Atif Mian, Francesco Trebbi, Amir Sufi, 10 February 2011

Several academics, policymakers, and regulators emphasise the role of foreclosures in the Great Recession and subsequent global crisis. This column provides one of the first attempts to show this empirically. Using micro-level data from all US states, it shows that foreclosures had a significant negative effect on house prices, residential investment, durable consumption – and consequently the real economy.

Amir Sufi, Atif Mian, 29 April 2010

US Congressional committees are now grilling bankers on the complex instruments that provided subprime mortgages with a veil of security. This column presents new evidence that subprime mortgages had more serious consequences – they were a key factor in the US housing-price boom. When house prices faltered, subprime mortgage holders defaulted en masse, eventually leading to the global crisis.

Sergi Jiménez-Martín, Hugo Benítez-Silva, Selcuk Eren, Frank Heiland, 30 June 2009

How did we get a housing bubble? This column describes how well households predict the market values of their homes. Most homeowners overestimate the value of their properties by 5% to 10%, primarily due to the large expected capital gains implicit in the self-reported home values. Overly optimistic expectations about the evolution of house prices may have planted the seed of the current mortgage crisis in the US.

Tommaso Monacelli, Roberto Cardarelli, Alessandro Rebucci, Luca Sala, 26 April 2008

Recent housing finance innovations have changed the relationship between house prices and the business cycle. This column suggests that these changes amplify spillovers from the housing sector to the rest of the economy and recommends that monetary policy respond more aggressively to the housing market.

Daniel Gros, 25 October 2007

Euro-area housing prices have risen almost as much as those of the US. For decades, euro-area housing prices have followed those of the US quite closely. Are Euro-area housing prices headed for a slump?

Dennis Snower, 28 September 2007

Economists can’t say: “we told you so.” Economists don’t have perfect foresight. But like doctors after the outbreak of a contagious disease – economists can tell you how the disease might spread, so that you may be better prepared. Here are some of the possible dangers ahead.

Tommaso Monacelli, 31 August 2007

The public is overreacting to the current turmoil in financial markets. The turmoil is most likely a situation where very specific problems are spread out extensively across investors and countries and thus the defaults are benign.

Stephen Cecchetti, 01 December 2004

Written December 2004: Governments should use regulatory policies to address equity and property price bubbles, leaving interest rates to pursue more traditional policy goals. But until the efficacy of alternatives is proven, interest rates are the only tool and the right response to emerging equity or property price bubbles is to raise interest rates.



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