The housing ladder, taxation, and borrowing constraints

Using a multi-tier model of the housing market, we show that both starters and movers benefit from mortgage interest deduction for higher income groups. However, such tax favouring also tends to facilitate house price explosions, especially when interest rates and downpayment ratios are low. More in general, the efficiency of implicit tax subsidies to homeowners depends critically on the price responsiveness of new construction, which is found to differ strongly from country to country. Irrespective of supply conditions, running down mortgage interest deduction is likely to detract from the profits of lending institutions

Spillover of domestic regulation to emerging markets

Correlation between the risks of portfolios of different commercial banks leads to too much risk taking from a social planner's perspective. The presence of a regulator omproves this risk-benefit allocation of the financial system. In this paper I show that first-best regulation also leads to more attention for the fundamentals of countries to which capital is lent out.Bank Regulation; Spillovers; Fundamentals Jel codes: G28; L16; F34; E58

Spillover of Domestic Regulation to Emerging Markets

Correlation between the risks of portfolios of different commercial banks leads to too much risk taking from a social planner's perspective. The presence of a regulator improves this risk-benefit allocation of the financial system. In this paper I show that first-best regulation also leads to more attention for the fundamentals of borrowing countries.Bank Regulation, Spillovers, Fundamentals.