1. Since variations in economy-wide employment and output seem to be closely linked to variations in the level of activity in the construction sector (see for example Leamer (2007)), a policy implication of the paper is that regulation of loan-to-value ratios of real estate loans to prevent widespread default when house prices decline may serve to lessen the severity of downturns. However since restrictions on loan-to-value ratios increase the severity of borrowing constraints;the model seem to fit well with the recent episodes of fluctuations in house prices in which sharp declines in construction activity coincided with declines in house prices
2. Econometric Regime Shifts and the US Subprime Bubble;A K Anundsen;Journal of Applied Econometrics,2014
3. Endogenous Collateral;A Araujo;Journal of Mathematical Economics,2005
4. Regulating Collateral Requirements when Markets are Incomplete;A Araujo;Journal of Economic Theory,2012