A report says that a very large number of commercial real estate loans are underwater, and commerical mortgage modification is on the horizon.
Undoubtably, that modification could be “means tested” in the sense that successful businesses would be ask to pay more, and means tests are expected to reduce economic activity. (On the other hand, commercial mortgages might be large enough that lenders could gather the necessary information about borrowers, without having to use borrower income as a proxy).
However, consumer spending and business investment seems to be too high right now to reflect an expectation of widespread layoffs in 2010 or 2011. That’s why I have concluded that labor is about close to the bottom now, and GDP has already hit bottom.
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Casey B. Mulligan is a Professor in the Department of Economics. Mulligan first joined the University of Chicago in 1991 as a graduate student, and received his Ph.D. in Economics from the University of Chicago in 1993.
He has also served as a Visiting Professor teaching public economics at Harvard University, Clemson University, and Irving B. Harris Graduate School of Public Policy Studies at the University of Chicago.
Mulligan is author of the 1997 book Parental Priorities and Economic Inequality, which studies economic models of, and statistical evidence on, the intergenerational transmission of economic status. His recent research is concerned with capital and labor taxation, with particular emphasis on tax incidence and positive theories of public policy. His recent work includes Market Responses to the Panic of 2008 (a book-in-process with Chicago graduate student Luke Threinen) and published articles such as “Selection, Investment, and Women’s Relative Wages,” “Deadweight Costs and the Size of Government,” “Do Democracies have Different Public Policies than Nondemocracies?,” “The Extent of the Market and the Supply of Regulation,” “What do Aggregate Consumption Euler Equations Say about the Capital Income Tax Burden?,” and “Public Policies as Specification Errors.” Mulligan has reported on some of these results in the Chicago Tribune, the Chicago Sun-Times, the Wall Street Journal, and the New York Times.
He is affiliated with a number of professional organizations, including the National Bureau of Economic Research, the George J. Stigler Center for the Study of the Economy and the State, and the Population Research Center. He is also the recipient of numerous awards and fellowships, including those from the National Science Foundation, the Alfred P. Sloan Foundation, the Smith- Richardson Foundation, and the John M. Olin Foundation.
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A report says that a very large number of commercial real estate loans are underwater, and commerical mortgage modification is on the horizon.
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