nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2008‒01‒12
25 papers chosen by
Steve Ross
University of Connecticut

  1. Neighborhood Effects, Urban Public Policies and Housing Values. A Spatial Econometric Perspective By BAUMONT, Catherine
  2. Wages, Rents and Heterogeneous Moving Costs By Douglas J. Krupka; Kwame Donaldson
  3. City Air or City Markets: Productivity Gains in Urban Areas By Douglas J. Krupka
  4. Private School Quality in Italy By Giuseppe Bertola; Daniele Checchi; Veruska Oppedisano
  5. Foreclosures in Ohio: does lender type matter? By Ozgur Emre Ergungor
  6. Trends and Determinants of China’s Industrial Agglomeration By Lu, Jiangyong; Tao, Zhigang
  7. The American High School Graduation Rate: Trends and Levels By James J. Heckman; Paul A. LaFontaine
  8. The Impact of Direct Democracy on Public Education: Evidence for Swiss Students in Reading, Mathematics and Natural Science By Fischer, Justina A.V.
  9. Agglomeration of Economic Activities in China: Evidence from Establishment Censuses By Lu, Jiangyong
  10. And the House Goes to - Ethnic Discrimination in the Greek Rental Market By Nick Drydakis
  11. On Pitchforks and Tomahawks By Michael Pflüger; Jens Südekum
  12. Entrance, Exit and Exclusion: Labour Market Flows of Foreign Born Adults in Swedish "Divided Cities" By Hedberg, Charlotta
  13. On Measuring the Complexity of Urban Living By Hasan, Lubna Hasan
  14. Who Gentrifies Low-income Neighborhoods? By McKinnish, Terra; Walsh, Randall; White, T. Kirk
  15. Do Regional Price Levels Converge? : Paneleconometric Evidence Based on German Districts By Christian Dreger; Reinhold Kosfeld
  16. Why Are Hispanic and African-American Dropout Rates So High? By Magnus Lofstrom
  17. The Property Tax Incidence Debate and the Mix of State and Local Finance of Local Public Expenditures By George R. Zodrow
  18. Does the underground economy hold back financial deepening? Evidence from the Italian credit market By Giorgio Gobbi; Roberta Zizza
  19. Does Movie Violence Increase Violent Crime? By Gordon Dahl; Stefano DellaVigna
  20. Economic growth across space and time: subprovincial evidence from Mainland China By Curran, Declan; Funke, Michael; Wang, Jue
  21. The persistence of urban poverty in Ethiopia: A tale of two measurements By Bigsten, Arne; Shimeles, Abebe
  22. Crossing The Alps: Three Transport Policy Options By Gerardo Marletto
  23. "Minsky’s Cushions of Safety Systemic Risk and the Crisis in the U.S. Subprime Mortgage Market" By Jan Kregel
  24. Securitisation and the bank lending channel By Yener Altunbas; Leonardo Gambacorta; David Marqués
  25. Lessons from the 2007 Financial Crisis By Buiter, Willem H

  1. By: BAUMONT, Catherine (LEG - CNRS UMR 5118 - Université de Bourgogne)
    Abstract: Problems of spatial segregation are often associated with segmented housing submarkets where the social status and social capital of a neighborhood appear to be the main driving forces behind housing price formation. Urban regeneration policies aim to raise housing values in poor areas through the construction of new buildings with higher levels of housing services. Structural attributes, neighborhood characteristics, and accessibility variables are the determinants of housing values considered in hedonic models. In this paper, it is assumed that spatial effects in terms of spatial autocorrelation, spatial heterogeneity, and spatial externalities are additional variables worth considering for at least two reasons: (i) in econometrics, OLS estimation problems arise from the occurrence of spatial dependencies among housing values; (ii) in urban policy studies, spatial effects engender a global diffusion process extending beyond housing submarkets. The impact of social housing policies and urban regeneration policies may permeate outside the areas where they are implemented. Our case study is of the urban area of Dijon (France), where two types of urban policy have been implemented in the last three decades: social housing projects in some suburban areas, and a regeneration plan for the old inner-city. Spatial effects are introduced in the hedonic model and a spatial error model is estimated, revealing a positive and significant global spatial effect combined with the usual influence of accessibility to the CBD. We also show the negative influence of location in social housing districts and the spatial diffusion effect they exert on neighboring districts.
    Keywords: Deprived districts, hedonic model, housing price, neighborhood effects, spatial econometrics, urban policies
    JEL: C12 C52 R14 R21
    Date: 2007–12
  2. By: Douglas J. Krupka (IZA); Kwame Donaldson (Georgia State University)
    Abstract: The model of compensating differentials in regional labor markets was developed by Roback (1982). The model interprets regional differences in constant quality wages and rents as compensating firms and residents for inter-regional differences in amenities. The model assumes that the costs of relocating to a new city are zero. The results hold in the presence of moving costs for the marginal migrant. This paper extends the Roback model to allow for moving costs which vary among a city’s residents and businesses. This modification of the model generates new interpretations of regional differences in rents and (to a lesser extent) wages. The importance of amenities is retained, but housing supply becomes the main other determinant of regional rents. Housing supply was for the most part ignored in the literature following on Roback’s initial insight. The new perspective also provides a bridge between the neo-classical perspective implicit in Roback’s approach and the newer literature on agglomeration economies.
    Keywords: compensating differentials, quality of life, housing supply, amenities, capitalization
    JEL: R12 R13 R23 R31 J31
    Date: 2007–12
  3. By: Douglas J. Krupka (IZA)
    Abstract: Persistent productivity gains to rural-urban migrants have been documented by a number of researchers. One interpretation of this result is that individuals learn higher value skills in cities than they would have learned in less dense areas. Another explanation for this result, however, is that thicker urban labor markets allow for better matches, which are realized slowly through a process of subsequent job searches. Surprisingly, there has been no empirical test of these two interpretations to this date. This paper uses NLSY79 geocode data to assess whether wage growth of urban workers is due primarily to time spent in the urban environment (and thus learning), or job changes. The evidence suggests that both these processes are probably at work.
    Keywords: productivity, agglomeration economies, urban wage premium, matching, learning
    JEL: R11 R23 J24 J31 J61
    Date: 2007–12
  4. By: Giuseppe Bertola (University of Turin); Daniele Checchi (University of Milan and IZA); Veruska Oppedisano (University of Turin)
    Abstract: We discuss how a schooling system’s structure may imply that private school enrolment leads to worse subsequent performance in further education or in the labour market, and we seek evidence of such phenomena in Italian data. If students differ not only in terms of their families’ ability to pay but also in terms of their own ability to take advantage of educational opportunities ("talent" for short), theory predicts that private schools attract a worse pool of students when publicly funded schools are better suited to foster progress by more talented students. We analyze empirically three surveys of Italian secondary school graduates, interviewed 3 year after graduation. In these data, the impact of observable talent proxies on educational and labour market outcomes is indeed more positive for students who (endogenously) choose to attend public schools than for those who choose to pay for private education.
    Keywords: private schooling, talent
    JEL: I21
    Date: 2007–12
  5. By: Ozgur Emre Ergungor
    Abstract: Whether mortgages are originated mostly by depository institutions regulated by the Federal agencies or by less-regulated lenders does not seem to affect the foreclosure fi ling rate in Ohio’s counties. What seems to matter is whether the lenders have a physical presence in the market, in which case, foreclosure rates are lower.
    Keywords: Foreclosure ; Mortgage loans
    Date: 2007
  6. By: Lu, Jiangyong; Tao, Zhigang
    Abstract: This paper investigates trends and determinants of the spatial concentration of China’s manufacturing industries using a large firm-level data for the time period of 1998 to 2005. It is found that the overall industrial agglomeration in China has increased steadily in recent years though it is still much lower than those of the well-developed market economies (such as United States, United Kingdom, and France). It is also found that local protectionism among China’s various regions obstructs China’s industrial agglomeration while Marshallian externalities facilitate the process of spatial concentration of manufacturing industries. On an optimistic note, there is evidence that the negative impacts of local protectionism have become less significant over time but those of Marshallian externalities are gaining in importance, which is consistent with the overall trend of China’s industrial agglomeration.
    JEL: R1
    Date: 2007–11
  7. By: James J. Heckman (University of Chicago and IZA); Paul A. LaFontaine (American Bar Association)
    Abstract: This paper uses multiple data sources and a unified methodology to estimate the trends and levels of the U.S. high school graduation rate. Correcting for important biases that plague previous calculations, we establish that (a) the true high school graduation rate is substantially lower than the official rate issued by the National Center for Educational Statistics; (b) it has been declining over the past 40 years; (c) majority/minority graduation rate differentials are substantial and have not converged over the past 35 years; (d) the decline in high school graduation rates occurs among native populations and is not solely a consequence of increasing proportions of immigrants and minorities in American society; (e) the decline in high school graduation explains part of the recent slowdown in college attendance; and (f) the pattern of the decline of high school graduation rates by gender helps to explain the recent increase in male-female college attendance gaps.
    Keywords: high school dropout rate, high school graduation rates, educational attainment
    JEL: I21
    Date: 2007–12
  8. By: Fischer, Justina A.V. (Dept. of Economics, Stockholm School of Economics)
    Abstract: Empirical analyses for the US suggest that stronger people’s control over the school budget is deleterious to student performance. Using Swiss data on ninth graders in mathematics, reading and natural science collected jointly with the PISA study 2000, this paper tests this hypothesis for Switzerland, exploiting inter-cantonal variation in political institutions. For both student performance in reading and mathematics, stronger popular rights appear to lower educational achievement through the school budget channel. In particular, the qualification of teachers is identified as most influential determinant of student achievement, which is shown to be linked to educational spending.
    Keywords: Direct democracy; public finance; economics of education; PISA
    JEL: H10 H41 I28
    Date: 2007–12–31
  9. By: Lu, Jiangyong
    Abstract: In this paper, we document spatial distribution of economic activities in China based on two recent nationwide censuses of establishments. This paper provides the whole picture of agglomeration of economic activities in China for the first time in the literature. The robust increasing trend of agglomeration supports the argument that interregional trade barriers in China decreased during the period of 1996-2001. We extend the agglomeration literature by studying agglomeration patterns of establishments with various ownership types. We find that non-public owned establishments are more spatially concentrated compared with public owned establishments. We also examine determinants of agglomeration economies with multivariate regressions. Results show that micro-foundations of agglomeration work well in explaining agglomeration of non-public owned establishments, but not for public owned establishments in China.
    Keywords: Geographic Concentration; Micro-foundations; Ownership
    JEL: R10
    Date: 2008–01–06
  10. By: Nick Drydakis (Department of Economics - University of Crete, Greece)
    Abstract: A field experiment was contacted in order to unbiased test whether female ethnic minorities; Albanians, face housing discrimination by owners when they seek to rent a unit in Greece three years after the national adoption of the European anti-discrimination legislation. Replicated the commonest process to rent a unit in Greece; telephone contact, we investigated a big sample represented by 122 areas. Rationally classified them in three status groups, according to their average rent levels, we found that discrimination increased monotonically with areas¢ status. The estimated probability of Albanians to receive an invitation to investigate a unit was lower by 0.231 in low status areas, followed by 0.324 in medium status areas, and by 0.419 in high status areas than that of Greeks. Adjusted for intra-class correlation the estimated differentials were found to be statistically significant. Similarly, we estimated an insignificant rent penalty against Albanians of 0.010 in low status areas, and significant penalties of 0.015 in medium status areas and of 0.023 in high status areas against Albanians. Consequently, a taste and/or statistical discrimination implied against Albanian seekers. Interestingly, the study enabled to estimate further that good rental housings are in significant degree unavailable to Albanians restricted their freedom in selecting a place to live. Specifically, Albanian seekers faced significantly less probabilities to investigate newer, busheled and units placed in floor than Greeks. Whilst, Albanians in order to have access to good units they had to pay more than Greeks. Finally, we estimated that female owners practiced significantly more availability constraints to Albanians than male owners. The current research contributes to two areas that have attracted scarce research attention in Greece: the experimental investigation of housing discrimination and discrimination by ethnicity. The results of this study have implications for understanding some of the enduring patterns of ethnic discrimination in the housing market.
    Keywords: Field Experiment, Ethnic Discrimination, Housing Discrimination, Housing Demand
    JEL: C93 J70 J71 J16 R
    Date: 2007–11–22
  11. By: Michael Pflüger (University of Passau, DIW Berlin and IZA); Jens Südekum (University of Duisburg-Essen and IZA)
    Abstract: The core-periphery model by Krugman (1991) has two 'dramatic' implications: catastrophic agglomeration and locational hysteresis. We study this seminal model with CES instead of Cobb-Douglas upper tier preferences. This small generalization suffices to change these stark implications. For a wide range of parameters we find that the model exhibits instead a smooth and easily reversible transition from symmetry to agglomeration.
    Keywords: core-periphery model, new economic geography, agglomeration, bifurcation pattern
    JEL: F12 F15 F22 R12 R50
    Date: 2007–12
  12. By: Hedberg, Charlotta (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: International migrants often achieve subordinate positions in the labour market or are left outside it. On the basis of unique, longitudinal data, this article investigates the socio-economic mobility of the foreign-born adult population in two Swedish cities, 1993–2002. Patterns of entrance, exit and exclusion from the labour market are compared between foreign- and native-born populations, focussing on variations between ‘distressed’ neighbourhoods and surrounding city regions. The results reveal that the foreign-born population experiences high labour turnover, generally with increasing employment stability, but that considerable vulnerability remains. However, surprisingly small differences were found between residents of ‘distressed’ and other neighbourhoods. Consequently, ethnic rather than residential status influenced the employment situation of foreign-born adults in Swedish cities.
    Keywords: Labour mobility; Segregation; Foreign Born; Life course; Sweden
    JEL: J15 J61 J63 R12
    Date: 2008–01–07
  13. By: Hasan, Lubna Hasan
    Abstract: This paper explores the concept of city ranking as a way to measure dynamics and complexities of urban life. These rankings have various dimensions and uses. Both the context in which these rankings are done, and their nature has changed considerably overtime. These rankings are also afflicted with many methodological and measurement problems. A review of major city rankings and related literature is carried out to suggest a framework for measuring Pakistani cities.
    Keywords: Quality of Life; Cities; Urbanization
    JEL: R1
    Date: 2007
  14. By: McKinnish, Terra; Walsh, Randall; White, T. Kirk
    Abstract: This paper uses confidential Census data, specifically the 1990 and 2000 Census Long-Form data, to study the demographic processes underlying the gentrification of low income urban neighborhoods during the 1990’s. In contrast to previous studies, the analysis is conducted at the more refined census-tract level with a narrower definition of gentrification and more narrowly defined comparison neighborhoods. The analysis is also richly disaggregated by demographic characteristic, uncovering differential patterns by race, education, age and family structure that would not have emerged in the more aggregate analysis in previous studies. The results provide little evidence of displacement of low-income non-white households in gentrifying neighborhoods. The bulk of the income gains in gentrifying neighborhoods are attributed to white college graduates and black high school graduates. It is the disproportionate in-migration of the former and the disproportionate retention and income gains of the latter that appear to be the main engines of gentrification.
    Keywords: gentrification; neighborhood change; migration
    JEL: J6 R0 R2
    Date: 2007–11
  15. By: Christian Dreger; Reinhold Kosfeld
    Abstract: We investigate price index convergence on the base of regional data for 439 German districts. Prices refer to the overall consumer price index as well as to the index without housing prices. To increase the efficiency of the testing framework, a panel unit root analysis is performed, where cross section dependencies are taken into account. The tests indicate a lack of regional price convergence. While the idiosyncratic component of price differentials is mostly stationary, their common component is driven by a unit root. The results are very similar for the overall price index and the index without housing prices, and for the Western and Eastern part of the German economy. Obviously the elimination of housing prices is not sufficient to obtain a price index where tradable products dominate. One rationale of our findings is the persistent west-east divide in consumer prices. A second argument is related to the persistence of the price gradient between urban and rural regions.
    Keywords: Regional price differentials, price convergence, panel unit roots
    JEL: E31 R10 C33
    Date: 2007
  16. By: Magnus Lofstrom (University of Texas at Dallas and IZA)
    Abstract: The proportion of students who do not graduate from high school is dramatically higher among the two largest minority groups, Hispanics and African-Americans, compared to non- Hispanic whites. In this paper we utilize unique student-level data from the Texas Schools Microdata Panel (TSMP) in an attempt to determine what factors contribute to the higher minority dropout rates. We show that poverty is a key contributor. Lack of English proficiency among Hispanic student is linked to the higher Hispanic dropout probability. Our results also suggest that neighborhood characteristics may be important in explaining the high African- American dropout rates. We also address the issue of the surprisingly low official dropout rates reported by the Texas Education Agency (TEA) and show that the GED program explains some of the discrepancy.
    Keywords: dropout rate, educational attainment
    JEL: I21
    Date: 2007–12
  17. By: George R. Zodrow (Baker Institute for Public Policy, Rice University)
    Abstract: Many states in the US have in recent years changed the mix of state and local revenue sources used to finance local public expenditures, especially primary and secondary education, with local property taxes being replaced by various sources of state tax revenue. This article examines the desirability of such a tax substitution, focusing on the implications of the long-standing debate between the “benefit tax” and “capital tax” views of the incidence of the tax. It also includes a discussion of some recent research that elaborates the capital tax view of the property tax.
    Keywords: Property tax incidence, capitalization, capital tax view, new view, benefit tax view, Texas tax reform, margin tax
    JEL: H10 H21 H22 H71
    Date: 2008
  18. By: Giorgio Gobbi (Bank of Italy, Department of Structural Studies on the Italian Economy.); Roberta Zizza (Bank of Italy, Department of Structural Studies on the Italian Economy.)
    Abstract: The paper investigates the relationship between the underground economy and financial deepening. Entrepreneurs can only access external finance by disclosing credible information in formal documentation. This may be impossible for many informal producers, who lack proper accounting records. Similarly, irregular workers may have difficulty borrowing to finance consumption and house purchases. Using panel data on local credit markets in Italy, we find that the share of irregular employment has a strong negative impact on outstanding credit to the private sector. According to our estimates, a shift of 1 per cent of employees from regular to irregular work corresponds to a decline of 1-2 percentage points of GDP in the volume of business lending and of 0.3 percentage points in outstanding credit to households. By contrast, the feedback effects of financial deepening on the size of the informal sector are weak and statistically not significant. Applying a difference-in-difference approach that exploits the exogenous variation induced by the regularization programme for immigrant workers launched in 2002, we also find that irregular labour has a negative effect on banksÂ’ decisions to enter local credit markets.
    Keywords: irregular employment, bank lending, school drop-out, entry, branching, regularisation program
    JEL: G21 O17 R23
    Date: 2007–11
  19. By: Gordon Dahl; Stefano DellaVigna
    Abstract: Laboratory experiments in psychology find that media violence increases aggression in the short run. We analyze whether media violence affects violent crime in the field. We exploit variation in the violence of blockbuster movies from 1995 to 2004, and study the effect on same-day assaults. We find that violent crime decreases on days with larger theater audiences for violent movies. The effect is partly due to voluntary incapacitation: between 6PM and 12AM, a one million increase in the audience for violent movies reduces violent crime by 1.1 to 1.3 percent. After exposure to the movie, between 12AM and 6AM, violent crime is reduced by an even larger percent. This finding is explained by the self-selection of violent individuals into violent movie attendance, leading to a substitution away from more volatile activities. In particular, movie attendance appears to reduce alcohol consumption. Like the laboratory experiments, we find indirect evidence that movie violence increases violent crime; however, this effect is dominated by the reduction in crime induced by a substitution away from more dangerous activities. Overall, our estimates suggest that in the short-run violent movies deter almost 1,000 assaults on an average weekend. While our design does not allow us to estimate long-run effects, we find no evidence of medium-run effects up to three weeks after initial exposure.
    JEL: A12 C91 C93 J08
    Date: 2008–01
  20. By: Curran, Declan (BOFIT); Funke, Michael (BOFIT); Wang, Jue (BOFIT)
    Abstract: This paper considers the persistent differences in economic performance across Chinese regions. We introduce a new county- and city-level dataset that spans all of mainland China and provides a detailed view of Chinese regional growth over the period 1997-2005. Non-parametric kernel density estimation is employed to establish the cross-sectional GDP per capita distribution, and the distributional dynamics are investigated using the probability matrix technique and associated stochastic kernel estimator. A set of explanatory variables is then introduced, and several regressions are run to test for conditional ƒÒ-convergence and to pinpoint influential factors for economic growth across counties and cities.
    Keywords: regional economic growth; China
    JEL: O11 R11
    Date: 2008–01–04
  21. By: Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University); Shimeles, Abebe (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper investigates dynamics of poverty in urban Ethiopia using both subjective and objective definitions of poverty. The two sets of estimates of persistence and recurrence of poverty are similar, suggesting that consumption-based mobility estimates are not seriously distorted by measurement error.<p>
    Keywords: Subjective poverty; poverty spells; state dependence
    JEL: I32
    Date: 2008–01–08
  22. By: Gerardo Marletto
    Abstract: In recent years crossing the Alps has become a central issue in transport policy. The constant increase in global transport flow has contributed to bringing two distinct objectives to the centre of attention: making transalpine transportation of goods easier and reducing the negative impact of this on the alpine environment. The debates and disagreements on the subject are often bad-tempered, and are evidence of the lack of communication between the interested parties. This is also due to the existence of three distinct transport policy options: territiorial competition, sustainable development and de-growth. The different positions taken by the various parties are more understandable when one is aware of these options, and this awareness could assist the parties in making the necessary decisions, which all those involved recognise are important.
    Keywords: Transport policy; Alps; Territorial marketing; Sustainibility; De-growth
    JEL: R49 Q01
    Date: 2007
  23. By: Jan Kregel
    Abstract: The current crisis in the financial systems of developed countries is often explained in terms of Hyman P. Minsky’s financial fragility hypothesis. Minsky was an economist at the Levy Institute and the foremost expert on credit crunches. His hypothesis was that the structure of a capitalist economy becomes more fragile over a period of prosperity; that is, endogenous processes breed financial and economic instability. In this brief, Senior Scholar Jan Kregel explains how the current crisis differs from the traditional Minsky hypothesis. He reviews Minsky’s concept of a margin or “cushion” of safety, financial fragility, and debt deflation. He concludes that, while the current subprime mortgage crisis involves both Ponzi financing and declining margins of safety, these conditions are not the result of endogenous processes. Rather, the crisis is the result of insufficient margins of safety based on how credit worthiness is assessed (the undervaluation and mispricing of risk) in the new “originate and distribute” financial system.
    Date: 2008–01
  24. By: Yener Altunbas (Centre for Banking and Financial Studies, University of Wales, Bangor); Leonardo Gambacorta (Bank of Italy); David Marqués (European Central Bank, Monetary Policy Directorate)
    Abstract: The dramatic increase in securitisation activity has modified the functioning of credit markets by reducing the fundamental role of liquidity transformation performed by financial intermediaries. We claim that the changing role of banks from “originate and hold” to “originate, repackage and sell” has also modified banks’ abilities to grant credit and the effectiveness of the bank lending channel of monetary policy. Using a large sample of European banks, we find that the use of securitisation appears to shelter banks’ loan supply from the effects of monetary policy. Securitisation activity has also strengthened the capacity of banks to supply new loans but this capacity depends upon business cycle conditions as well as upon banks’ risk positions. In this respect the recent experience of the sub-prime mortgage loans crisis is very instructive.
    Keywords: asset securitisation, bank lending channel, monetary policy
    JEL: E44 E52
    Date: 2007–11
  25. By: Buiter, Willem H
    Abstract: The paper studies the causes of the current financial crisis and considers proposals for mitigation and prevention of future crises. The crisis is was the product of a ‘perfect storm’ bringing together a number of microeconomic and macroeconomic pathologies. Among the microeconomic systemic failures were: wanton securitisation, fundamental flaws in the rating agencies’ business model, the procyclical behaviour of leverage in much of the financial system and of the Basel capital adequacy requirements, privately rational but socially inefficient disintermediation, and competitive international de-regulation. Proximate local drivers of the specific way in which these problems manifested themselves were regulatory and supervisory failure in the US home loan market. Among the macroeconomic pathologies that contributed to the crisis were, first, excessive global liquidity creation by key central banks and, second, an ex-ante global saving glut, brought about by the entry of a number of high-saving countries (notably China) into the global economy and a global redistribution of wealth and income towards commodity exporters that also had, at least in the short run, high propensities to save. In the UK, failures of the Tripartite financial stability arrangement between the Treasury the Bank of England and the FSA, weaknesses in the Bank of England’s liquidity management, regulatory failure of the FSA, an inadequate deposit insurance arrangement and deficient insolvency laws for the banking sector contributed to the financial disarray. Despite this, it may well be possible to minimize the spillovers over from the crisis beyond the financial sectors of the industrial countries and the housing sectors of the US and a few European countries.
    Keywords: collateral; financial stability; leverage; liquidity; rating agencies; regulation; securitization
    JEL: D52 D53 E32 E44 E58 F37 G21 G24 G28
    Date: 2007–12

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