Economic distress and voting: evidence from the subprime mortgage crisis

We use nationwide deed-level records on home foreclosures to examine the effects of economic distress on electoral outcomes and individual voter turnout. County-level difference-in-differences estimates show that counties that suffered larger increases in foreclosures did not punish or reward members of the incumbent president's party more than less affected counties. Linking the Ohio voter file to individual foreclosures, difference-in-differences estimates show that individuals whose homes were foreclosed on were less likely to turn out, rather than being mobilized. However, in 2016 counties more exposed to foreclosures supported Trump at substantially higher rates. Taken together, the evidence suggests that the effect of local economic distress on incumbent performance is generally close to zero and only becomes substantial in unusual circumstances.

The federal funds rate effect on subprime mortgage crisis management: An ARDL approach

This research empirically investigated the effectiveness of the interest rate policy of the Federal Reserve (Fed) on managing the subprime mortgage crisis. The study employed the autoregressive distributed lag model (ARDL) to analyze the stability of the Fed’s monetary policy, thereby providing an alternative analysis tool. Correlation analysis results showed a strong positive and statistically significant relationship between Fed funds rate and the labor market, a strong negative and statistically significant relationship between Fed funds rate and the housing market, and a strong negative and statistically significant relationship between Fed funds rate and price stability. In contrast, results of the ARDL model bounds test for cointegration indicated that house price index (HPI), labor market, and price stability were cointegrated, hence exhibiting a long-run relationship with Fed funds rate. This research demonstrates that additional empirical studies using new techniques are required to reevaluate the Fisher effect and expand the understanding of the mechanism between interest rates and inflation. This issue is extremely important, particularly for countries such as the U.S., the UK adapting inflation targeting policy using interest rates as an operational target.

Cross-Regional Connectedness in the United States’ Housing Market

The interconnectedness of markets is a useful measure of risk and therefore an indicator of economic stability. In this paper, the interconnectedness among housing markets in different metropolitan areas was analyzed. Interconnectedness between the housing market and other markets were also calculated. In regional studies, West Coast housing markets were found to be the most influential on housing markets elsewhere. Interestingly, overall connectedness across regions steadily increased prior to the subprime mortgage crisis, representing a systematic risk increase. When analyzing diverse markets in relation to the housing market, the stock market was found to have the highest interconnectedness, suggesting that financial health of stock market depend on financial health of housing market. The increased systematic risk due to high housing market interconnectedness coupled with the interdependence between the stock market and the housing market were key indicators of the subprime mortgage crisis. Such measures should be monitored in the future to avoid a similar economic disaster.

Dynamics of wilful blindness: An introduction

What are the politics of ignorance in an age of misinformation? How can the concept of ‘wilful blindness’ help us to understand the logics involved? We start the introduction to this special issue by arguing that the intrinsic instability of wilful blindness draws valuable attention to the graded nature of intentionality and perception, and the tensions between them. These features are an essential part of the workings of ignorance, as we illustrate with reference to the shifting intentions of drug couriers, the fleeting moments in which the humanity of victims is recognised in the midst of violent acts, and the affects that channel economic behaviour, such as in the subprime mortgage crisis. When approaching perception and intentionality as complexly entangled in institutionalised fields of power, ‘wilful blindness’ emerges as a powerful and critical diagnostic of the epistemic instabilities of our time.

Revealing “Mafia Inc.”? Financial Crisis, Organized Crime, and the Birth of New Enterprises

We study the investment of organized crime in the legal economy. By using the shock induced on the Italian credit market by the 2007 subprime mortgage crisis, we document how provinces with a high organized crime presence have been impacted less by the crisis in terms of the establishment of new enterprises than provinces with a lower criminal infiltration. We provide evidence that the lower impact of the crisis is consistent with the presence of investments by organized crime in the legal economy. We corroborate this interpretation by comparing our results with the characterization made by the judicial authority of such investments.

A Masterpiece from the Subprime Mortgage Crisis in America

Subprime mortgage crisis is a phenomenon that has a major impact on the world economy. The crisis that began in the United States has infected many other economically related countries with the United States. This study tries to parse how the economic conditions of the United States in the era before and after the crisis. From the results of the descriptive statistical analysis test on the economic conditions of the United States in the period 1998 - 2017, it was found that in the variables of inflation, investment, GDP, and interest rates there were negative differences between before and after the crisis, even though statistically did not show a significant effect, except for interest rate variable. This phenomenon shows that monetary policy oriented to controlling interest has the potential to trigger systemic risks to the economy.