Wednesday, October 29, 2008

Reviving the housing market, the supply side

I have given my take on the demand side policies.

Mankiw noted some supply side plans:

  • the shared appreciation mortgage, or SAM, in which the homeowners who get a mortgage relief will have to forfeit the future appreciation on their house.
  • Zingales's Plan B, which is essentially an equity-for-debt swap.
The problem, it is hard to renegotiate the mortgage contract as we have noted before. Then it is still easier to implement the demand side policies.

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