Bulletin May 2008

IN THIS ISSUE...

Waiting for the bubble to burst
As the financial market instability caused by the sub-prime mortgage crisis in the United States continues to ripple through global markets, many experts have begun to ask whether central banks should have taken action earlier to 'lean against' rapid increases in property prices, instead of simply waiting for the bubble to burst. CEPR Researcher Stefan Gerlach and co-author Katrin Assenmacher-Wesche find, however, that raising interest rates to deflate a bubble would, in fact, be a very risky strategy.

Everybody needs good neighbours
Economists have long debated the secret of successful development, pondering whether there is a special policy recipe, a perfect set of institutions or an ideal climate for a country to take off. CEPR Researcher Thierry Mayer shows that proximity to other rich countries is a crucial component of economic development.

House prices and consumer spending
With the United States in the grip of a severe housing downturn, and property booms coming to an end in the United Kingdom, Spain and a number of other countries, an urgent public debate is underway about how badly falling house prices affect the wider economy. CEPR Researcher John Muellbauer argues that the answer depends on how easily credit is available within an economy, and how that has changed over time.

Novelas and the shrinking Brazilian family
Characters from popular television shows are well known to set trends in fashion, hair-styles and catch-phrases; but CEPR Researcher Eliana La Ferrara and her co-authors show that women in Brazil have also echoed the lifestyles of their heroines from the small screen when it comes to planning their families.