Cross-Sectional Patterns of Mortgage Debt during the Housing Boom: Evidence and Implications

Christopher Foote, Lara Loewenstein and Paul Willen

No 19-19, Working Papers from Federal Reserve Bank of Cleveland

Abstract: In this paper, we use two comprehensive micro datasets to study the evolution of the distribution of mortgage debt during the 2000s housing boom. We show that the allocation of mortgage debt remained stable, as did the distribution of real estate assets. We propose that any theory of the boom must replicate this fact. Using a general equilibrium model, we show that this requires two elements: (1) an exogenous shock to the economy that increases expected house price growth or, alternatively, reduces interest rates and (2) financial markets that endogenously relax constraints in response to the shock. The role played by subprime mortgage debt provides additional empirical evidence that this narrative mirrors reality.

JEL-codes: D3 R31 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2019-10-16
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://doi.org/10.26509/frbc-wp-201919 Full text (text/html)

Related works:
Journal Article: Cross-Sectional Patterns of Mortgage Debt during the Housing Boom: Evidence and Implications (2021)
Working Paper: Cross-sectional patterns of mortgage debt during the housing boom: evidence and implications (2016)
Working Paper: Cross-Sectional Patterns of Mortgage Debt during the Housing Boom: Evidence and Implications (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:191900

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DOI: 10.26509/frbc-wp-201919

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