Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/148065 
Authors: 
Year of Publication: 
2016
Series/Report no.: 
FinMaP-Working Paper No. 66
Publisher: 
Kiel University, FinMaP - Financial Distortions and Macroeconomic Performance, Kiel
Abstract: 
This paper investigates the U.S. housing price dynamics from the perspective of speculative trading, in addition to the macro-finance factors such as the stock market, household disposable income and nominal interest rate. It is found that among the speculative investors, fundamental traders drive house price away from the fundamental value. Their trading is weakened in the regime of high nominal interest rate and their behavior even changes to push the price towards the fundamental value when price deviation is large. A second type of speculative traders is momentum traders who believe that the trend of the recent price movement would be persistent. Stock market has a positive effect on the house price. The positive effect of household income becomes pronounced when nominal interest rate is high. When the nominal interest rate is high, house price faces a negative effect from the nominal interest rate and the positive effect of inflation disappears. Among all the factors, speculative trading is the largest market force driving the U.S. housing market which exhibits self-correction in the long run.
Subjects: 
Speculative trading
U.S. housing market
Wealth effect
Money illusion effect
JEL: 
C2
C5
R2
D1
Document Type: 
Working Paper

Files in This Item:
File
Size
554.96 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.