Testing the Global Banking Glut Hypothesis

Maria Teresa Punzi, Karlo Kauko

Publication: Working/Discussion PaperWU Working Paper

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Abstract

This paper presents VAR results on the recent economic history of the U.S and focuses on the dependence of U.S. macrofinancial variables on international capital flows.
Both gross and net flows are included in the analysis. The results indicate that cross-border funding has affected the build-up in the U.S. housing market irrespective of how these flows are defined and measured. Both the savings glut hypothesis and the banking glut hypothesis are supported by these findings. However, net banking flows appear to explain the higher volatility in the increase in house prices as well as the mortgage loan boom. (authors' abstract)
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 1 Mar 2015

Publication series

NameDepartment of Economics Working Paper Series
No.194

WU Working Paper Series

  • Department of Economics Working Paper Series

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