It seems pretty clear to me that a monetary contraction isn’t the appropriate policy response to a supply shock. Apparently there are those within the Federal Reserve who see things differently.
Category Archives: housing
Fact-checking the fact-checkers
When Chairman Ben Bernanke of the Council of Economic Advisors made a statement about the U.S. housing market last week, some analysts jumped all over him. It looks to me like Bernanke had his facts exactly right.
What is a bubble and is this one now?
Many of those discussing the possibility of a housing market bubble seem to be taking
Justice Potter Stewart’s position on pornography– they haven’t defined a bubble, but they think
they know it when they see it. Maybe it’s useful to take a look at a formal characterization of
the concept of a speculative bubble, and see how well it seems to fit the facts of the current
situation.
For the love of tulips
Many folks appear to be convinced that the current housing situation is akin to any of a
number of other famous financial bubbles of history. Trouble is, those famous bubbles weren’t
very much like what most people seem to assume.
Babble about a housing bubble
There’s been much discussion recently of whether the U.S. is experiencing a speculative bubble in house prices. Like previous historical bubble sightings, this one only seems to pop up in situations where the fundamentals on their own might justify significant price increases.