Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/214657
Authors: 
Martin, Carolin
Schmitt, Noemi
Westerhoff, Frank H.
Year of Publication: 
2020
Series/Report no.: 
BERG Working Paper Series 156
Abstract: 
We integrate a plausible expectation formation and learning scheme of boundedly rational investors into a standard user cost housing market model, involving a rental and a housing capital market. In particular, investors switch between heterogeneous expectation rules according to an evolutionary fitness measure, given by the rules' past profitability. We analytically show that our housing market model may produce endogenous boom-bust dynamics. Furthermore, we demonstrate that policy makers may use our model as a tool to explore how different tax policies may affect the housing market's steady state, its stability and out-of-equilibrium behavior.
Subjects: 
housing markets
bubbles and crashes
heterogeneous expectations
bounded rationality and learning
tax policy
steady state and stability analysis
JEL: 
D84
H24
R31
ISBN: 
978-3-943153-77-4
Document Type: 
Working Paper

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