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The risk of a recession period in the U.S. and the possible role of home equity

Author

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  • De Koning, Kees

Abstract

The Bank of International Settlement in its latest report demonstrates how the inflation levels, especially of food and energy prices have affected the behaviour of households in the U.S and in other countries. This paper aims to set out a method to use home equity as a policy tool for the Federal Reserve.Home owners equity now far outstrips U.S. annual GDP level. During the Great Recession, households had no other option than to use private sector financing. In the paper it is demonstrated that such use was detrimental to household's interests. To avoid another Great Recession, the Fed might wish to take over this responsibility.

Suggested Citation

  • De Koning, Kees, 2022. "The risk of a recession period in the U.S. and the possible role of home equity," MPRA Paper 114162, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:114162
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    More about this item

    Keywords

    Home equity in the U.S. Accumulated values over the last 24 years. Quantitative Easing Home Equity (QEHE);

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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