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Why New England went the way of Texas rather than California

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  • Lynn E. Browne

Abstract

When the New England economy first started to slow in 1988, a few prescient individuals would occasionally raise the possibility of the region going the way of Texas, which was suffering a serious economic downturn and a real estate bust at the time. Such an outcome seemed most unlikely for New England, however. The decline in the Texas economy was precipitated by an adverse economic shock, falling oil prices. New England had suffered nothing comparable. ; Today New England looks more like Texas. Real estate woes have been devastating and, in terms of job loss, the overall regional decline surpasses the Texas downturn in severity. Why were the New England and Texas booms in real estate followed by busts, whereas the California boom was not? Where were the signs of problems ahead? What lesson might New England have learned from the Texas experience, had closer attention been paid? And what lessons might other parts of the country learn from the common difficulties of these two very different areas?

Suggested Citation

  • Lynn E. Browne, 1992. "Why New England went the way of Texas rather than California," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 23-41.
    • Handle: RePEc:fip:fedbne:y:1992:i:jan:p:23-41
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    File URL: http://www.bostonfed.org/economic/neer/neer1992/neer192b.pdf
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    References listed on IDEAS

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    1. Karl E. Case & Robert J. Shiller, 1988. "The behavior of home buyers in boom and post-boom markets," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 29-46.
    2. Edward Moscovitch, 1990. "The downturn in the New England economy: what lies behind it?," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 53-65.
    3. Eric Rosengren, 1990. "How diversified is New England?," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 3-16.
    4. Katerina Simons, 1990. "New England banks and the Texas experience," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 55-62.
    5. Karl E. Case, 1986. "The market for single-family homes in the Boston area," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 38-48.
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    Cited by:

    1. Amy Glasmeier & Marie Howland, 1993. "Service-Led Rural Development: Definitions, Theories, and Empirical Evidence," International Regional Science Review, , vol. 16(1-2), pages 197-229, April.
    2. Lynn E. Browne & Rebecca Hellerstein & Jane Sneddon Little, 1998. "Inflation, asset markets, and economic stabilization: lessons from Asia," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-32.
    3. Lynn E. Browne, 2001. "Does Japan offer any lessons for the United States?," New England Economic Review, Federal Reserve Bank of Boston, pages 3-18.
    4. Lisa Morris Grobar, 1996. "Comparing The New England And Southern California Regional Recessions," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 71-84, July.
    5. Jahyeong Koo & Mark A. Wynne, 1997. "Business cycles under monetary union: EU and US business cycles compared," Working Papers 9707, Federal Reserve Bank of Dallas.
    6. D'Ann M. Petersen & Keith R. Phillips & Mine K. Yücel, 1994. "The role of tax policy in the boom/bust cycle of the Texas construction sector," Working Papers 9413, Federal Reserve Bank of Dallas.
    7. Christian L. Redfearn, 2000. "The Composition of Metropolitan Employment and the Correlation of Housing Prices Across Metropolitan Areas," Working Paper 8641, USC Lusk Center for Real Estate.
    8. D'Ann M. Petersen & Keith R. Phillips & Mine K. Yücel, 1994. "The Texas construction sector: the tail that wagged the dog," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 23-33.
    9. William T. Bogart & William M. Gentry, 1993. "Capital Gains Taxation and Realizations: Evidence from Interstate Comparisons," NBER Working Papers 4254, National Bureau of Economic Research, Inc.

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