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.

Andrew Fieldhouse, Karel Mertens, Morten Ravn, 02 May 2017

Despite the significant role of housing government-sponsored enterprises in the US mortgage markets, their activities have not been subject to much scrutiny by macroeconomists. Using a monthly sample covering 40 years, this column asks how portfolio mortgage purchase activities have affected the availability of housing credit and key aggregate variables. The results indicate a key role for the agencies in shaping the US economy, as well as significant interactions and similarities between housing credit policies and conventional monetary policy.


CEPR Policy Research