Housing and the macroeconomy: the role of implicit guarantees for government-sponsored enterprises

Karsten Jeske and Dirk Krueger

No 2005-15, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: This paper studies the macroeconomic effects of implicit government guarantees of the obligations of government-sponsored enterprises. We construct a model with competitive housing and mortgage markets in which the government provides banks with insurance against aggregate shocks to mortgage default risk. We use this model to evaluate aggregate and distributional impacts of this government subsidy of owner-occupied housing. Preliminary findings indicate that the subsidy leads to higher equilibrium housing investment, higher mortgage default rates, and lower welfare. The welfare effects of this policy vary substantially across members of the population with different economic characteristics.

Date: 2005
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ure
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Housing and the Macroeconomy: The Role of Implicit Guarantees for Government Sponsored Enterprises (2005)
Working Paper: Housing and the Macroeconomy: The Role of Implicit Guarantees for Government Sponsored Enterprises (2004)
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