Adam J. Levitin
Georgetown University Law Center
Susan M. Wachter
University of Pennsylvania - Wharton School, Department of Real Estate
February 14, 2013
Housing Policy Debate, Vol. 23, pp. 5-27 (2013)
U of Penn, Inst for Law & Econ Research Paper No. 12-28
Georgetown Law and Economics Research Paper No. 12-035
Georgetown Public Law Research Paper No. 12-127
Asset bubbles come and go. Only the housing bubble, however, brought the economy to its knees. Why? What makes housing uniquely a cause of macroeconomic risk?
This article examines the workings of the housing market as well as theories and empirical evidence about the housing bubble. It explains why housing is a particular source of macroeconomic risk and how changes in the housing finance channel were the critical element in the formation of the bubble.
Number of Pages in PDF File: 24
Keywords: bubble, mortgage, housing, interest rates, securitization, agency, CDO
JEL Classification: E32, E44, G21, R31
Date posted: August 22, 2012 ; Last revised: July 17, 2013