International capital flows and expectation-driven boom-bust cycles in the housing market

Hajime Tomura*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)


This paper analyzes the roles of credit market conditions in endogenous formation of housing-market boom-bust cycles in a business cycle model. When households are uncertain about the duration of a temporary high income growth period, expected future house prices rise during the high growth period and fall at the end of the period. But this development causes expectation-driven boom-bust cycles in current house prices only if the economy is open to international capital flows. It is also shown that high maximum loan-to-value ratios for residential mortgages per se do not cause boom-bust cycles without international capital flows in the model.

Original languageEnglish
Pages (from-to)1993-2009
Number of pages17
JournalJournal of Economic Dynamics and Control
Issue number10
Publication statusPublished - 2010 Oct 1
Externally publishedYes


  • Boom-bust cycles
  • Credit market frictions
  • Financial liberalization
  • House prices
  • Informational overshooting

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


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