Housing, Global Finance and American Hegemony: Building Conservative Politics One Brick at a Time

Schwartz, H. (2008). Housing, Global Finance and American Hegemony: Building Conservative Politics One Brick at a Time. Comparative European Politics, 6(3), pp. 262-284. doi: 10.1057/cep.2008.11

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Abstract

How did US housing markets articulate both with global financial flows and US domestic politics? During the long 1990s, the US economy benefited from a system of global financial arbitrage in which the US economy as a whole borrowed short term, at low interest rates, from the rest of the world, while lending back long term at higher. A temporarily self sustaining housing market boom in the US based on declining nominal interest rates emerged from these flows. This boom favored employment and GDP growth in the US at the expense of some but not all advanced economies. The more that housing market financial structures in an economy approximated those in the US (widespread omeownership, high levels of mortgage debt to GDP, low transaction costs for mortgage refinance, and mortgage loan securitization), the better that economy performed in GDP and employment terms during the 1990s. While falling interest rates could have benefited all economies, US style housing markets proved better at translating disinflation into new aggregate demand. This situation consolidates voter preferences around a continued low inflation environment, continuation of US financial arbitrage, and maintenance of high housing prices.

Item Type: Article
Additional Information: This is a post-peer-review, pre-copyedit version of an article published in Comparative European Politics. The definitive publisher-authenticated version of Schwartz, H. (2008) Housing, Global Finance and American Hegemony: Building Conservative Politics One Brick at a Time, Comparative European Politics, 6, 262-284 is available online at: http://dx.doi.org/10.1057/cep.2008.11.
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
J Political Science > JK Political institutions (United States)
Divisions: School of Social Sciences > Department of International Politics
URI: http://openaccess.city.ac.uk/id/eprint/3903

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