Economic Adjustment during the Great Recession: The Role of Managerial Quality

Chapter 6 examines real estate as a neglected feature of actual economies. It begins with an empirical overview demonstrating the preeminent role of land as a part of nonfinancial wealth. Whereas many macroeconomic models represent nonfinancial wealth by a symbol K that is interpreted as machines and equipment (if not robots), the text makes clear that such items are of minor quantitative importance. In contemporary economies, nonfinancial wealth consists chiefly of real estate. This is the proper reason so many analysts conjecture a link between house prices and the Great Recession. Changes in house prices (primarily changes in land prices) operate on the economy through their influence on nonfinancial wealth. Nonfinancial wealth affects consumption directly and investment indirectly since it relaxes or tightens borrowing constraints. Building on the results obtained in previous chapters, the text studies housing manias and leverage cycles and relates its main findings to US data.

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The role of the economic environment on mortgage defaults during the Great Recession

Applied Financial Economics ◽

10.1080/09603107.2011.613753 ◽

2011 ◽

Vol 22 (3) ◽

pp. 243-250 ◽

Cited By ~ 4

Author(s):

Camilo Sarmiento

Keyword(s):

Great Recession ◽

Economic Environment ◽

The Great Recession ◽

Mortgage Defaults

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Suicide and the Great Recession of 2007–2009: The role of economic factors in the 50 U.S. states

Social Science & Medicine ◽

10.1016/j.socscimed.2014.06.015 ◽

2014 ◽

Vol 116 ◽

pp. 22-31 ◽

Cited By ~ 68

Author(s):

Julie A. Phillips ◽

Colleen N. Nugent

Keyword(s):

Great Recession ◽

Economic Factors ◽

The Great Recession

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Evaluating the Effects of the Home Affordable Modification Program

10.36095/banxico/di.2021.08 ◽

2021 ◽

Author(s):

Richard Cóndor

Keyword(s):

General Equilibrium ◽

Great Recession ◽

Heterogeneous Agents ◽

Idiosyncratic Risk ◽

The Great Recession ◽

Heterogeneous Agents Model ◽

The U.S

The Home Affordable Modification Program (HAMP) was a loan modification program introduced in 2009, in the U.S., to assist highly indebted homeowners with avoiding foreclosure. This program also encouraged private lenders to offer more sustainable modifications. This paper studies the role of HAMP in preventing higher foreclosures rates during and after the Great Recession, in the context of a general-equilibrium heterogeneous-agents model with two types of households (Borrowers and Savers), uninsurable idiosyncratic risk, and both private and HAMP modifications. The main result is that, without HAMP, the peak in the foreclosure rate could have been 50% larger (3.2 percent vs 2.2 percent in data).

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The Role of Policy in the Great Recession and the Weak Recovery

The American Economic Review ◽

10.1257/aer.104.5.61 ◽

2014 ◽

Vol 104 (5) ◽

pp. 61-66 ◽

Cited By ~ 35

Author(s):

John B. Taylor

Keyword(s):

Economic Performance ◽

Great Recession ◽

Regulatory Policy ◽

Poor Performance ◽

Economic Policies ◽

Slow Recovery ◽

The Great Recession ◽

The Past ◽

Severe Recession

This paper reports on recent research showing that the severe recession of 2007-2009 and the weak recovery have been due to poor economic policies and the failure to implement good policies during the past decade. Monetary policy, fiscal policy, and regulatory policy became more discretionary, more interventionist, and less predictable in comparison with the previous two decades of better economic performance. At best these policies led to growth spurts, but were followed by retrenchments, averaging to poor performance. The paper also considers alternative views-that the equilibrium interest rate declined during the decade and that the seriousness of financial crisis caused the slow recovery.

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Is a European “Hidden Investment State” Emerging in Spain? The Role of Instituto de Crédito Oficial

The Reinvention of Development Banking in the European Union ◽

10.1093/oso/9780198859703.003.0008 ◽

2021 ◽

pp. 199-223

Author(s):

Clifton Judith ◽

Fuentes Daniel Díaz ◽

Clara García ◽

Ana Lara Gómez

Keyword(s):

European Integration ◽

Great Recession ◽

Policy Making ◽

Financial Information ◽

Financial Instruments ◽

European Level ◽

The Great Recession ◽

Evolving Networks ◽

Low Levels

In the context of protracted low levels of investment following the 2008 Great Recession and, with the launch of the European Commission’s “Investment Plan for Europe,” scholars have argued a new dimension of European integration may be emerging: a “hidden investment state.” Interlocking institutions through European-level policy making, and increased and innovative loans, are interpreted as a means of setting up a multilevel infrastructure for further investment. This chapter investigates how Spain and its state-owned bank, the Instituto de Crédito Oficial (ICO), has navigated—and responded to—this changing scenario. We map evolving networks, portray ICO’s institutional trajectory, compile financial information on borrowing and loans, and categorize the financial instruments deployed, in order to assess whether ICO is becoming part of this investment state. We find that, whilst the ICO reacted vigorously to the Great Recession, since then, its activities have largely returned to pre-crisis normality. We conclude that developments around a hidden investment state in Spain are modest to date.

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