Download or read book Housing Credit Constraints and Macro Stability written by James A. Wilcox and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Policies for Macrofinancial Stability written by Mr.Bas B. Bakker and published by International Monetary Fund. This book was released on 2012-06-07 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This note explores the costs and benefits of different policy options to reduce the risks associated with credit booms, drawing upon several country experiences and the findings from econometric analysis.
Download or read book Housing Consumption and Credit Constraints written by Andreas Lehnert and published by . This book was released on 2004 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: "I test the credit-market effects of housing wealth shocks by estimating the consumption elasticity of house price shocks among households in different age quintiles. Younger households face faster expected income growth and hence would like to borrow more than older households. I estimate consumption elasticities from housing wealth by age quintile to be (4; 0; 3; 8; 3) percent. As predicted by theory, the youngest group has a higher elasticity of consumption than the next two age quintiles. That the consumption of the age quintile on the verge of retirement is responsive to housing wealth is also not surprising: I show that these households are likeliest to "downsize" their house and thus realize any capital gains"--Abstract.
Download or read book Predicting Downside Risks to House Prices and Macro Financial Stability written by Andrea Deghi and published by International Monetary Fund. This book was released on 2020-01-17 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper predicts downside risks to future real house price growth (house-prices-at-risk or HaR) in 32 advanced and emerging market economies. Through a macro-model and predictive quantile regressions, we show that current house price overvaluation, excessive credit growth, and tighter financial conditions jointly forecast higher house-prices-at-risk up to three years ahead. House-prices-at-risk help predict future growth at-risk and financial crises. We also investigate and propose policy solutions for preventing the identified risks. We find that overall, a tightening of macroprudential policy is the most effective at curbing downside risks to house prices, whereas a loosening of conventional monetary policy reduces downside risks only in advanced economies and only in the short-term.
Download or read book Hot Property written by Rob Nijskens and published by Springer. This book was released on 2019-06-14 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt: This open access book discusses booming housing markets in cities around the globe, and the resulting challenges for policymakers and central banks. Cities are booming everywhere, leading to a growing demand for urban housing. In many cities this demand is out-pacing supply, which causes house prices to soar and increases the pressure on rental markets. These developments are posing major challenges for policymakers, central banks and other authorities responsible for ensuring financial stability, and economic well-being in general.This volume collects views from high-level policymakers and researchers, providing essential insights into these challenges, their impact on society, the economy and financial stability, and possible policy responses. The respective chapters address issues such as the popularity of cities, the question of a credit-fueled housing bubble, the role of housing supply frictions and potential policy solutions. Given its scope, the book offers a revealing read and valuable guide for everyone involved in practical policymaking for housing markets, mortgage credit and financial stability.
Download or read book The Global Financial Crisis and Housing written by Susan Wachter and published by Edward Elgar Publishing. This book was released on 2014-02-28 with total page 364 pages. Available in PDF, EPUB and Kindle. Book excerpt: This innovative book analyses the role played by real estate markets in global financial stability and examines the fragile link between the two. Through what transmission channels do housing market cycles influence broader economic systems? How
Download or read book Financial Frictions in a Housing Economy written by Marcus Mølbak Ingholt and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Housing Finance in the Macroeconomy written by Tim Landvoigt and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Between the years 1998 and 2006, the total mortgage debt of U.S. households rose from 65% of GDP in 1998 to over 100% of GDP in 2006. Over the same period the value of residential real estate rose by roughly the same proportion from 180% to 280% of GDP. This thesis examines the macroeconomic link between housing and mortgage markets during the boom period from three different angles. (i) The first chapter examines the impact of increasing securitization of mortgage debt in a dynamic model of borrowers, savers, and financial intermediaries that is calibrated to the different stages of US housing finance in the postwar period. Banks lend funds to borrowers in the form of mortgages and raise those funds by issuing equity and deposits to savers. Deposits are over-collateralized claims on the banks' portfolios of mortgages. Securitization allows banks to sell part of the loans directly to savers after origination. It further allows the same allocation of risk among savers with diverse risk aversion, but at lower cost. Rising securitization gradually reduces intermediation costs and frictions. The dynamic model shows that, when agents temporarily underestimate the default risk of mortgages, the economy undergoes a boom-bust episode in debt and house prices. In the simulated model economy, securitization adds 30 percent to the peak of mortgage debt in 2006 by neutralizing the dampening effect of bank capital requirements. (ii) The second chapter uses an assignment model to understand the cross section of house prices within a metro area. Movers' demand for housing is derived from a lifecycle problem with credit market frictions. Equilibrium house prices adjust to assign houses that differ by quality to movers who differ by age, income and wealth. To quantify the model, we measure distributions of house prices, house qualities and mover characteristics from micro data on San Diego County during the 2000s boom. The main result is that cheaper credit for poor households was a major driver of prices, especially at the low end of the market. (iii) Optimism about future house price appreciation and loose credit constraints are commonly considered drivers of the recent housing boom. The third chapter infers short-run expectations of future house price growth and minimum down payment requirements from observed household choices. The expectations and credit constraints are implied by a life-cycle portfolio choice model that encompasses home ownership, housing demand, and financing choices. I estimate the parameters of this model using data from the Survey of Consumer Finances from 1995 to 2007. The main result is that both aggregate expectations of future price growth and minimum down payment requirements were declining throughout the boom, but price growth expectations stay positive throughout. The separate identification of the two channels comes from their differential impact on the intensive and extensive margins of housing demand.
Download or read book House Prices and the Macroeconomy written by Charles Goodhart and published by OUP Oxford. This book was released on 2006-12-21 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt: House price bubbles, and their aftermath, have become a focus of macro-economic policy concern in most developed countries. This book elucidates the two-way relationship between house-price fluctuations and economic fundamentals. Housing has many features which make it distinct from other assets, like equity. Real estate is not only an asset but also a durable consumption good for households, providing shelter and other housing services. As a result, a house is often the largest and most important asset of households and therefore accounts for a major share of household wealth. Similarly a large share of bank assets is tied to housing values. House price fluctuations may, therefore, have a major effect on economic activity and the soundness of the financial system. Following an introductory chapter, the book is structured into three parts. The first demonstrates the importance of house prices as determinants or indicators of inflation and economic activity. The second focuses on the inter-relationships between bank credit extension and housing prices, and how bubbles can lead to financial crises. The third discusses resultant public policy issues, such as whether, and how, to include housing prices in a general inflation index, and how to restrain the housing/bank credit cycle.
Download or read book The macroeconomic effects of housing wealth housing finance and limited risk sharing in general equilibrium written by Jack Favilukis and published by . This book was released on 2010 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study a two-sector general equilibrium model of housing and non-housing production where heterogenous households face limited opportunities to insure against aggregate and idiosyncratic risks. The model generates large variability in the national house price-rent ratio, both because it fluctuates endogenously with the state of the economy and because it rises in response to a relaxation of credit constraints and decline in housing transaction costs (financial market liberalization). These factors, together with a rise in foreign ownership of U.S. debt calibrated to match the actual increase over the period 2000-2006, generate an increase in the model price-rent ratio comparable to that observed in U.S. data over this period. The model also predicts a sharp decline in home prices starting in 2007, driven by the economic contraction and by a presumed reversal of the financial market liberalization. Fluctuations in the model's price-rent ratio are driven by changing risk premia, which fluctuate endogenously in response to cyclical shocks, the financial market liberalization, and its subsequent reversal. By contrast, we show that the inflow of foreign money into domestic bond markets plays a small role in driving home prices, despite its large depressing influence on interest rates. Finally, the model implies that procyclical increases in equilibrium price-rent ratios reflect rational expectations of lower future housing returns, not higher future rents.
Download or read book Housing and Financial Stability written by Alan Brener and published by Routledge. This book was released on 2021-12-13 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book brings together politics, law, financial services regulation, economics and housing policy in the analysis of mortgage lending and macroprudential policy in the UK and US. The book addresses the relationship between housing policy, credit and financial instability in light of the recent global financial crisis, and proposes both short and long-term solutions. Although it is not known where the next crisis will come from, history suggests that it will have credit and property at its source. Thus, it is important that the UK and other countries look more broadly at what should be done in terms of policies, institutions and tools to make the housing market and mortgage lenders more resilient against a future crisis. This book sets out a number of workable proposals. Central to this work are questions relating to the quantitative macroprudential measures, such as loan-to-value (LTV) and debt-to-income (DTI) restrictions, and whether these can be used to any significant extent in western democracies and, if employed, whether they are likely to be effective. In particular, the book questions the political legitimacy of their use and the potential consequences for the institutions, such as central banks, promulgating such policies. Preserving financial stability in very uncertain market conditions is of key importance to central bankers and other regulators, and macroprudential policy is a rapidly growing subject for both legal and economics study. This book will therefore be of interest to financial professionals, policy-makers and academics.
Download or read book Banking Competition Housing Prices and Macroeconomic Stability written by Javier Angel Andrés Domingo and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a dynamic general equilibrium model with an imperfectly competitive bank-loans market and collateral constraints that tie investors credit capacity to the value of their real estate holdings. Banks set optimal lending rates taking into account the effects of their price policies on their market share and on the volume of funds demanded by each customer. Lending margins have a significant effect on aggregate variables. Over the long run, fostering banking competition increases total consumption and output by triggering a reallocation of available collateral towards investors. However, as regards the short-run dynamics, we find that most macroeconomic variables are more responsive to exogenous shocks in an environment of highly competitive banks. Key to this last result is the reaction of housing prices and their effect on borrowers' net worth. The response of housing prices is more pronounced when competition among banks is stronger, thus making borrowers' net worth more vulnerable to adverse shocks and, specially, to monetary contractions. Thus, regarding changes in the degree of banking competition, the model generates a trade-off between the long run level of economic activity and its stability at the business cycle frequency. [Resumen de autor]
Download or read book Housing Finance and Real Estate Booms written by Mr.Eugenio Cerutti and published by International Monetary Fund. This book was released on 2015-06-03 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent global crisis highlighted the risks stemming from real estate booms. This has generated a growing literature trying to better understand the sources and the risks associated with housing and credit booms. This paper complements and supplements the previous work by (i) exploiting more disaggregated data on credit allowing us to dissociate between firm-credit and household (and in some cases mortgage) credit, and (ii) by taking into account the characteristics of the mortgage market, including institutional as well as other factors that vary across countries. This detailed cross-country analysis offers new valuable insights.
Download or read book Credit Expansion in Emerging Markets written by Ms.Mercedes Garcia-Escribano and published by International Monetary Fund. This book was released on 2015-09-29 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the contribution of credit growth and the composition of credit portfolio (corporate, consumer, and housing credit) to economic growth in emerging market economies (EMs). Using cross-country panel regressions, we find significant impact of credit growth on real GDP growth, with the magnitude and transmission channel of the impact of credit on real activity depending on the specific type of credit. In particular, the results show that corporate credit shocks influence GDP growth mainly through investment, while consumer credit shocks are associated with private consumption. In addition, taking Brazil as a case study, we use a time series model to examine the role that the expansion and composition of credit played in driving real GDP growth in the past. The results of the case study are consistent with those found in the cross-country panel regressions.
Download or read book Housing Wealth and Consumption written by S. Borağan Aruoba and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Housing Market Dynamics written by François Ortalo-Magné and published by . This book was released on 2001 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Canada written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2019-06-24 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly. However, macrofinancial vulnerabilities—notably, elevated household debt and housing market imbalances—remain substantial, posing financial stability concerns. Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance. The financial system would be able to manage severe macrofinancial shocks. Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario. Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment. Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable. This would help ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.
