Economic Quarterly

July 7, 2011

Richmond Fed's Economic Quarterly Focuses on Housing

Richmond, Va.

In this housing-themed issue of Economic Quarterly, Sonya Ravindranath Waddell, Anne Davlin, and Edward Simpson Prescott of the Richmond Fed explore the role of house prices and labor market conditions in mortgage default. The authors focus their research on default rates in the Fifth District, looking in particular at Prince William County, Va., and Charlotte, N.C. Using a simple model of MSA fixed effects to examine variation in foreclosure rates, they find that declining house prices are a key factor in escalating subprime and prime foreclosure rates. The analysis explores how default rates vary among localities, revealing that the decision to default depends not only on national and statewide factors, but also on local conditions.

You can find the full text of this article and others in the latest issue of Economic Quarterly at:

Also in the First Quarter 2011 issue:

  • Housing and the Great Recession: A VAR Accounting Exercise by Samuel E. Henly and Alexander L. Wolman
  • Optimal Contracts for Housing Services Purchases by Borys Grochulski
  • Mortgage Reform and the Countercyclical Role of the Federal Housing Administration's Mortgage Mutual Insurance Fund by Brent C Smith

The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. For free copies or more information, contact the Federal Reserve Bank of Richmond's Research Department—Publications at 800.322.0565 or visit

The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.


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