In a column in the New York Times, Harvard economist Edward Glaeser argues: Theory and data both predict that the 1.2 percentage point drop in
In a column in the New York Times, Harvard economist Edward Glaeser argues: “Theory and data both predict that the 1.2 percentage point drop in real interest rates that America experienced between 1996 and 2006 should cause a
[housing] price increase of somewhat less than 10 percent. . . .”
a. How can the Fed cause the real interest rate to increase or decrease?
b. Why would a decline in real interest rates cause an increase in housing prices?
Source: Edward Glaeser, “Did Low Interest Rates Cause the Great Housing Convulsion?” New York Times, August 3, 2010.
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Authors: R Glenn Hubbard ,Anthony Patrick O'Brien
1st Edition
013255352X, 978-0132553520
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