We develop a simple model of a speculative housing market in which the demand for houses is influenced by expectations about future housing prices. Guided by empirical evidence, agents rely on extrapolative and regressive forecasting rules to form their expectations. The relative importance of these competing views evolves over time, subject to market circumstances. As it turns out, the dynamics of our model is driven by a two-dimensional nonlinear map which may display irregular boom and bust housing price cycles, as repeatedly observed in many actual markets. Complex interactions between real and speculative forces play a key role in such dynamic developments.
A simple model of a speculative housing market / R. Dieci; F. Westerhoff. - In: JOURNAL OF EVOLUTIONARY ECONOMICS. - ISSN 0936-9937. - STAMPA. - 22:(2012), pp. 303-329. [10.1007/s00191-011-0259-8]
A simple model of a speculative housing market
DIECI, ROBERTO;
2012
Abstract
We develop a simple model of a speculative housing market in which the demand for houses is influenced by expectations about future housing prices. Guided by empirical evidence, agents rely on extrapolative and regressive forecasting rules to form their expectations. The relative importance of these competing views evolves over time, subject to market circumstances. As it turns out, the dynamics of our model is driven by a two-dimensional nonlinear map which may display irregular boom and bust housing price cycles, as repeatedly observed in many actual markets. Complex interactions between real and speculative forces play a key role in such dynamic developments.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
