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Reconstructing the Great Recession


  • Michele Boldrin

    (Washington University in St Louis)


This paper uses a simple general equilibrium models with residential investment and input-output structure to illustrate the effects of demand shocks in the productive economy. A decline in the demand for homes generates a readjustment of the portfolio, and a decline in the demand of intermediate inputs, this depreoves the real side of the economy and generates a significant decline in employment and real activity. The effects are significant even when the shock is transitory.

Suggested Citation

  • Michele Boldrin, 2012. "Reconstructing the Great Recession," 2012 Meeting Papers 1038, Society for Economic Dynamics.
  • Handle: RePEc:red:sed012:1038

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    References listed on IDEAS

    1. Nobuhiro Kiyotaki & Alexander Michaelides & Kalin Nikolov, 2011. "Winners and Losers in Housing Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 255-296, March.
    2. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2009. "Accounting For Changes In The Homeownership Rate," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(3), pages 677-726, August.
    3. Black, Fischer, 1995. " Interest Rates as Options," Journal of Finance, American Finance Association, vol. 50(5), pages 1371-1376, December.
    4. Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 2005. "Metropolitan-Specific Estimates of the Price Elasticity of Supply of Housing, and Their Sources," American Economic Review, American Economic Association, vol. 95(2), pages 334-339, May.
    5. Song, In Ho, 2010. "House Prices and Consumption," MPRA Paper 27481, University Library of Munich, Germany.
    6. Carlos Garriga & Rodolfo E. Manuelli & Adrian Peralta-Alva, 2012. "A model of price swings in the housing market," Working Papers 2012-022, Federal Reserve Bank of St. Louis.
    7. Rodolfo E. Manuelli & Adrian Peralta-Alva, 2011. "Sectoral shocks, reallocation frictions, and optimal government spending," Working Papers 2011-017, Federal Reserve Bank of St. Louis.
    8. Davis, Morris A. & Heathcote, Jonathan, 2007. "The price and quantity of residential land in the United States," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2595-2620, November.
    9. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    10. Michael Keane & Richard Rogerson, 2012. "Micro and Macro Labor Supply Elasticities: A Reassessment of Conventional Wisdom," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 464-476, June.
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    Cited by:

    1. Gete, Pedro, 2015. "Housing demands, savings gluts and current account dynamics," Globalization and Monetary Policy Institute Working Paper 221, Federal Reserve Bank of Dallas, revised 01 Aug 2015.
    2. Kliesen, Kevin L., 2014. "A guide to tracking the U.S. economy," Review, Federal Reserve Bank of St. Louis, vol. 96(1), pages 35-54.
    3. Davis, Morris A. & Van Nieuwerburgh, Stijn, 2015. "Housing, Finance, and the Macroeconomy," Handbook of Regional and Urban Economics, Elsevier.
    4. Cohen, Jeffrey P. & Coughlin, Cletus C. & Lopez, David A., 2012. "The boom and bust of U.S. housing prices from various geographic perspectives," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 341-368.

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models


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