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

By Ò. Jordà, M. Schularick, Alan M. Taylor. Social Science Research Network, 2014

604 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/f7a35a64fc7fdfe7388f5ee0bedad079b407491a

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Citations in the corpus

How Does Credit Supply Expansion Affect the Real Economy? The Productive Capacity and Household Demand Channels (2020, positive): “For example, researchers have highlighted that a rise in household debt is associated with a heightened risk of financial crisis and a slow-down in growth (Jordà et al. (2016), Mian et al. (2017)).”
Financialization and housing: Between globalization and Varieties of Capitalism (2016, neutral): “A historical study including data from 1870 to 2010, partly based on historical data from BIS data for 17 selected advanced economies, found that private-debtto-GDP ratios remained in the range of 50–60% until 1980, but increased to 118% in 2010 (Jordà et al., 2014).”
Bank Capital Redux: Solvency, Liquidity, and Crisis (2017, neutral): “6Recent studies focused on the importance of private or public debt, as well as mortgage debt (Jordà et al. (2016b), Jordà et al. (2016a)) and on the incentives of political actors (Herrera et al. (2014)).”
Global Debt Database: Methodology and Sources (2018, neutral): “In the wake of the Global Financial Crisis (GFC), scholars compiled new panel datasets on debt—whether public (Reinhart and Rogoff 2009; Abbas and others 2011) or private (Jordà, Schularick, and Taylor 2016)—covering many decades (if not centuries) of data to overcome this conundrum.”
Macrofinancial History and the New Business Cycle Facts (2016, positive): “Our previous research (Schularick and Taylor 2012; Jordà, Schularick, and Taylor 2011, 2013, 2016a, 2016b) uncovered a key stylized fact of modern macroeconomic history that we may call the “financial hockey stick.””
Business, Housing and Credit Cycles (2018, positive): “Given the key role of the leverage cycle in the emergence of financial imbalances (Geanakoplos, 2009; Jordà et al., 2014), an important element in these discussions is macro-prudential policies aimed at dampening cyclical fluctuations in credit volumes and residential property prices (Cerutti et al.”
Cost-benefit analysis of leaning against the wind (2017, neutral): “…net marginal cost is the limit of (12) for δ → 1−. cluding how many standard errors larger effects are required for break-even; and, finally, using debt to GDP (including using 5-year moving averages as in Jordà, Schularick, and Taylor (2016)) instead of real debt as a predictor of crises.”
No Price Like Home: Global House Prices, 1870-2012 (2014, positive): “Houses are typically the largest component of household wealth, the key collateral for bank lending and play a central role for long-run trends in wealth-toincome ratios and the size of the nancial sector (Jordà et al., 2016; Piketty and Zucman, 2014).”