Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110367
Authors: 
Dieci, Roberto
Westerhoff, Frank
Year of Publication: 
2015
Series/Report no.: 
BERG Working Paper Series 99
Abstract: 
We combine a standard stock-flow housing market model, incorporating explicit relationships between house prices, the housing stock, and the rent level, with a parsimonious expectation formation scheme of housing market investors, reflecting an evolving mix of extrapolative and regressive expectation rules. The model results in a two-dimensional discrete-time nonlinear dynamical system. Based on realistic parameters, the model is able to generate endogenous boom-bust housing market dynamics with lasting periods of overvaluation and overbuilding. We thus exploit our model to investigate how real forces, in particular supply conditions, interact with expectations-driven housing market fluctuations.
Subjects: 
Housing markets
Speculation
Housing supply
Boom-bust cycles
Nonlinear dynamics
JEL: 
D84
R21
R31
ISBN: 
978-3-943153-16-3
Document Type: 
Working Paper

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