Title

Real Estate and the Great Crisis: Lessons for Macro-Prudential Policy

Abstract

Credit conditions have caused real estate booms and busts, owing to an underpricing of credit risk aided by regulatory arbitrage and shadow financing. Across countries, real estate price and credit bubbles have reflected not only inelastic land supply and thin trading, but also the amplification of shocks via backward‐looking price expectations and financing based on distorted prices. Macroprudential lessons from the Great Crisis include preventing excess real estate financing and limiting the amplification and correlation of risks. Nonetheless, the costs and benefits of recent regulations require re‐evaluation amid an ongoing need to address correlated risks from shadow financing and securitization.

Publisher

Wiley

Publication Date

1-1-2019

Publication Title

Contemporary Economic Policy

Department

Economics

Document Type

Article

DOI

10.1111/coep.12260

Keywords

Global Financial Crisis, 2008-2009, Real estate business, Monetary policy, Interest rates, Financial performance

Language

English

Format

text

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