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This paper describes a novel methodology of measuring risky and conservative mortgage credit using household survey data for 18 European Union countries and the United Kingdom. In addition, we construct time series for both types of credit and embed them into a global vector autoregressive (GVAR) model, so as to study how shocks to both variables affect domestic output and propagate across countries through cross-border banking exposures. The results show that a decrease in risky credit can have long-lasting positive effects on GDP, both in the originating country and its most exposed peers, while a fall in conservative credit is detrimental. In some geographies, negative shocks to both types of credit reduce output, a feature linked to the lower relevance of homeownership which implies that mortgage credit plays a less prominent role in the domestic economy.

AbstractIn the wake of the 2008–2009 global financial crisis, the macroeconomic discussion has returned to the topic of proactive macroprudential policies. The use of loan‐to‐value (LTV) policies to curb booming property markets has long been used by Hong Kong's monetary authorities to actively manage the potential fallout from housing price bubbles. In 2013 the Hong Kong authorities supplemented the LTV policies with property transfer taxes. Here, we also analyse the merits of these tax‐based macroprudential policies in the dynamic stochastic general equilibrium framework. Furthermore, we calibrate the impact of both countercyclical macroprudential policies employed in conjunction with forward guidance. We conclude that both policy approaches can limit the pace of housing price increases. As regards the comparison of LTV and tax‐based measures, it turns out that property acquisition taxes are more effective.

Como medidas microprudenciales para contener una crisis financiera se han establecidos límites a los indicadores de préstamos otorgados sobre el valor del activo financiado y la deuda sobre el ingreso del prestatario (Loan To Value o LTV y Debt To Income o DTI). El LTV hace parte del marco normativo que regula en Colombia el sistema de financiamiento de vivienda a largo plazo, Ley de Vivienda o ley 546 de 1999. Sin embargo, al consistir en restricciones al acceso al crédito y, por ende, a su democratización, ha generado un impacto negativo directo sobre el número de hogares que han podido adquirir vivienda propia, resultando una medida regresiva en cuanto a la materialización del Derecho de rango constitucional a la Vivienda Digna, (Artículo 51 CP), pero favorable como garantía de la estabilidad financiera al permitir una asignación responsable de créditos, privilegiando este último indicador. No obstante, se sugiere replantear estos límites sin generar efectos desestabilizadores del sistema financiero, en desarrollo del postulado de progresividad en la atención de derechos de carácter asistencial, y recordando el compromiso social derivada de nuestra Carta Constitucional consistente en concretar el derecho a la vivienda como postulado de la dignidad de los colombianos. ; As microprudential measures to contain a financial crisis, limits have been set on the indicators of loans granted on the value of the financed asset and debt on the borrower's income (Loan To Value or LTV and Debt To Income or DTI). The LTV has been part of the regulatory framework that regulates in Colombia the long term financing housing system, Housing Law or Law 546 of 1999. However, given the restrictions on access to credit and, therefore, its democratization, it has been generated a direct negative impact on the number of households that have been able to acquire their own home, resulting in a regressive measure in terms of the materialization of the constitutional right to Decent Housing, (Article 51 CP), but favorable as a guarantee of financial stability by allowing a responsible allocation of credits, privileging the latter indicator. It is suggested to rethink these limits without generating destabilizing effects of the financial system, in development of the postulate of progressivity in the attention of welfare rights, and recalling the social commitment derived from our Constitutional Charter consisting of concretizing the right to housing as a postulate of the dignity of Colombians. ; Magister en Derecho Económico énfasis en Regulación Económica y Análisis Económico del Derecho ; Maestría

Although major changes in mortgage finance have occurred since the subprime bust, several issues remain unresolved, centering on the roles of Fannie Mae, Freddie Mac, and the FHA. We analyze how some reforms might affect house prices in a framework rich enough to simulate the impact of several reforms which change mortgage interest rates and/or loan-to-value (LTV) ratios of first time home buyers, the key drivers of house prices in recent decades. Simulations suggest that ending the GSE interest rate subsidy would have small effects, while changes in capital requirements or maximum FHA loan size limits would have larger effects.

In this paper, we use the panel of the first two waves of the Household Finance and Consumption Survey by the European Central Bank to study housing demand of European households and evaluate potential housing market regulations in the post-crisis era. We provide a comprehensive account of the housing decisions of European households between 2010 and 2014, and structurally estimate the housing preference of a simple life-cycle housing choice model. We then evaluate the effect of a tighter LTV/LTI regulation via counter-factual simulations. We find that those regulations limit homeownership and wealth accumulation, reduces housing consumption but may be welfare improving for the young households.

Is a "fully automated" capitalism possible? According to Marx's labor theory of value (LTV) and the theory of surplus-value derived from it, a fully automated economy cannot be profitable. To refute the theory, critics have put forth various thought experiments claiming to show that a fully automated but profitable capitalist economy is conceivable. I argue that the thought experiments fail to demonstrate conceivability, because they misunderstand the role of labor in a commodity economy. In the latter, labor is a means for acquiring the property of others, and so it cannot be eliminated so long as the economy is based on the commodity form. Quite apart from issues of technical feasibility, then, the idea of a fully automated commodity economy is conceptually incoherent. The ineliminability of labor under the commodity form reflects the limits to the socialization of production this form imposes.

Abstract
A decision not to prohibit or limit high-risk mortgage products in Ireland in 2005 reveals the extent to which three important factors – interests, institutions, ideology – impact on information processing by decision-makers, and reveals irrationality or otherwise in the process. This article summarises the events leading up to the bad decision on 100 per cent loan-to-value (LTV) mortgages in November 2005. This case reveals the nature of the interaction between government departments, regulators and banks at a critical time before the crash, and shows how a department's interests can interact with institutional factors, and the ideological context, to prompt poor rational and irrational information processing, and lead to a bad decision. In particular, the dominance of a market ideology which raised the threshold for what information was necessary before intervention would be made, combined with the low institutional standing of the department seeking intervention, produced a suboptimal outcome. Finally, the case provides evidence of irrationality (e.g. groupthink, herding) within institutional actors, rather than between them.

This study aims to investigate the effect of macroprudential regulation on banks' profitability during financial crises, to find out whether the instruments of the Central Bank of Jordan (CBJ) enhance the performance of the Jordanian banking sector in terms of increasing banks' profitability and reducing banking sector exposure to financial crisis vulnerability. The sample of the study consists of twelve listed banks in Jordan over the period 2000–2018. The bank's return on assets (ROA) was regressed on instruments by using the fully modified ordinary least square (FMOLS) method. The results had shown a slightly weak significant effect of stress testing (ST) on the banks' ROA. Capital adequacy ratio (CAR) had no significant effect, leverage ratio had the deepest effect, and banks are highly leveraged with more debt-to-equity ratio. In addition to that, a good number of the banks maintain CAR, loan-to-value (LTV), and leverage ratios higher than the minimum limit required by the CBJ and Basel requirements, suggesting that the Basel standards did not take into consideration the particularity of some countries. The results also revealed that CBJ prudential regulation instruments are succeed in keeping the stability of the banking sector profitability during previous financial crises, but still need to enhance the level of gearing for banks against future shocks