Archive for December 2007

Monetary policy and housing

December 26, 2007

How important was the Fed for the housing boom?  John Taylor of ‘The Taylor Rule’  thinks the Fed mattered.  He is arguing that the Fed did not follow the appropriate short-term interest rate rule.

Housing and Monetary Policy


Since the mid-1980s, monetary policy has contributed to a great moderation of the housing cycle by responding more proactively to inflation and thereby reducing the boom bust cycle. However, during the period from 2002 to 2005, the short term interest rate path deviated significantly from what this two decade experience would suggest is appropriate. A counterfactual simulation with a simple model of the housing market shows that this deviation may have been a cause of the boom and bust in housing starts and inflation in the last two years. Moreover, a significant time series correlation between housing price inflation and delinquency rates suggests that the poor credit assessments on subprime mortgages may also have been caused by this deviation.

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This week

December 22, 2007
  • I handed my grades in.
  • I got a promotion.
  • We bought a new car—red, and fancy!
  • Major health scare—less scary today—but still of some concern.
  • We saw Santa.
  • L.’s first school play.  She was great.
  • We got better at the Wii.
  • Deposit on a trip to Disney.

Being alive and human is hard.  But soooo worth it.

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Almost 7 year old + small santa hat + tree decorating=crazy cute.

December 17, 2007

And the decorations are not all bunched on one branch!

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Ben Stein

December 2, 2007

really gives economists a lot of unwarranted credit.  I didn’t think he was funny in the movies, either.

The Long and Short of It at Goldman Sachs – New York Times

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