PLE 535 Lecture Notes - Lecture 7: Financialization, Prime Rate, Subprime Lending
Document Summary
Micro (individuals & firms: neo classical economics, principles of supply and demand usually demand driven, very influential theory and ideology. Housing is an economic stimulus: go(cid:448)"t pu(cid:373)ps (cid:373)o(cid:374)e(cid:455) i(cid:374)to housi(cid:374)g as a(cid:374) i(cid:374)(cid:448)est(cid:373)e(cid:374)t to (cid:271)oost the e(cid:272)o(cid:374)o(cid:373)(cid:455) duri(cid:374)g a downturn. Housing starts: study of how much new housing has been built including predictions. An approach to economics that seeks to determine prices and outputs in markets through an analysis of supply and demand. Assumes that equilibrium will always been reached (kind of an ideal look at things). Assumes all individuals have agency, choice, and information. Focus: individuals demand firms supply. Individuals are rational actors who max utility: firms seek max profits, context: scarce resources individuals and firms have perfect knowledge. Household formulation: year to year change in number of private households, population growth (birth, death, net migration, household size, cultural shifts (preferences change over time, economic factors (e. g. employment changes) Interest rates, mortgage availability: employment, income, economic growth.