Journal Article

Discussion of ‘Financial innovation and European housing and mortgage markets’, by David Miles and Vladimir Pillonca

Patrick Honohan

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 24, issue 1, pages 176-179
Published in print January 2008 | ISSN: 0266-903X
Published online January 2008 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grn007
Discussion of ‘Financial innovation and European housing and mortgage markets’, by David Miles and Vladimir Pillonca

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Although their paper stresses the potential merits of a particular financial innovation—a form of shared-ownership indexed contract—Miles and Pillonca surprisingly neglect the role of differential surges of financial innovation in explaining cross-country differences in house-price inflation. The risk-reducing potential of their favoured instrument deserves further analysis, not least because of the sizeable political risk involved: the experience of several other countries that have used indexed mortgage contracts shows their limited robustness to macroeconomic shocks.

Keywords: housing finance; indexation; D14; E44; G21; R21

Journal Article.  1825 words.  Illustrated.

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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