https://macropaperwarehouse.com/authors/daniel-l.-greenwald/Daniel L. GreenwaldHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/do-credit-conditions-move-house-prices/https://macropaperwarehouse.com/papers/do-credit-conditions-move-house-prices/<p><strong>Research Question.</strong> To what extent did an expansion and contraction of credit drive the 2000s housing boom and bust? The existing literature offers sharply divergent answers — ranging from credit explaining virtually none of the boom (Kaplan, Mitman, and Violante 2020) to credit explaining the majority of it (Favilukis, Ludvigson, and Van Nieuwerburgh 2017, who find credit alone explains 60% of the rise in price-to-rent ratios). Greenwald and Guren argue that the source of these divergent findings is a single structural assumption: the degree to which credit-insensitive agents (landlords and unconstrained savers) can absorb credit-driven demand for housing, which in turn depends on the degree of segmentation between the owner-occupied and rental housing markets.</p>