Advanced Search
MyIDEAS: Login

Kaldorian boom-bust cycles in the housing market

Contents:

Author Info

  • Ingo Barens

    (Darmstadt University of Technology)

  • Peter Flaschel

    (Bielefeld University)

  • Florian Hartmann

    ()
    (University of Osnabrück)

  • Andreas Röthig

    (Darmstadt University of Technology)

Abstract

We show that the Kaldor (1940) trade cycle mechanism can be meaningfully applied to the market for residential housing space, since the demand for houses may be positively related to the housing price in a mid-range price domain, while it is downward sloping for house prices sufficiently small as well as sufficiently large. Confronted with the current supply of houses this gives rise to multiple equilibria. Then the employed nonlinear house demand schedule is coupled with backward-looking house price expectations and a planar dynamics is obtained with the same range of model-consistent expectations equilibria as in the partial situation studied beforehand. The model however is not dependent on the backward oriented expectation scheme, but also applies to the case of myopic perfect foresight. The nonlinear demand function for houses in connection with changes in the housing stock initiates sudden reversals from booms into busts and vice versa, which from a mathematical point of view give locally rise to fold catastrophes at the bifurcation points, with the dynamics being described by relaxation oscillations from the global perspective.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.elgaronline.com/view/journals/ejeep/7-2/ejeep.2010.02.11.xml
Download Restriction: no

Bibliographic Info

Article provided by Edward Elgar in its journal Intervention.

Volume (Year): 7 (2010)
Issue (Month): 2 ()
Pages: 361-375

as in new window
Handle: RePEc:elg:ejeepi:v:7:y:2010:i:2:p361-375

Contact details of provider:
Web page: http://www.elgaronline.com/ejeep

Related research

Keywords: Kaldorian trade cycles; boom-bust cycles; housing markets; relaxation oscillations;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:elg:ejeepi:v:7:y:2010:i:2:p361-375. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Emily Milsom).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.