Housing Markets and the Financial Crisis of 2007-2009: Lessons for the Future

John Duca, John Muellbauer and Anthony Murphy (anthony.murphy@dal.frb.org)

SERC Discussion Papers from Centre for Economic Performance, LSE

Abstract: An unsustainable weakening of credit standards induced a US mortgage and housing bubble whose consumption impact was amplified by innovations altering the collateral role of housing. In countries with more stable credit standards, any overshooting of construction and house prices owed more to traditional housing supply and demand factors. Housing collateral effects on consumption varied, depending on the liquidity of housing wealth. Lessons include recognizing the importance of financial innovation, regulation, housing policies, and global financial imbalances for fueling credit, construction, house price and consumption cycles that vary across countries.

Keywords: financial crisis; house prices; credit crunch; subprime mortgages (search for similar items in EconPapers)
JEL-codes: C51 C52 E21 E51 G18 R21 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-cba and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (117)

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Related works:
Journal Article: Housing markets and the financial crisis of 2007-2009: Lessons for the future (2010)
Working Paper: Housing markets and the financial crisis of 2007-2009: lessons for the future (2010)
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