 The Baby Boom, Housing and Loanable FundsJoyce Manchester Canadian Journal of Economics, 1989, vol. 22, issue 1, 128-49 Abstract: This paper examines baby boom effects in a simple three-period overlapping generations model in which equilibrium must be maintained in the housing market, as well as in the loanable funds market. All agents must buy a house financed by an adjustable-rate mortgage in the first period. Expectations regarding the path of interest rates and the price of housing play a crucial role in determining effects of the population bulge. Under static expectations, the rate of interest falls sharply at the appearance of the baby boom, while the price of housing increases. Behavior in the market for loanable funds explains this surprising result. When rational expectations are assumed, however, the rate of interest rises prior to, and during, the appearance of the baby boom and the price of housing increases as well. Welfare and long-term effects in the two scenarios do not differ markedly. Date: 1989 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:22:y:1989:i:1:p:128-49 Ordering information: This journal article can be ordered from Access Statistics for this article Canadian Journal of Economics is currently edited by Zhiqi Chen More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC. |
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