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Published on Feb 20, 2012
By Dr Susan Wachter, Professor of Real Estate and Finance at The Wharton School of the University of Pennsylvania Senior Research Fellow, Centre for Asset Securitisation and Management in Asia
In the wake of an unprecedented housing bubble and global recession, scholars and policymakers have acknowledged the necessity of macro-prudential policies in the financial sector. The success of these policies in preventing a repeat occurrence, however, will depend on how they address two challenges. First, they must target specific information failures within the real estate market that make this asset class especially susceptible to boom-and-bust behavior. Second, they must moderate the endogenous swings in debt that characterize the modern global economy. This talk will discuss these lessons learned and the policy challenges ahead.