TY  - JOUR
AU  - Mulligan,Casey
AU  - Threinen,Luke
TI  - Market Responses to the Panic of 2008
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14446
PY  - 2008
Y2  - October 2008
UR  - http://www.nber.org/papers/w14446
L1  - http://www.nber.org/papers/w14446.pdf
N1  - Author contact info:
Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL  60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu

Luke Threinen
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL  60637
E-Mail: threinen@uchicago.edu
AB  - We model the panic of 2008 as part of the wealth and substitution effects deriving from a housing price crash that began in 2006.  The dissipation of the wealth effect stimulates a reorganization of the banking industry and increases in employment, GDP, and unemployment.  The release of resources from the housing sector lowers investment goods prices, and thereby devalues existing non-residential capital while stimulating non-residential investment.  These predictions are compared with measured U.S. economic performance from 2006 to 2008 Q2.
ER  -