Comments on: Counterparties: International Monetary Fail http://blogs.reuters.com/felix-salmon/2013/06/06/counterparties-international-monetary-fail/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: QCIC http://blogs.reuters.com/felix-salmon/2013/06/06/counterparties-international-monetary-fail/comment-page-1/#comment-47336 Thu, 13 Jun 2013 15:45:51 +0000 http://blogs.reuters.com/felix-salmon/?p=22002#comment-47336 The piece was frankly terrible. It doesn’t show anything it is preporting to show, and I generally agree with the authors on policy.

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/06/06/counterparties-international-monetary-fail/comment-page-1/#comment-47278 Fri, 07 Jun 2013 17:06:40 +0000 http://blogs.reuters.com/felix-salmon/?p=22002#comment-47278 For whatever reason commenting is not set up on the Ferro homeownership piece. Anyway, if the graphs are a fair representation of that paper, color me dubious that it proves anything.

These studies may suggest that there is no correlation between homeownership and unemployment rates, but the evidence for negative correlation looks awfully weak. In the international comparison, it sure looks like the trend line is driven by the two outliers at the top with 80+ percent homeownership and 25+ percent unemployment. (Spain is one. Is Greece the other?)

As for the U.S. data, I am not sure why they chose differing periods for home ownership versus unemployment rate (ending in 2000 as opposed to 2010). I’m also skeptical about choosing single years as endpoints, particularly for unemployment rate, as opposed to a multi-year average. I grow even more skeptical when 2010 is selected as the endpoint, which was a year of elevated unemployment. Even with all that, the correlation is barely positive (R2 is 0.11).

I’m all in favor of eliminating the mortgage interest deduction over time and loosening zoning restrictions – a bit different than simply “rezoning the suburbs”, but probably not far off – but that support stems from basic economic principles, and I don’t see that this paper contributes much if any to the debate.

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