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Junior Recruitment Workshop: Stephanie Johnson

Monday, February 11, 2019 at 11:40am to 1:10pm

Ives Hall, 115
B07 Tower Rd, Ithaca, NY 14853, USA

Stephanie Johnson, Northwestern University

Mortgage Leverage and House Prices

Abstract: I measure the effect of mortgage leverage restrictions on house prices using a change in the eligibility requirements imposed by Fannie Mae and Freddie Mac. In 1999, Fannie Mae and Freddie Mac’s debt-to-income requirements diverged, leading to tighter lending standards in places where local lenders had pre-existing relationships with Freddie Mac. Locations with tighter debt-to-income requirements experience an immediate reduction in house prices, showing that changes in lending standards have powerful effects. The effect builds over time, resulting in a smaller house price boom and bust in these locations during the 2000s. I use a simple model to interpret the empirical results and extrapolate to other similar policies, finding that a relaxation of debt-to-income restrictions is important for explaining the 2000s housing boom.

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Event Type

Seminar, Class/ Workshop

Departments

Economics

Tags

economics, EconSeminar, EconMetrics, EconMacro, EconPublic, EconIO, EconRecruit, EconBehave, EconMicro, EconLabor, EconAppliedMicro

Hashtag

#CornellEcon

Contact E-Mail

alg5@cornell.edu

Contact Name

Amy Moesch

Contact Phone

607-255-5617

Speaker

Stephanie Johnson

Speaker Affiliation

Northwestern University

Open To

Cornell Economics Community (List Serve Members)