Working Papers N° 716: Private Information and the Mortgage Market: Evidence and a Theory of Crises

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Working Papers N° 716: Private Information and the Mortgage Market: Evidence and a Theory of Crises

Autor: Robert Shimer


Description

A growing body of evidence suggests that private information is important in the mortgage-backed securities market. Recent research reconsiders the theory of how investors trade in the presence of private information. This paper summarizes the evidence and uses the new theoretical approach to explain how trade in mortgage-backed securities can collapse during a crisis.

 
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