Comments on: Don’t Fight the Fed? An Analysis of the Role of Monetary Policy in the Formation of Bubbles in the Housing Market

By: Jessica Khouri

Jessica Khouri — Fri, 21 Apr 2023 18:48:36 +0000

Outstanding work! I am also interested in how you selected the cities that were included in the analysis.

By: Noah Brown

Noah Brown — Fri, 21 Apr 2023 18:13:04 +0000

Sorry, I rephrased:
Given this data do you think we are on the trajectory for another housing crisis, or can we avoid another bubble? Are there other factors which suggest a bubble is less imminent than in 2008? Great work!

By: Noah Brown

Noah Brown — Fri, 21 Apr 2023 18:12:40 +0000

By: Noah Brown

Noah Brown — Fri, 21 Apr 2023 18:08:37 +0000

Given this data do you think we are destined for another housing crisis, or given the data are we one the verge for another bubble? Are there other factors which suggest a bubble is less imminent than in 2008?

By: Claira Schiffrik

Claira Schiffrik — Fri, 21 Apr 2023 17:05:38 +0000

Hi Leah! Thank you! The 12 cities studied were chosen because extensive housing price data was available for them through the S&P Case-Shiller Housing Price Index, which has been tracking monthly price changes in these cities for several decades. With these being major metropolitan areas, data for the other variables used in the regression was much more accessible as well. However, a limitation that I cited in my study was the lack of use of data for smaller, rural, and poorer areas of the country. If data for those areas had been included, it is possible the results would have been different. I recommend that further research on this topic includes this kind of data to improve the accuracy of the analysis.

By: Claira Schiffrik

Claira Schiffrik — Fri, 21 Apr 2023 16:33:13 +0000

Hi Adam! Thank you very much! Yes, in the years immediately preceding the 2008 crisis, starting around the early 2000s, the Fed began lowering the interest rate and held it down throughout that entire period, which is considered expansionary monetary policy. My results suggest that this contributed to the formation of the 2008 bubble. This is consistent with the findings of McDonalds and Stokes (2011), which concluded that the monetary policy invoked in the years before the crisis were a crucial factor in the development of the bubble.

By: Prof. Leiby

Prof. Leiby — Fri, 21 Apr 2023 16:12:00 +0000

Congratulations, Claira! It’s so great to see what you’ve done in your major 🙂

By: Leah Montesano

Leah Montesano — Fri, 21 Apr 2023 15:12:06 +0000

Impressive work! How did you decide which 12 cities to focus on? Do you think you would have had different results if you had focused on different cities?

By: Adam Wood

Adam Wood — Thu, 20 Apr 2023 23:14:07 +0000

You’ve done amazing work, and its exciting to see ��Vlog��ý students looking into the housing price issue. I can see where around 2008, when the recession would have been going on. The housing index makes a significant drop and levels out till about 2012 and then begins rising drastically. Would the federal government have been using the monetary policy just before the increase?