Sticky Rents and the Stability of Housing Cycles
AbstractThis paper presents a simple model of housing cycles in a two good economy. We establish that nonsubstitutability between housing services and other commodities along with high degree of heterogeneity in home ownership may lead to a stable spiral path converging to a steady-state equilibrium of rental price and housing stock. Key conditions for stability are a sufficiently sticky rent adjustment dynamics and a relatively rapid depreciation of per capita housing stock.
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Bibliographic InfoPaper provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its series Working Papers with number 0902.
Date of creation: 2009
Date of revision:
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Housing cycles; Sticky rents; Stability of equilibrium; Leontief utility;
Other versions of this item:
- Erdem Basci & Ismail Saglam, 2009. "Sticky Rents and the Stability of Housing Cycles," Working Papers, TOBB University of Economics and Technology, Department of Economics 0901, TOBB University of Economics and Technology, Department of Economics.
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-18 (All new papers)
- NEP-MAC-2009-04-18 (Macroeconomics)
- NEP-URE-2009-04-18 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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