Capital is not back: A comment on Thomas Piketty’s ‘Capital in the 21st Century’

Odran Bonnet, Pierre-Henri Bono, Guillaume Camille Chapelle, Étienne Wasmer 30 June 2014

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The impressive success of Thomas Piketty’s book (Piketty 2014) shows that inequality is a great concern in most countries. His claim that “capital is back”, because the ratio of capital over income is returning to the levels of the end of the 19th century, is probably one of the most striking conclusions of his 700 pages. Acknowledging the considerable interest of this book and the effort it represents, we nevertheless think this conclusion is wrong, due to the particular way capital is measured in national accounts.

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Topics:  Global economy

Tags:  house prices, housing, Inequality, rents, housing bubble, capital, wealth inequality

The housing-market impacts of shale-gas development

Lucija Muehlenbachs, Beia Spiller, Christopher Timmins 09 February 2014

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Technological improvements in the extraction of natural gas from shale rock have transformed the industry.

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Topics:  Energy Environment

Tags:  house prices, housing, externalities, pollution, property prices, shale gas, fracking

Does homeownership influence stockholding?

Denis Fougère, Mathilde Poulhès 01 December 2012

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The influence of homeownership on portfolio choice is a complex issue because housing is both an investment good and a consumption good. That said, a deeper analysis of the influence of homeownership is crucial, at least if we consider the recent high fluctuations in the housing market and the substantial increase in mortgage debt both in the US and some European countries.

Distinguishing between mortgage debt effect and home equity effect

The debate on the influence of homeownership on households’ portfolios is, first, a debate between theory and empirics.

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Topics:  Global economy

Tags:  house prices, mortgages, home equity

Why is housing such a popular investment? A new psychological explanation

Thomas Alexander Stephens, Jean-Robert Tyran 23 November 2012

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In the wake of the economic crisis that began in 2007, homeowners in many countries have faced substantial losses. Prices have fallen in both nominal and real terms. In the US, for example, house prices in the first quarter of 2012 were down more than 40% in real terms from their peak (Shiller 2012). Nevertheless, housing remains a popular investment1.

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Topics:  Global economy

Tags:  inflation, house prices, housing

On the Chinese house-price bubble

Christian Dreger, Yanqun Zhang 15 July 2011

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For many observers, the Chinese economy has been spurred by a bubble in the real-estate market, probably driven by the fiscal stimulus package and massive credit expansion (Nicolas 2009). For example, the stock of loans increased by more than 50% since the end of 2008.

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Topics:  Macroeconomic policy

Tags:  house prices, China, Property market

Low interest rates and housing booms: The role of capital inflows, monetary policy, and financial innovation

Filipa Sá, Pascal Towbin, Tomasz Wieladek 10 March 2011

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The run-up to the recent global financial crisis was characterised by an environment of low interest rates and a rapid increase in housing market activity across OECD countries.

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Topics:  International finance Macroeconomic policy Monetary policy

Tags:  interest rates, house prices, Capital inflows, real estate

Foreclosures, house prices, and the real economy

Atif Mian, Francesco Trebbi, Amir Sufi 10 February 2011

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How does a negative shock to the economy get amplified into a severe and long-lasting economic slump? The answer may be found in your house. An extensive body of theoretical research shows that the forced sale of durable goods – in many cases a house – can have two undesirable consequences. First, the price of these goods is driven down. Second, these negative price effects can lead to a significant decline in real economic activity (see for example Shleifer and Vishny 1992, Kiyotaki and Moore 1997, Krishnamurthy 2009, Lorenzoni 2008, and Shleifer and Vishny 2010 for a recent discussion).

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Topics:  Global crisis Macroeconomic policy

Tags:  US, house prices, subprime crisis, global crisis, foreclosures

Household debt and macroeconomic fluctuations

Amir Sufi, Atif Mian 29 April 2010

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There once was a decade in US history in which financial innovation led to a sharp rise in the flow of credit to households. Durable goods consumption increased dramatically as household debt climbed to over 100% of GDP. The subsequent economic downturn was tragic, and the severity of the malaise was closely related to the preceding rise in household leverage (see Eichengreen and Michener 2003, Mishkin 1978, and the chart from David Beim at npr.org).

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Topics:  Global crisis

Tags:  house prices, Subprime, global crisis

How well do individuals predict the selling prices of their homes?

Sergi Jiménez-Martín, Hugo Benítez-Silva, Selcuk Eren, Frank Heiland 30 June 2009

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Housing wealth is one of the pillars of the well-being of Americans families, especially because it represents more than 60% of the average net wealth of US households, according to the Federal Reserve's 2004 Survey of Consumer Finances (SCF). However, we know relatively little about the ability of households to predict the market value of their homes in the context of household-level representative surveys and using data on sales prices of those properties.

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Topics:  Financial markets

Tags:  US, house prices, mortgages

The changing housing cycle and its implications for monetary policy

Tommaso Monacelli, Roberto Cardarelli, Alessandro Rebucci, Luca Sala 26 April 2008

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After several years of rapid price increases, house price growth has decelerated in many advanced economies, and in a few of them – the United Stated and Ireland – house prices have fallen during the past year (Figure 1). Real residential investment has also slowed in several countries, including the United States, Australia, and, especially, Ireland, where it has fallen by about 3 percentage points of GDP since its peak four years ago.

Figure 1.

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Topics:  Monetary policy

Tags:  house prices, monetary policy, spillovers, business cycles

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