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:
- 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, 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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0803, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
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