nep-pke 2010-10-09 papers

on Post Keynesian Economics

Issue of 2010‒10‒09
two papers chosen by
Karl Petrick
University of the West Indies

The Gains from Right to Rent By Dean Baker; Hye Jin Rho
Feel No Pain: Why a Deficit in Times of High Unemployment is Not a Burden By Dean Baker

By:	Dean Baker; Hye Jin Rho
Abstract:	Though Congress and Presidents Bush and Obama put forth several different mortgage modification programs, the rate of foreclosures has continued to rise over the past several years. According to CoreLogic, about one-in-four (23%) mortgages were underwater in the second quarter of 2010, and another one-in-four (28%) were nearly underwater. It is clear that the vast majority of people facing foreclosure are not benefiting from these programs. The flagship program, HAMP, has managed less than half a million permanent mortgage modifications as of July. The limited impact of mortgage modification plans has increased interest in alternative policies to help homeowners facing foreclosure. One sensible alternative is the “Right to Rent” legislation introduced in the House of Representatives by Representatives Grijalva and Kaptur (H.R. 5028) that would give homeowners facing foreclosure the option to remain in their homes as tenants up to five years. During this period, they would be paying the fair market rent as set by an independent appraiser. This would give homeowners an important degree of security, since they could not simply be thrown out on the streets. If they like their house, their eighborhood, and the schools for their kids, they need not have their lives severely disrupted by foreclosure. This policy should also benefit neighborhoods in the most hard-hit areas, since they would not have large numbers of vacant homes following foreclosures.
Keywords:	right to rent, foreclosures, housing
JEL:	G G2 G21 G28 R R2 R21
Date:	2010–09
URL:	http://d.repec.org/n?u=RePEc:epo:papers:2010-21&r=pke

Feel No Pain: Why a Deficit in Times of High Unemployment is Not a Burden

By:	Dean Baker
Abstract:	With the economy suffering from near double-digit unemployment, public debate is dominated by concerns over the budget deficit and national debt. This discussion is unfortunate both because there is no reason for people to be concerned about the deficit at present, and more importantly, because it discourages action on the unemployment crisis that is devastating the country.
Keywords:	budget deficit, deficit, fiscal responsibility, unemployment unemployment, deficit spending
JEL:	E E6 E60 E61 E62 E63 E64 E65 E66 H H2 H5 H6 H60 H61 H62 H63 H68
Date:	2010–09
URL:	http://d.repec.org/n?u=RePEc:epo:papers:2010-22&r=pke

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