Expectations-Driven Cycles in the Housing Market
Luisa Lambertini
Authors registered in the RePEc Author Service: Maria Teresa Punzi and
Caterina Mendicino
Working Papers from Banco de Portugal, Economics and Research Department
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.
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
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Citations: View citations in EconPapers (11)
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https://www.bportugal.pt/sites/default/files/anexos/papers/wp201004.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) 
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w201004
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