Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/210100 
Year of Publication: 
2016
Series/Report no.: 
Working Paper No. 11/2016
Publisher: 
Norges Bank, Oslo
Abstract: 
With the aid of econometric modeling, I investigate whether rapidly increasing house prices necessarily imply the existence of a bubble that will eventually burst. I consider four alternative econometric methods to construct indicators of housing market imbalances for the US, Finland and Norway. The four approaches are used to study if house prices in these countries in the 2000s can be explained by underlying economic fundamentals, or whether the developments are best characterized by bubble-dynamics. For the US, all measures unanimously suggest a bubble in the early to mid 2000s, whereas current US house prices are found to be aligned with economic fundamentals. Only one of the measures indicate imbalances in the Finnish housing market, while none of the measures suggest a bubble in Norway.
Subjects: 
cointegration
explosive roots
housing bubbles
JEL: 
C22
C32
C51
C52
C53
G01
R21
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-917-3
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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