Expectations-Driven Cycles in the Housing Market

Caterina Mendicino, Luisa Lambertini and Maria Teresa Punzi

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes housing market boom-bust cycles driven by changes in households'expectations. We explore the role of expectations not only on productivity but on several other shocks that originate in the housing market, the credit market and the conduct of monetary policy. We find that, in the presence of nominal rigidities, expectations on both the conduct of monetary policy and future productivity can generate housing market boom-bust cycles in accordance with the empirical findings. Moreover, expectations of either a future reduction in the policy rate or a temporary increase in the central bank's inflation target that are not fulfilled generate a macroeconomic recession. Increased access to credit generates a boom-bust cycle in most variables only if it is expected to be reversed in the near future.

Keywords: Credit Frictions; Boom-Bust Cycles; News Shocks; Housing Prices. (search for similar items in EconPapers)
JEL-codes: E32 E44 E52 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/20776/1/MPRA_paper_20776.pdf original version (application/pdf)

Related works:
Journal Article: Expectations-driven cycles in the housing market (2017)
Working Paper: Expectations-Driven Cycles in the Housing Market (2012)
Working Paper: Expectations-driven cycles in the housing market (2010)
Working Paper: Expectations-Driven Cycles in the Housing Market (2010)
Working Paper: Expectations-Driven Cycles in the Housing Market (2010)
Working Paper: Expectations-Driven Cycles in the Housing Market (2010)
Working Paper: Expectation-Driven Cycles in the Housing Market (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:20776

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().