This paper models the housing sector, mortgages and endogenous default in a DSGE setting with nominal and real … housing demand shock. Next we use our estimated model to evaluate a policy that reduces the principal of underwater mortgages …

This paper examines the welfare cost of rare housing disasters characterized by large drops in house prices. I … construct an overlapping generations general equilibrium model with recursive preferences and housing disaster shocks. The … likelihood and magnitude of housing disasters are inferred from historic housing market experiences in the OECD. The model shows …