jeanne, Anton Korinek, 28 November 2010

The damage caused by the global crisis and fiscal crises in several developed countries has rejuvenated support for regulation and has reignited research interest. This column presents one recent proposal: A Pigouvian tax to help bring the amount of debt and capital held by the financial sector closer to the socially optimal level.


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