Project description
Understanding the effectiveness of regulations: the case of the 2008 finance crisis
In 2008, the world watched on as the financial crisis unfolded, resulting in many countries adopting regulations for the housing and mortgage markets. It is unclear how effective these regulations were, due to the lack of micro-level data available on these markets. The EU-funded HousingAndMortgages project aims to address this gap. With a focus on the Netherlands and Norway, the project will create a platform of data sets on the housing and mortgage markets as well as novel structural econometric models of demand and supply, which will be used to evaluate the effects of existing and alternative regulations on welfare.
Objective
Worldwide, housing wealth represents the most important asset in households' balance sheet, and mortgage debt is the most important liability. In the past two decades, several countries have experienced house price bubbles, excessive households' leverage, and increasing risk-taking behavior of banks. To limit these phenomena, and in response to the 2008 financial crisis, new regulations have been introduced in housing and mortgage markets. The lack of disaggregate and extensive micro level data on housing and mortgages has so far prevented researchers from carefully investigating these events and the effectiveness of regulation. This project will bridge this gap. I will assemble a unique and extensive platform of datasets on housing and mortgage markets, combining disaggregate information on housing transactions, buyers and sellers, and loan level data on mortgages for two European countries, the Netherlands and Norway. These data will be used to develop and estimate novel structural econometric models of demand and supply in housing and mortgage markets. These models will serve to investigate three main questions of concern to policymakers, and to evaluate the welfare effects of existing and alternative regulations via counterfactual simulations. First, I will investigate a novel demand channel of housing and mortgages driven by the rise of accommodation sharing platforms such as Airbnb. While these platforms provide extra income to households renting their property, they also fuel housing bubbles and affect mortgage markets. Second, I will evaluate the role of mortgage securitization in reducing lenders' funding costs, quantify its effect on lenders' risk taking behavior, and propose regulations to balance this trade off. Last, I will document the distributional effects of leverage regulations, that have helped to reduce credit risk, but have also disproportionally penalized low income households and first time buyers, worsening income and wealth inequality.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
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Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
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HORIZON.1.1 - European Research Council (ERC)
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Topic(s)
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Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
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Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
HORIZON-ERC - HORIZON ERC Grants
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Call for proposal
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Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2021-STG
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Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.
5037 AB Tilburg
Netherlands
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