Mortgage Debt , Consumption , and Illiquid Housing Markets in the Great Recession

  title={Mortgage Debt , Consumption , and Illiquid Housing Markets in the Great Recession},
  author={Carlos Garriga and Aaron Hedlund},
Using a model with housing search, endogenous credit constraints, and mortgage default, this paper accounts for the housing crash from 2006 to 2011 and its implications for aggregate and cross-sectional consumption during the Great Recession. Left tail shocks to labor market uncertainty and tighter downpayment requirements emerge as the key drivers. An endogenous decline in housing liquidity amplifies the recession by increasing foreclosures, contracting credit, and depressing consumption… CONTINUE READING


Publications referenced by this paper.
Showing 1-10 of 48 references

The Nature of Countercyclical Income Risk,

Guvenen, Fatih, Serdar Ozkan, Jae Song
Journal of Political Economy, • 2014
View 1 Excerpt
Highly Influenced

Housing and Macroeconomics ∗

Monika Piazzesi Stanford

The Common Origin of Uncertainty Shocks

Nicholas Kozeniauskas, Anna Orlik, Laura L. Veldkamp
View 1 Excerpt

The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk-Sharing in General Equilibrium,

Favilukis, Jack, Sydney C. Ludvigson, Stijn Van Nieuwerburgh
Journal of Political Economy, • 2016
View 2 Excerpts

The Real Consequences of Bank Mortgage Lending Standards,

Driscoll, C John, Benjamin S. Kay, Cindy M. Vojtech

A Model of Mortgage Default,

Campbell, Y John, João F. Cocco
Journal of Finance, • 2015

Homeowner Balance Sheets and Monetary Policy,

Aladangady, Aditya

Household Consumption: Research Questions, Measurement Issues, and Data Collection Strategies,

Pistaferri, Luigi
Journal of Economic and Social Measurement, • 2015

Similar Papers

Loading similar papers…