A depressing scenario : mortgage debt becomes unemployment insurance / Casey B. Mulligan.

By: Contributor(s): Material type: TextTextSeries: Working paper series (National Bureau of Economic Research) ; no. 14514.Publication details: Cambridge, Mass. : National Bureau of Economic Research, 2008.Description: 16 p. : ill. ; 22 cmSubject(s): LOC classification:
  • HB1 .N38 no. 14514
Online resources: Available additional physical forms:
  • Also available as an electronic book via the World Wide Web.
Summary: When asset values fall, the owners of collateralized loans are not in an enviable position. Nonetheless, they possess a kind of monopoly power over their borrowers that they do not possess when borrowers are solvent. Lenders maximize profits by price discriminating, but create deadweight costs in the process. From the perspective of the aggregate labor market, it is as if lenders were levying their own labor income tax, on top of the taxes already levied by public treasuries. Governments have an incentive to regulate this price discrimination, repudiate part of the private debts, cut their own tax rates, or acquire the debt themselves. These conditions may describe both the 1930s and economic events today.
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Item type Current library Collection Call number Copy number Status Date due Barcode
Book Book University of Macedonia Library Βιβλιοστάσιο Β (Stack Room B) Research Papers HB1.N38 no. 14514 (Browse shelf(Opens below)) 1 Available 0013119105

Includes bibliographical references (p. 15-16).

When asset values fall, the owners of collateralized loans are not in an enviable position. Nonetheless, they possess a kind of monopoly power over their borrowers that they do not possess when borrowers are solvent. Lenders maximize profits by price discriminating, but create deadweight costs in the process. From the perspective of the aggregate labor market, it is as if lenders were levying their own labor income tax, on top of the taxes already levied by public treasuries. Governments have an incentive to regulate this price discrimination, repudiate part of the private debts, cut their own tax rates, or acquire the debt themselves. These conditions may describe both the 1930s and economic events today.

Also available as an electronic book via the World Wide Web.

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