The Unassuming Economist

On cross-country:

• 14th Annual Demographia International Housing Affordability Survey: 2018 – Demographia
• Global House Prices Will Rise, but Ideal Conditions to End – FITCH

On the US:

• Redefault Risk in the Aftermath of the Mortgage Crisis: Why Did Modifications Improve More Than Self-Cures? – Federal Reserve Bank of Philadelphia
• Perspectives: Practitioners Weigh in on Drivers of Rising Housing Construction Costs in San Francisco – Terner Center

On other countries:

• [Australia] The changing institutions of private rental housing: an international review – AHURI
• [Belgium] Belgian house prices continue to rise, despite falling demand and weak economy – Global Property Guide
• [Bulgaria] Bulgaria’s house prices rising rapidly, due to strong economic growth – Global Property Guide
• [India] Rent Control in Mumbai – Marginal Revolution
• [Ireland] Update on the progress of the Central Bank of Ireland’s Tracker Mortgage Examination – Central Bank of Ireland
• [Latvia] Latvia’s housing market remains robust – Global Property Guide
• [New Zealand] Quantifying the costs of land use regulation: Evidence from New Zealand – University of Canterbury
• [Portugal] Great value and good yields in Portugal, where house prices continue to rise – Global Property Guide
• [United Kingdom] Empty homes, longer commutes: The unintended consequences of more restrictive local planning – Journal of Public Economics
• [United Kingdom] UK Housing: Something Concrete to Dwell On – Roubini Global Economics

Photo by Aliis Sinisalu

A new IMF working paper “describes a new database of major labor and product market reforms covering 26 advanced economies over the period 1970-2013. The focus is on large changes in product market regulation in seven individual network industries, employment protection legislation for regular and temporary workers, and the replacement rate and duration of unemployment benefits. The main advantage of this dataset is the precise identification of the nature and date of major reforms, which is valuable in many empirical applications. By contrast, the dataset does not attempt to measure and compare policy settings across countries, and as such is no substitute for other publicly available indicators produced, for example, by the ILO, the OECD or the World Bank. It should also be seen as work in progress, for researchers to build on and improve upon. Based on the dataset, major reforms appear to have been more frequent in product markets than in labor markets in the last decades, and were predominantly implemented during the 1990s and 2000s.”

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FocusEconomics announces the winners of our 2017 Analyst Forecast Awards. “The Awards recognize the most accurate forecasters for the main macroeconomic indicators across 87 countries and 29 commodity prices in 2016. Details of the awards and the list of winners are available at: www.focus-economics.com/awards.”

From a new IMF working paper by Mircea Epure, Irina Mihai; Camelia Minoiu, and José-Luis Peydró:

“We analyze the effects of macroprudential policies on local bank credit cycles and interactions with international financial conditions. For identification, we exploit the comprehensive credit register containing all bank loans to individuals in Romania, a small open economy subject to external shocks, and the period 2004-2012, which covers a full boom-bust credit cycle when a wide range of macroprudential measures were deployed. Although household leverage is known to be a key driver of financial crises, to our knowledge this is the first paper that employs a household credit register to study leverage and macroprudential policies over a full economic cycle. Our results show that tighter macroprudential conditions are associated with a significant decline in household credit, with substantially stronger effects for foreign currency (FX) loans than for local currency loans. The effects on FX loans are higher for: (i) ex-ante riskier borrowers proxied by higher debt-service-toincome ratios and (ii) banks with greater exposure to foreign funding. Moreover, tighter macroprudential policy has stronger dampening effects on FX lending when global risk appetite is high and foreign monetary policy is expansionary. Finally, quantitative effects are in general larger for borrower rather than lender macroprudential policies.”

From the IMF’s latest report on Hong Kong:

“During the last decade, Hong Kong SAR has experienced a large increase in house prices and credit, prompting the authorities to respond with several rounds of tightening macro-prudential rules and increasing stamp duty taxes. This chapter analyzes the effectiveness of these measures, and finds that they have helped reduce house price appreciation. The estimated impact of a 10 percent LTV tightening is a reduction of house prices of 4.8 percent over the next year. The estimated impact of a 1 percent increase in the ad valorem stamp duty tax is a reduction of house prices of 1.2 percent over the next year. Without these policies, house prices would have been 12.5 percent higher, and the mortgage credit-GDP ratio 15 percent higher.”