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An expansion in mortgage credit to subprime borrowers is widely believed to have been a principal driver of the 2002 … purchase mortgages to subprime borrowers. We also document that the expansion in speculative mortgage products and underwriting …
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This paper shows that rising real estate prices reduce industry productivity, because they lead to a reallocation of capital and labor towards inefficient firms. I establish that the rise in real estate value during the US housing boom relaxes firms' financial constraints. Companies borrow...
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asymptotically normal. Applying my estimator to the subprime mortgage crisis, I quantify what caused the foreclosure rate to triple … standards, with a 10% decline in home prices increasing subprime mortgage default rates by 50% …
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