A mechanism for booms and busts in housing prices

Marten Hillebrand, Tomoo Kikuchi

研究成果: Article査読

7 被引用数 (Scopus)

抄録

The paper studies the dynamics of housing prices in a pure exchange overlapping generations framework a la Samuelson (1958) and Gale (1973), which is extended to include housing as a utility-yielding durable good and a credit sector. We completely characterize the equilibrium dynamics, which alternates between an expansive regime where leveraged borrowing increases housing prices, and a contractive regime where these variables decrease. Regime switches occur due to small but persistent income changes giving rise to boom-bust cycles in housing prices. Price deviations from fundamentals are caused by leveraged borrowing, and turn out to be fully welfare-neutral.

本文言語English
ページ(範囲)204-217
ページ数14
ジャーナルJournal of Economic Dynamics and Control
51
DOI
出版ステータスPublished - 2015 2 1
外部発表はい

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics

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