Fed Paper asks if we are “Mortgaging the Future?”

By Jann Swanson

Posted To: MND NewsWire

Three economists writing for the Federal Reserve Bank of San Francisco’s Economic Letter , are theorizing that the explosion of lending, especially mortgage lending, has played a more important role in shaping the business cycle that previously thought. If they are correct, they say, then economic policy must adapt to this reality. In their paper, “Mortgaging the Future?” the three, Oscar Jordà vice president in the Economic Research Department of the Bank, Moritz Schularick, professor of economics at the University of Bonn; and Alan M. Taylor professor of economics and finance at the University of California, Davis say that bank lending has quadrupled as a ratio to GDP in advanced economies since World War II. This lending has been driven to a large extent by the growth in mortgage…(read more)

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