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.

Heterogeneous expectations, boom-bust housing cycles, and supply conditions: A nonlinear economic dynamics approach / Dieci, Roberto; Westerhoff, Frank. - In: JOURNAL OF ECONOMIC DYNAMICS & CONTROL. - ISSN 0165-1889. - STAMPA. - 71:(2016), pp. 21-44. [10.1016/j.jedc.2016.07.011]

Heterogeneous expectations, boom-bust housing cycles, and supply conditions: A nonlinear economic dynamics approach

DIECI, ROBERTO;
2016

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.
2016
Heterogeneous expectations, boom-bust housing cycles, and supply conditions: A nonlinear economic dynamics approach / Dieci, Roberto; Westerhoff, Frank. - In: JOURNAL OF ECONOMIC DYNAMICS & CONTROL. - ISSN 0165-1889. - STAMPA. - 71:(2016), pp. 21-44. [10.1016/j.jedc.2016.07.011]
Dieci, Roberto; Westerhoff, Frank
File in questo prodotto:
File Dimensione Formato  
DWhousing_Revised_full.pdf

accesso aperto

Tipo: Postprint
Licenza: Licenza per Accesso Aperto. Creative Commons Attribuzione - Non commerciale - Non opere derivate (CCBYNCND)
Dimensione 3.36 MB
Formato Adobe PDF
3.36 MB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/589154
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 39
  • ???jsp.display-item.citation.isi??? 33
social impact