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Are Housing Prices, Household Debt, and Growth Sustainable?

  • Dimitri B. Papadimitriou
  • Edward Chilcote
  • Gennaro Zezza

Rising home prices and low interest rates have fueled the recent surge in mortgage borrowing and enabled consumers to spend at high rates relative to their income. Low interest rates have counterbalanced the growth in debt and acted to dampen the growth in household debt-service burdens. As past Levy Institute strategic analyses have pointed out, these trends are not sustainable: Household spending relative to income cannot grow indefinitely.

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File URL: http://www.levyinstitute.org/pubs/sa_jan_06.pdf
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Paper provided by Levy Economics Institute in its series Economics Strategic Analysis Archive with number sa_jan_06.

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Date of creation: Jan 2006
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Handle: RePEc:lev:levysa:sa_jan_06
Contact details of provider: Web page: http://www.levyinstitute.org

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  1. Dean Baker, 2002. "The Run-up in Home Prices: A Bubble," Challenge, M.E. Sharpe, Inc., vol. 45(6), pages 93-119, November.
  2. Wynne Godley & Dimitri B. Papadimitriou & Claudio H. Dos Santos & Gennaro Zezza, 2005. "The United States and Her Creditors: Can the Symbiosis Last?," Economics Strategic Analysis Archive sa_sep_05, Levy Economics Institute.
  3. Marco Del Negro & Christopher Otrok, 2005. "Monetary policy and the house price boom across U.S. states," Working Paper 2005-24, Federal Reserve Bank of Atlanta.
  4. Karl E. Case & Robert J. Shiller, 2003. "Is There a Bubble in the Housing Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 299-362.
  5. Dimitri B. Papadimitriou & Anwar Shaikh & Claudio H. dos Santos & Gennaro Zezza, 2002. "Is Personal Debt Sustainable?," Economics Strategic Analysis Archive 02-11, Levy Economics Institute.
  6. anonymous, 2004. "Asset prices and monetary policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 67, march.
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