The Great Mortgaging: Housing Finance, Crises, and Business Cycles

HKIMR Working Paper No.25/2014

46 Pages Posted: 25 Sep 2014  

Oscar Jorda

University of California, Davis - Department of Economics; Federal Reserve Banks - Federal Reserve Bank of San Francisco

Moritz Schularick

Free University of Berlin (FUB)

Alan M. Taylor

University of California, Davis - Department of Economics; University of Virginia - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: September 24, 2014

Abstract

This paper unveils a new resource for macroeconomic research: a long-run dataset covering disaggregated bank credit for 17 advanced economies since 1870. The new data show that the share of mortgages on banks' balance sheets doubled in the course of the 20th century, driven by a sharp rise of mortgage lending to households. Household debt to asset ratios have risen substantially in many countries. Financial stability risks have been increasingly linked to real estate lending booms which are typically followed by deeper recessions and slower recoveries. Housing finance has come to play a central role in the modern macroeconomy.

Keywords: Leverage, Recessions, Mortgage Lending, Financial Crises, Business Cycles, Local Projections

JEL Classification: C14, C38, C52, E32, E37, E44, E51, G01, G21, N10, N20

Suggested Citation

Jorda, Oscar and Schularick, Moritz and Taylor, Alan M., The Great Mortgaging: Housing Finance, Crises, and Business Cycles (September 24, 2014). HKIMR Working Paper No.25/2014. Available at SSRN: https://ssrn.com/abstract=2500610 or http://dx.doi.org/10.2139/ssrn.2500610

Oscar Jorda

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-5549382 (Phone)

HOME PAGE: http://old.econ.ucdavis.edu/faculty/jorda/

Federal Reserve Banks - Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States
4159742691 (Phone)

HOME PAGE: http://www.frbsf.org/economic-research/economists/oscar-jorda/

Moritz Schularick (Contact Author)

Free University of Berlin (FUB) ( email )

Lansstr. 7-9
Berlin 14195, 14195
Germany

Alan M. Taylor

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-1572 (Phone)
530-752-9382 (Fax)

HOME PAGE: http://www.econ.ucdavis.edu/faculty/amtaylor/

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
(434)-924-3177 (Phone)
(434)-982-2904 (Fax)

HOME PAGE: http://people.virginia.edu/~amt7u

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://nber.org

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

HOME PAGE: http://cepr.org

Paper statistics

Downloads
25
Abstract Views
171