The Unassuming Economist

From a paper by Cheol-Keun Cho and Myunghyun Kim:

“We consider a proxy FAVAR (Factor-Augmented Vector Autoregression) model to analyze the impact of an oil supply news shock on the Korean economy. To identify an oil supply news shock, we use the variation in oil futures prices around OPEC production announcements as a proxy. Moreover, we include a factor that captures the common movement of many Korean macro variables such as various price indices and investment. The estimation results of the proxy FAVAR model show that an oil supply news shock increases the real oil price and the US CPI, and decreases world oil production and US GDP. As for Korean macro variables, GDP and net exports fall and CPI increases in response to the shock.”

Working papers and conferences:

• The Distaste for Housing Density – NBER
• The Determinants of Local Housing Supply in England – CEPR

On the US—developments on house prices, rent, permits and mortgage:    

• What can the next administration do about the US housing shortage? – Brookings
• Scariest Charts of the Week – Real Estate Decoded
• All-Cash Sales and Prices Decline in the Third Quarter – NAHB
• This Year’s Housing Turnaround Ended Before It Started. Sales of existing homes are on track for the worst two-year period since the mid-1990s – Wall Street Journal
• Owner-Occupied Single-Family Housing Units Across Congressional Districts – NAHB
• Pending Home Sales in US See Biggest Gain Since Summer 2020. Index of sales remains low despite outsize September rise. All US regions report increases, led by jump in western states – Bloomberg
• Housing market faces 7% mortgage rates again—here’s what is really going on. The Fed lowered interest rates, so why are the mortgage rates for the housing market climbing back up again? – Fast Company 
• Freddie Mac House Price Index Increased in September; Up 3.6% Year-over-year. 17 of the 30 worst performing cities are now in Florida! – Calculated Risk

On the US—other developments:    

• Why a Key Biden Effort to Boost Affordable Housing Has Faced Hurdles. The Biden administration rolled out a plan last year to create more housing by unlocking more than $35 billion in lending capacity. It has yet to close on any loans that would support housing-related projects. – New York Times
• What Harris and Trump plan to do about housing costs. Housing affordability has become a key issue for both the Trump and Harris campaigns. Today on “Post Reports,” what each candidate is proposing to do about the housing crisis, and whether their solutions could actually work. – Washington Post
• Can Public Housing Play a Role in a New American Social Housing System? – Harvard Joint Center for Housing Studies
• Boosting Housing Affordability: Practical Suggestions for Congress and the White House. How executive actions and new laws in Washington can help reform efforts in the states. – Mercatus Center
• To Fix the Affordable Housing Shortage, Policymakers Should Support Smarter Housing Policies Instead of Using Immigration to Evade Responsibility. Avoiding the real issues causing higher housing costs distracts from constructive solutions to solve America’s housing shortage. – Center for American Progress
• Where do Trump and Harris stand on housing, taxes and other policies? Polls show US voters unhappy about the economy, their top election concern. How would the presidential candidates address economic issues such as cost of living and labor? – The Guardian
• A Proposal to Address the Housing Crisis – Calculated Risk
• Fewer US Homes Are Insured Against Floods, Even as Risks Are Rising – Econofact
• U.S. housing market is on the ‘verge of a vicious cycle,’ which is ‘not good for America,’ Lennar Mortgage head warns. Politicians should ‘stop talking about affordability — and start delivering on affordability,’ Laura Escobar says – Market Watch
• The Role of the Recent Immigrant Surge in Housing Costs – Harvard Joint Center for Housing Studies
• Hedge funds and housing – Politico
• Climate Change Should Make You Rethink Homeownership – New York Times
• Construction Job Openings Fall in September – NAHB
• Weaker Homeownership Data for Younger Households – NAHB
• A Wall Street Landlord Bought Your Neighbor’s House. It’s a Mixed Blessing. The zip codes where investors own a bigger share of homes have seen higher-than-average increases in both prices and rents – Wall Street Journal
• The Year’s Most Important Housing Vote. Proposition 33 would repeal all of California’s state-level limits on rent control. It’s passage could prove to be a disaster for housing supply in the Golden State. – Reason
• Fannie and Freddie: Single Family and Multi-Family Serious Delinquency Rates Increased in September. Fannie Mae Multi-Family Delinquency Rate Ties Highest Since 2011 – Calculated Risk
• Radical Plans for Public Housing Stir Up Hope, and Doubt. A plan would demolish aged housing projects in Chelsea and build new homes and thousands of additional apartments. It could be a game changer. – New York Times
• N.Y.C. Housing Voucher Program Is ‘Plagued With Problems,’ Audit Says. Thomas DiNapoli, the New York State comptroller, found that management lapses had caused delays for people who needed permanent housing. – New York Times
• Nightmare on Main Street: Unpacking 10 Scary Housing Trends – CoreLogic
• Zombie Foreclosures Remain Sparce Around U.S. in Fourth Quarter Amid Ongoing Strong Housing Market – ATTOM 

On Australia and New Zealand

• [Australia] Housing market on the cusp of another boom – Financial Review
• [Australia] Housing policy heats up – Grattan Institute
• [Australia] Sydney House Prices Drop for the First Time in Almost Two Years – Bloomberg
• [New Zealand] New Zealand Housing Market Bogged Down by Flood of Listings. Prices seen recovering in 2025 if summer sales clear backlog. ‘Prices may bounce along the bottom for a few months yet’: ANZ – Bloomberg

On other countries:  

• [Canada] Canada faces worsening home ownership crisis with stalled condo sales – Reuters
• [Hong Kong] Hong Kong’s Rising Home Sales Still Face Economic Headwinds – Bloomberg
• [Ireland] Economic policy issues in the Irish housing market – IDEAS
• [Singapore] Singapore Home Prices Fall Less Than Expected; Rents Rebound – Bloomberg
• [United Kingdom] Chancellor pledges extra £500m for social homes in budget. Treasury plans £5bn total investment in housing supply and reduction in discounts under right-to-buy scheme – The Guardian

From a paper by Alihan Serdengeçti:

“The impact of financial liberalisation on income distribution has attracted increasing attention. However, the debate on whether financial liberalisation is a gain or a loss is still ongoing. Especially in the 1990s, following the collapse of the Bretton Woods system, financial liberalisation became a globally widespread concept. While this concept constituted the basis of neoliberal policies, it emerged as a saviour solution in periods when state policies were dominant. Financial liberalisation means the implementation of policies and reforms that emphasise the liberalisation of the international financial system and the liberalisation of capital flows. In this period, processes such as liberalisation of capital flows, development of financial markets, deregulation of the banking sector and increased international financial integration have come to the fore. In this context, examining the impact of financial liberalisation on income distribution has become an important issue among economists and researchers. Moreover, among the countries where financial liberalisation policies have been implemented, some of them have achieved positive results, while in others they have led to costly crises. In this framework, the aim of this study is to examine the impact of financial liberalisation on G-7 countries during the 2008 crisis period. This is because the potential effects of financial liberalisation on developed countries during crisis periods are desired to be observed. In the study, the relationship between financial liberalisation and income distribution was analysed by panel data analysis method using data from 2003-2013. According to the results of the analysis, it is observed that financial liberalisation has a positive effect on income distribution in developed countries.”

From a paper by Michael Christl, Silvia De Poli, and Viginta Ivaškaite-Tamošiune:

“This paper examines the extent to which fiscal policy protected household incomes in the second year of the COVID-19 pandemic in EU countries. Using microsimulation techniques and detailed Eurostat data, we analyse this impact separately for employees and the selfemployed. We show that while on average income protection was similar for employees and the self-employed at the EU level, the heterogeneity both between and within countries was much higher for self-employed households in 2021. For employees, both monetary compensation schemes and unemployment benefits played a similar role in absorbing the income shock, whereas for the self-employed it was mainly monetary compensation schemes and much less so unemployment benefits that stabilised their income. Overall, we find that monetary compensation schemes, together with automatic stabilisers, absorbed a substantial part (67%) of the market income shock in 2021, albeit with a reduced cushioning effect compared to the previous year (74%). Monetary compensation schemes alone account for almost a third of this cushioning effect in 2021. Our paper underlines the importance of targeted policies to ensure comprehensive support for vulnerable households amid ongoing economic uncertainties.”

From a new paper by Nicholas Apergis and Hany Fahmy:

“This paper explores the link between geopolitical risks and energy prices crash risk. Studying energy price crashes is important given the sharp fall in oil prices in 2008 and 2014. The analysis focuses on three energy markets: natural gas, oil, and coal, while it employs two measures: the negative coefficient of skewness and the down-to-up volatility, to construct proxies for crash risks. The period of examination is January 2000 to December 2023, whereas that for coal is January 2010 to December 2023. The study employs a modified version of the smooth transition autoregressive model. The results show that, within the modelling framework, coal and oil crash risks are driven by the cyclical behavior of geopolitical acts, whereas natural gas crash risks by geopolitical threats. Causality tests confirm the prediction that geopolitical tensions cause crash risks in energy markets. The results also confirm that the “Economic Activity Channel” is only valid for energy markets driven by geopolitical threats. Energy market regulators should be concerned about crash risks, given that the energy supply shows cyclical boom and bust cycles in prices and production. Crash risks could also potentially cause a fall in investments required to enhance energy efficiency.”