Regulating speculative housing markets via public housing construction programs: Insights from a heterogeneous agent model

Carolin Martin and Frank Westerhoff

No 135, BERG Working Paper Series from Bamberg University, Bamberg Economic Research Group

Abstract: Since the instability of housing markets may be quite harmful for the real economy, we explore whether public housing construction programs may tame housing market fluctuations. As a workhorse, we use a behavioral stock-flow housing market model in which the complex interplay between speculative and real forces triggers realistic housing market dynamics. Simulations reveal that plausible and well-intended policy measures may turn out to be a mixed blessing. While public housing construction programs may reduce house prices, they seem to be incapable of bringing house prices much closer towards their fundamental values. In addition, these programs tend to drive out private housing constructions.

Keywords: housing markets; boom-bust dynamics; extrapolative and regressive expectations; heterogeneous agent model; policy experiments; public housing construction programs (search for similar items in EconPapers)
JEL-codes: D84 R21 R31 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cmp, nep-hme and nep-ure
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https://www.econstor.eu/bitstream/10419/179673/1/1024076563.pdf (application/pdf)

Related works:
Journal Article: Regulating Speculative Housing Markets via Public Housing Construction Programs: Insights from a Heterogeneous Agent Model (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bamber:135

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