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Wall street and the housing bubble

Author(s): Cheng, IH; Raina, S; Xiong, Wei

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Abstract: We analyze whether midlevel managers in securitized finance were aware of a large-scale housing bubble and a looming crisis in 2004 -2006 using their personal home transaction data. We find that the average person in our sample neither timed the market nor were cautious in their home transactions, and did not exhibit awareness of problems in overall housing markets. Certain groups of securitization agents were particularly aggressive in increasing their exposure to housing during this period, suggesting the need to expand the incentives-based view of the crisis to incorporate a role for beliefs. (JEL D14, D83, E32, E44, G01, G21, R31).
Publication Date: Sep-2014
Citation: Cheng, IH, Raina, S and Xiong, Wei. (2014). Wall street and the housing bubble. American Economic Review, 104 (9), 2797 - 2829. doi:10.1257/aer.104.9.2797
DOI: doi:10.1257/aer.104.9.2797
ISSN: 0002-8282
Pages: 2797 - 2829
Type of Material: Journal Article
Journal/Proceeding Title: American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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