Modelling a housing and mortgage crisis

Charles Goodhart, Dimitri Tsomocos and Alexandros Vardoulakis

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The purpose of this paper is to explore financial instability in this case due to a housing crisis and defaults on mortgages. The model incorporates heterogeneous banks and households. Mortgages are secured by collateral, which is equal to the amount of housing which agents purchase. Individual default is spread through the economy via the interbank market. Several comparative statics illustrate the directional effects of a variety of shocks in the economy.

Keywords: mortgage default; financial fragility; competitive banking; general equilibrium; monetary policy (search for similar items in EconPapers)
JEL-codes: D52 E40 E50 G10 G20 (search for similar items in EconPapers)
Date: 2010-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119090

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