Professor Ross contributes to JPAM Point/Counterpoint on the Foreclosure Crisis

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In the spring issue of the Journal of Policy Analysis and Management, Professor Ross takes issue with the conventional wisdom that the foreclosure crisis has been driven by weak underwriting standards and risky mortgage products in the subprime market.  Professor Ross argues that the primary cause of the foreclosure crisis was the significant erosion of housing equity among U.S. homeowners in the period leading up to the crisis, which exposed large numbers of homeowners to significant risk of negative equity from even small to moderate declines in housing prices.  For example, he notes that in early 2007 well before the financial crisis stuck foreclosure began to rise in all segments of the mortgage market, not just in the subprime sector.  The timing of this increase immediately follows declines in housing prices that began in the fourth quarter of 2006 and those foreclosures were overwhelming among households that had little equity in the home prior to those declines, regardless of their particular lender or mortgage product.  In light of this evidence, Professor Ross and his coauthors argue the most important policy response for preventing a future foreclosure crisis is to monitor and develop tools for managing aggregate homeowner leverage in the U.S. housing market.  This issue has been notably absent from the debate during and following the passage of the recent financial regulatory reform law. Professor Couch edits the Point/Counterpoint series.

For more information, please see the following website: http://onlinelibrary.wiley.com/doi/10.1002/pam.v30.2/issuetoc

Professor Couch Renews Research Contract with Social Security Administration

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Prof. Kenneth Couch has renewed his annual research contract with the Social Security Administration to conduct joint studies on Unexpected Lifecycle Events.  This work focuses on a variety of unexpected lifecycle events on short and long-term economic well being.  One line of research considers the impact of recessions on short and long-term economic well being along with preparedness for retirement.  Other topics, such as the impact of changes in family structure on economic well-being and preparedness for retirement, are also being examined as part of the research.  The contract allows Professor Couch to travel to Washington, DC regularly to work with researchers within the Social Security Administration on these projects.

CCEA provides economic analysis that justifies massive state investment in UConn Health Center & Dempsey Hospital

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On Tuesday, May 17, 2011, in the atrium of the University of Connecticut School of Medicine/Dentistry, Governor Malloy announced a $900 million investment to transform the Schools into an international leader in biomedical research, an investment that will generate more than nearly 3,000 construction jobs in the near term and 16,000 new jobs by 2037. Critically, the investment will generate sustained economic growth that delivers so much net new tax revenue to the state that the bonding is entirely self-financing–with a large revenue bonus for the state.  The Connecticut Center for Economic Analysis provided the dynamic (REMI) economic analysis on with the Governor relied.  Prof. Fred Carstensen, Director of CCEA, attended the event and provided both electronic and print media backup explanations of the details on the economic analysis.  The Center currently employs three department graduate students and two more are participating in its summer work.

CCEA releases new OUTLOOK

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Today (Friday, May 20) the Connecticut Center for Economic Analysis released its quarterly OUTLOOK, a forecast of Connecticut’s output and employment for the next ten quarters.  “Bucking Stiff Headwinds” is modestly more optimistic, but notes the array of downside risks for the state’s economy, everything from the ending of $6.3 billion in stimulus over the last two years to the anemic national recovery, European sovereign debt turmoil, and the difficulty of capturing jobs in the face of a globalized economy.

The CCEA Outllook: Bucking Stiff Headwinds, is available at http://ccea.uconn.edu/forecasts/CTOutlook_2011May.pdf

CCEA is directed by Prof. Fred Carstensen, and currently engages five graduate students in its studies.

Xiaoming Li defends dissertation and heads to Freddie Mac

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Xiaoming Li defended his PhD dissertation under the supervision of Prof. Ross on Monday, April 25, 2011.

Theoretical models and empirical analyses argue that mortgage underwriting is a dynamic process in which previous mortgage and housing market conditions affect current mortgage approvals. Neighborhoods likely differ in important ways and over important events or shocks that influence both housing prices and mortgage underwriting decisions. This potential endogeneity complicates the causal analyses and failure to control for neighborhood heterogeneity risks confounding spurious and true state dependence. Xiaoming’s dissertation attempts to examine the housing dynamics and distinguish between sources of time persistence on neighborhood mortgage underwriting. Specifically, Xiaoming extends traditional and recently developed dynamic panel data techniques for use of repeated, clustered cross-sectional individual mortgage applications linearly and nonlinearly, respectively.

Xiaoming now heads to Freddie Mac as a Credit & Prepayment Modeling, Senior. We wish him the best of luck!

Prof. Carstensen evaluates University of Maine’s School of Economics

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Last week, Prof. Fred Carstensen participated in the external evaluation of the School of Economics at the University of Maine.  The U.S.Department of Agricultural assembled the four member team, drawing on faculty from Boston University, Washington State University, Clark University, and UConn.  The team reviewed voluminous written materials, including an extensive self-study, and then spent two and half days in intensive interviews with all administrators who engaged with the SOE in any capacity as well as the senior administrators of the University. Friday morning the team delivered an oral summary of their draft report to the Provost and Vice Presidents, the Dean and Associate Deans, and the School faculty.

The School of Economics at the University of Maine, in the team’s judgement, is a remarkably highly productive department, engaged in a remarkably wide array of scholarship, with a very strong record in external funding.  The most notable were the three-year $1.8 million EDA grant to support a Knowledge Transfer Initiative, aimed to helping small and medium size businesses resolve critical challenges from technical production and design issues to marketing and personnel questions, and the five-year $20 million NSF grant (largest in University history) to support a comprehensive, state-wide Sustainable Communities initiative.  In both grants, SOE faculty have leading roles.  The School, with only seventeen faculty, supports a vigorous and nationally recognized Master’s program and participates in two multi-disciplinary doctoral programs.  Notably, each faculty member negotiates the distribution of their time between research and teaching; the merit evaluation then follows from that contracted work load.  Thus teaching varies from 3-3 loads down to 1-0, and, because of the balanced treatment of teaching and research, the SOE faculty enjoyed high morale and collegiality. And senior administrators look to SOE as a model for other departments and schools.

Members of the evaluation team all planned to bring elements of the SOE model back to their home universities.

Prof. Carstensen named Educator of the Year

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On Thursday, April 28, the Undergraduate Academic Affairs committee of the UConn Undergraduate Student Government hosted its annual banquet to recognize Professional Excellence in Education among staff, advisers, and faculty at the University. The Committee received 26 nominations for the three categories of awards; based on these nominations, the Committee selected Professor of Economics Fred Carsensen as the Academic Educator of the Year. The student nomination cited his innovative and
challenging class on Contemporary Economic Issues: Globalization, and in particular his use of a “real time” textbook, the Financial Times. Students appreciate his discusion of current events, peppering in anecdotes and personal advice along the way. He also offers his students a rare level of academic freedom. This style encourages creativity and imagination, and his
students are always grateful, even if at first intimidated as they are whet they describe as “the audience to an improv
performance.”

Prof. Couch to be promoted to Full Professor

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Professor Kenneth Couchis a labor economist whose work focuses on disadvantaged groups in the labor market and public policies to assist them. Among other topics, his work has examined disparities in pay and employment for women and minorities, the extent of economic mobility among different groups in society and the influence of the business cycle on the lives of workers. Couch is also known for his research on differences in labor markets in Europe relative to the United States. His work has been published in leading economic journals including the American Economic Review, the Review of Economics and Statistics, and the Journal of Labor Economics.

Reflecting his reputation as a leading researcher on issues of applied economic policy, Professor Couch is the Editor of the Methods for Policy Evaluation, Point/Counterpoint, and Professional Practice sections of the Journal of Policy Analysis and Management, the journal of the national Association for Public Policy Analysis and Management. He is also an Associate Editor of the Journal of Income Distribution. Couch currently holds a research contract with the Social Security Administration and is a Visiting Scholar at the San Francisco Federal Reserve Bank. In the past he has worked as a visiting professor at Cornell and Yale universities and leading public policy institutes including the American Enterprise Institute, the Institute for Research on Poverty, and the Urban Institute.

Prof. Furtado to be granted tenure

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Prof. Delia Furtado will start next academic year as a tenured Associated Professor of Economics.

Professor Furtado’s research to date has focused on immigration and ethnic assimilation. She has several well-cited papers on the economics of interethnic marriage, but has also worked on issues ranging from racial segregation to female labor force participation and fertility decisions. Her work has been published in Economic Inquiry, Journal of Population Economics, and the American Economic Review Papers and Proceedings. Through her current fellowship at the Yale School of Public Health, she is moving into the area of immigrant health and specifically immigrant utilization of health-related public programs.

In addition to research, Prof. Furtado has been active in teaching labor economics at both the undergraduate and PhD levels at UConn. She is also a Research Fellow at the Institute for the Study of Labor (IZA) in Bonn, Germany.

Jonathan Gruber Speaks on Health Care Reform

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Professor Jonathan Gruber from MIT recently spoke to a standing-room only crowd in Konover Auditorium about health care reform in the U.S.  Speaking at the 2nd annual Philip E. Austin Forum on the Economics of Public Policy on “Health-Care Reform in the U.S.: What Happened and Where Do We Go Now?”, Gruber described his experience with health care reform in Massachusetts.  Gruber was a key architect of the Massachusetts program.  He described Massachusetts’ “three-legged stool” approach to ensuring adequate health care coverage, which includes (1) insurance market reforms (to prohibit exclusions or pricing based on health status), (2) a mandate that individuals buy insurance (or pay a penalty for not doing so), and (3) subsidies to help low-income individuals comply with the mandate.

Gruber then compared the Massachusetts experience to the experience of federal health care reform embodied in the Obama-led Affordable Care Act.  He noted that, while the federal reform is based on the same three-legged stool approach used in Massachusetts, it is more ambitious (and hence challenging).  Unlike the Massachusetts reform, the federal program had to find new sources of money to fund the subsidies required to ensure access to insurance for low income individuals.  In addition, the federal reform sought to bring down rising health care costs, which was not a primary goal of the reforms in Massachusetts.  Gruber went on to discuss the challenges currently facing the implementation of the federal reform.  

Professor Gruber is a leading expert on the economics of health care.  He has published extensively on this topic and has served as an advisor on health care reform at both the state and federal level.  The Austin Forum is designed to bring experts such as Professor Gruber to UConn to discuss important, contemporary public policy issues from an economic perspective, and to honor the legacy of President Phil Austin, who served as President of the University from 1996-2007 and is currently serving as Interim President.