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Date of Award
Restricted Thesis: Campus only access
Bachelor of Arts
Dr. Rob Dolan
As researchers attempt to identify the causes of the most recent recession, the housing sector of the economy is often at the center of the debate. In Chart 1.1, residential fixed investment component (in constant 2005 dollars) of Gross Domestic Product grew faster than overall real GDP for much of the time period between 2002 and 2006. In 2007, Owners’ Equity in Household Real Estate from the Board of Governors Flow of Funds Accounts (or, as this paper will consider it, net housing wealth) in the United States was nearly 40 percent higher than it was in 2002. After experiencing above average growth before 2007, declines in both net housing wealth and residential fixed investment occurred earlier than the declines experienced in GDP, and the declines in the housing market were much more severe. Finally, both variables still haven’t recovered to their 2002 levels while GDP has approximately reached its previous high experienced before the recession. This data suggests that abnormal activity in the housing market contributed to the decline in GDP that occurred in 2008.
Jones, Stephen, "The wealth effect and the great recession : using VAR models to account for the housing wealth effect in the most recent recession" (2012). Honors Theses. 85.