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1-4-Family Housing May Have Been a False Culprit

33 Pages Posted: 8 Nov 2014 Last revised: 19 May 2015

Daniil Gorbatenko

GREQAM, Aix-Marseille University

Date Written: November 7, 2014


The dominant account of the Great Recession in the United States’ economy links the economic decline to the preceding boom in the sector of single-family housing and related financial markets. Even the existing explanations of the crisis in terms of the Austrian Business Cycle Theory (ABCT) have focused on this part of the U.S. economy. In this paper, we will argue that 1-4-family housing construction projects do not seem to be the right phenomenon to focus on, especially for the purposes of ABCT. Instead, we provide evidence that long-term private construction projects are prima facie a better candidate for at least a partial explanation of the boom and bust of the 2000s. We also propose a potential connection between the failure of long-term construction projects and the crisis in the subprime mortgage market.

Keywords: Austrian Business Cycle Theory, US Great Recession

JEL Classification: B53, E32

Suggested Citation

Gorbatenko, Daniil, 1-4-Family Housing May Have Been a False Culprit (November 7, 2014). Available at SSRN: or

Daniil Gorbatenko (Contact Author)

GREQAM, Aix-Marseille University ( email )


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