Understanding booms and busts in housing markets

dc.contributor.author

Burnside, C

dc.contributor.author

Eichenbaum, M

dc.contributor.author

Rebelo, S

dc.date.accessioned

2015-08-31T11:33:49Z

dc.date.issued

2016-08-01

dc.description.abstract

© 2016 by The University of Chicago. All rights reserved.Some booms in housing prices are followed by busts. Others are not. It is generally difficult to find observable fundamentals that are useful for predicting whether a boom will turn into a bust or not. We develop a model consistent with these observations. Agents have heterogeneous expectations about long-run fundamentals but change their views because of “social dynamics.” Agents with tighter priors are more likely to convert others to their beliefs. Boom-bust episodes typically occur when skeptical agents happen to be correct. The booms that are not followed by busts typically occur when optimistic agents happen to be correct.

dc.identifier.eissn

1537-534X

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0022-3808

dc.identifier.uri

https://hdl.handle.net/10161/10440

dc.publisher

University of Chicago Press

dc.relation.ispartof

Journal of Political Economy

dc.title

Understanding booms and busts in housing markets

dc.type

Journal article

pubs.begin-page

1088

pubs.end-page

1147

pubs.issue

4

pubs.organisational-group

Duke

pubs.organisational-group

Economics

pubs.organisational-group

Trinity College of Arts & Sciences

pubs.publication-status

Published

pubs.volume

124

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