With respect to the role of housing as a business cycle driver, a very significant piece of work is Stijn’s most recent research, forthcoming in the Journal of Political Economy and jointly written with Jack Favilukis and Sydney Ludvigson.5 Stijn and co-authors study the impact of changes in housing collateral constraints as well as foreign capital inflows in a general equilibrium model.
However one cuts it, the consequences of the financial crisis were vast in terms of lost output, unemployment, financial instability, and bailout costs to taxpayers across the world, and meaningful efforts were subsequently devoted to explicitly strengthening financial sector governance. 2.