Ms Sevim Kosem

Ms Sevim Kosem

PhD Candidate in Economics

Department of Economics

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English, German, Greek, Turkish
Key Expertise
Macro Finance

About me

Job Market Placement
Research Economist, Bank of England

Research interests
Macro Finance (primary)
International Finance, Housing Economics (secondary)

Job market paper
Income Inequality, Mortgage Debt and House Prices  


Read the abstract and download the paper

The last three decades in the US have been characterized by two secular trends: rising income inequality and declining real interest rates. This paper studies macroeconomic and financial stability implications of increasing income inequality and discusses how a low interest rate environment can alter its consequences. I develop a parsimonious model of mortgage and housing markets. The framework departs from standard lending models with exogenous lending constraints by incorporating collateral into a strategic default model. The model predicts a decline in house prices and a rise in aggregate default risk in equilibrium following an increase in inequality. I then show that low real rates mitigate the depressing effect of inequality on house prices at the cost of amplifying aggregate default risk in the mortgage market. Using cross-sectional data from US states and counties, I show that model predictions are consistent with the data and I present three new stylized facts: a rise in income inequality is associated with (i) a decline in house prices, (ii) an increase in mortgage delinquencies and (iii) a decline in mortgage debt.

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Publications and additional papers

“Global Banks and International Transmission of Financial Shocks”

Abstract: This paper analyses the role of global banks in international transmission of shocks when countries have different domestic financial market structures. In particular, capital requirement faced by a global bank and the level of financial development, i.e. share of investments financed by bank lending, vary across countries. A positive productivity shock in one country brings about an increase in its GDP with negative international spillovers, dynamics of which are independent of the financial conditions in the country of the shock. In contrast, it has global implications whether the country that is hit by a financial shock is more financially developed than the other or not. A financial shock in the more financially developed economy leads to a more severe global downturn than a similar shock in the less financially developed economy. Moreover, how fast a country recovers from a financial crisis depends on its degree of financial development and the bank capital regulations: although GDP declines simultaneously in both countries, the recession lasts shorter in the country with lower financial development and lower bank capital requirement.


Placement Officer
Professor Mark Schankerman 

Dr Ethan Ilzetzki

Professor Wouter den Haan
Professor Ricardo Reis  

Contact information


Room number

Office Address
Department of Economics,
London School of Economics and Political Science,
Houghton Street, London WC2A 2AE