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"House of Debt" by Atif Mian and Amir Sufi

Hüseyin Özbilgin ()

Central Bank Review, 2015, vol. 15, issue 1, 95-108

Abstract: Through a unique and powerful analysis of the Great Recession, Atif Mian and Amir Sufi establish that the main culprit was the over-indebtedness of households, in contrast with the dominant view that the problems in the financial intermediaries and the resulting disruption of credit were at the core. Their analysis yields a set of novel empirical findings that have solid implications about the mechanisms at play leading the economy towards the catastrophe. This enables the authors to provide a theoretical framework for the researchers that strive to write models capable of generating recessions such as the latest. Furthermore, by the same virtue, they manage to provide a valuable evaluation of the policy responses in the face of the crisis. The authors conclude the book with a groundbreaking policy recommendation to avoid similar recessions in the future: replacement of debt with equity-like instruments that provide a better sharing of aggregate risk.

Keywords: House of debt; Financial crisis; Debt; Economic policy; Book review (search for similar items in EconPapers)
JEL-codes: E21 E60 G01 G18 G21 (search for similar items in EconPapers)
Date: 2015
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