This paper models and provides empirical evidence for the quality of assets that are securitized through bankruptcy remote special purpose vehicles (SPVs). The model predicts that assets sold to SPVs will be of lower quality (“lemons”) compared to assets that are not sold to SPVs. We find...

Almost 45 percent of U.S. Treasury securities and just under 20 percent of U.S. Agency securities (bonds and mortgage-backed securities (MBS)) are currently held by foreign investors. This paper addresses some key questions concerning these large foreign investments in U.S. Treasury and Agency...

The Federal takeover of Fannie Mae and Freddie Mac last September spells the end of an experiment in the public-private hybrid known as the Government Sponsored Enterprises (GSE). This paper documents the subsidies provided to the enterprises and the public and private benefits generated. The...

This paper evaluates a current policy proposal to limit the size of the retained mortgage portfolios held by Fannie Mae and Freddie Mac (hereafter Famp;F). The proposal is a response to the growing concerns that the interest rate risks contained in the Famp;F portfolios create a serious threat...

Larry White has created a highly useful paper that clearly lays out the reasons to privatize Fannie Mae and Freddie Mac (Famp;F) and offers a roadmap for doing so. I agree fully with the goal and his reasons for it, although below I will indicate I have a different perspective on how best to...

One of the primary results of studying asymmetric information as part of information economics over the last 30 years has been a theory of markets for lemons - that is, markets for goods that are likely to be of poor quality. Unfortunately, it has proven difficult to directly test the lemons...

This paper analyzes the offshoring of innovative activity, and the circumstances and implications of the global spread of corporate Ramp;D. Economists are largely in agreement on the importance of continued innovation as the primary way to create high-paying new jobs in the US, therefore...

It is now widely recognized that the interest rate risks embedded in the Fannie Mae and Freddie Mac (Famp;F) retained mortgage portfolios create a serious threat to the US financial system. This paper evaluates proposals to control the interest rate risk embedded in these portfolios. The...

This paper evaluates the interest rate risk of Fannie Mae and Freddie Mac (Famp;F) and develops related public policy proposals. Famp;F merit special attention due to (1) their potentially very large interest rate risk, and (2) their status as U.S. government sponsored enterprises. The analysis...

We develop a model for markets for catastrophic risk. The model explains why insurance providers may choose not to offer insurance for catastrophic risks and not to participate in reinsurance markets, even though there is a large enough market capacity to reach full risk sharing through...