Only a select few can create a phenomenon that affects the lives of millions and then write a research paper about it.

In this case, the phenomenon is the housing boom (or bubble), and the “few” is actually just one: former Federal Reserve chairman Alan Greenspan.

In the aftermath of the technology bust of the late 1990s and the September 11, 2001, terrorist attacks, the Maestro, as Greenspan is known by his fans, brought interest rates to historic lows. This in turn sent home prices through the roof and gave the entire real estate industry a boost.

Altogether, housing activity added 0.5 percentage points to economic growth in both 2004 and 2005, years in which the U.S. economy grew 3.9 percent and 3.2 percent, respectively.

Now Greenspan and Fed economist James Kennedy have released a paper detailing how much cash homeowners have been able to extract from their properties since 1991 and what they spent it on.

This equity extraction was primarily achieved through three means: home sales, home-equity loans, and the refinancing of mortgages. These methods, the two economists find, helped consumers generate about $1 trillion in "free" cash per year from 2001 to 2005, more than triple the $300 billion average between 1991 and 2000.

And what did homeowners do with that money?

In 2005, the bulk of it—more than 60 percent—was spent on buying real estate or investing in other assets. About 23 percent of the cash was used to finance consumption, a category that encompasses most U.S. economic activity. Greenspan and Kennedy say that in recent years this wealth effect financed 3 percent of consumption, up from an average of 1.1 percent from 1991 to 2000.

As interest rates have climbed, the housing party has come to an end and economic growth has slowed. Construction of single-family homes and apartment buildings has fallen for six straight quarters. In 2006, the housing slowdown reduced economic activity by 0.75 percentage points to 3.3 percent, current Fed chairman Ben Bernanke said in February.

In their paper, Greenspan and Kennedy avoid the sticky subject of how hard the decline in equity extraction will hit consumer spending and overall economic growth. The latest numbers have not be reassuring. Last Friday, the government reported that the economy grew at a paltry 1.3 percent annualized rate in the first quarter. On Monday, the Commerce Department said consumer spending actually fell 0.2 percent in March after adjusting for increased gas prices. Meanwhile, critics have questioned Greenspan’s easy-money policy, charging that he merely replaced one bubble (tech stocks) with another (housing).

Greenspan's gamble was that consumers would hand off the baton to businesses in the economic relay race. But despite historically high profits, this has not materialized. In a speech last week, San Francisco Federal Reserve Bank President Janet Yellen said the current business investment environment is marked by "sluggishness."

Skeptics of Greenspan's policies might say he has heard the criticism loud and clear. In their paper, the researchers focus on describing the overall trend of equity extraction since 1991, even though most observers are primarily interested in its impact on the economy over the past five years. Other than appearing in some tables at the end of the paper, the duo mention this time period only once.