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Expectations-Driven Cycles in the Housing Market

Luisa Lambertini, Caterina Mendicino and Maria Teresa Punzi

Working Papers from Center for Fiscal Policy, Swiss Federal Institute of Technology Lausanne

Abstract: This paper analyzes housing market boom-bust cycles driven by changes in households' expectations. We explore the role of expectations on productivity and other shocks originating from the housing market, the credit market and the conduct of monetary policy. We find that expectations related to different sectors of the economy can generate booms in the housing market in accordance with empirical findings. Only expectations of future expansionary monetary policy that are not fulfilled can generate a macroeconomic recession. Regarding the credit market, increased access to credit generates boom-bust cycles only if it is expected to be reversed in the near future.

Keywords: boom-bust cycles; credit frictions; housing market (search for similar items in EconPapers)
JEL-codes: E32 E44 E52 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2010-01, Revised 2010-10
New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge, nep-mac and nep-ure
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Citations: View citations in EconPapers (15)

Downloads: (external link)
http://infoscience.epfl.ch/record/151490/files/CFP2010_01.pdf

Related works:
Journal Article: Expectations-driven cycles in the housing market (2017) Downloads
Working Paper: Expectations-Driven Cycles in the Housing Market (2012) Downloads
Working Paper: Expectations-driven cycles in the housing market (2010) Downloads
Working Paper: Expectations-Driven Cycles in the Housing Market (2010) Downloads
Working Paper: Expectations-Driven Cycles in the Housing Market (2010) Downloads
Working Paper: Expectations-Driven Cycles in the Housing Market (2010) Downloads
Working Paper: Expectation-Driven Cycles in the Housing Market (2010) Downloads
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