Understanding the Roots of the US Subprime Crisis and its Subsequent Effects
In this paper we provide an overview of the roots, first manifestations and further developments of the US subprime crisis and explain the securitization process by emphasizing especially the mortgage securitization process. Some explanations for the ongoing financial crisis are also offered. We continue with a presentation of the US real estate sector and its main indicators. Finnally, we investigate the relationship between home mortgages growth and gross domestic product in the United States using quarterly observations for the two variables, covering the 2002-2008 time period. We find that curret GDP is explained both by its own lagged value and by previous quarter change in home mortgages. A unidirectional Granger causality from home mortgages to the gross domestic product is also attested. We can therefore report that a significant decrease in borrowing leads to an equally significant decrease in house prices and causes a future economic slowdown, reflected by a decrease in the gross domestic product.
Volume (Year): 12 (2009)
Issue (Month): 31 ((1))
|Contact details of provider:|| Postal: |
Web page: http://www.rei.ase.ro/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Adam B. Ashcraft & Til Schuermann, 2008.
"Understanding the securitization of subprime mortgage credit,"
318, Federal Reserve Bank of New York.
- Ashcraft, Adam B. & Schuermann, Til, 2008. "Understanding the Securitization of Subprime Mortgage Credit," Foundations and Trends(R) in Finance, now publishers, vol. 2(3), pages 191-309, June.
When requesting a correction, please mention this item's handle: RePEc:rej:journl:v:12:y:2009:i:31:p:115-143. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Radu Lupu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.