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Fundamentals for the Price of Housing in Uruguay

Author

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  • Jorge Ponce

    (Banco Central del Uruguay)

Abstract

This paper proposes a model of fundamentals for the price of housing. The model is calibrated with data from Uruguay. The main findings are: Real housing prices fluctuate more than justified by fundamen¬tals; the misalignment was statistically significant just before the 2002 crisis; a fall in fundamental prices anticipates the crisis; and, in the recent period fundamental prices follow a stable trend of positive growth while real housing prices fluctuate around it.

Suggested Citation

  • Jorge Ponce, 2015. "Fundamentals for the Price of Housing in Uruguay," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 175-201, July-Dece.
  • Handle: RePEc:cml:moneta:v:iii:y:2015:i:2:p:175-201
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    References listed on IDEAS

    as
    1. Aizenman, Joshua & Jinjarak, Yothin, 2009. "Current account patterns and national real estate markets," Journal of Urban Economics, Elsevier, vol. 66(2), pages 75-89, September.
    2. Christian Hott, 2007. "Explaining house price fluctuations," Proceedings 1055, Federal Reserve Bank of Chicago.
    3. Jinjarak, Yothin & Sheffrin, Steven M., 2011. "Causality, real estate prices, and the current account," Journal of Macroeconomics, Elsevier, vol. 33(2), pages 233-246, June.
    4. Hideaki Hirata & M. Ayhan Kose & Christopher Otrok & Marco E Terrones, 2013. "Global House Price Fluctuations: Synchronization and Determinants," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 119-166.
    5. David Laibson & Johanna Mollerstrom, 2010. "Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis," Economic Journal, Royal Economic Society, vol. 120(544), pages 354-374, May.
    6. Jorge Ponce & Magdalena Tubio, 2013. "Precios de inmuebles. Aproximaciones metodológicas y aplicación empírica," Documentos de trabajo 2013005, Banco Central del Uruguay.
    7. University of Chicago & Pedro Gete, 2009. "Housing Markets and Current Account Dynamics," 2009 Meeting Papers 427, Society for Economic Dynamics.
    8. Alejandro Jara & Eduardo Olaberría, 2013. "Are all Capital Inflows Associated with Booms in House Prices? An Empirical Evaluation," Working Papers Central Bank of Chile 696, Central Bank of Chile.
    9. Jack Favilukis & David Kohn & Sydney C. Ludvigson & Stijn Van Nieuwerburgh, 2012. "International Capital Flows and House Prices: Theory and Evidence," NBER Chapters,in: Housing and the Financial Crisis, pages 235-299 National Bureau of Economic Research, Inc.
    10. Gete, Pedro, 2009. "Housing Markets and Current Account Dynamics," MPRA Paper 20957, University Library of Munich, Germany, revised 24 Feb 2010.
    11. Christian Hott & Terhi Jokipii, 2012. "Housing Bubbles and Interest Rates," Working Papers 2012-07, Swiss National Bank.
    12. Fernando Borraz & Gerardo Licandro & Jorge Ponce, 2012. "Precios de viviendas. una metodología para evaluar desvíos respecto a sus fundamentos," Documentos de trabajo 2012016, Banco Central del Uruguay.
    13. Soyoung Kim & Doo Yang, 2011. "The Impact of Capital Inflows on Asset Prices in Emerging Asian Economies: Is Too Much Money Chasing Too Little Good?," Open Economies Review, Springer, vol. 22(2), pages 293-315, April.
    14. Hiroyuki Taguchi, 2012. "Capital Inflows and Asset Prices: The Recent Evidence of Selected East Asian Economies," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(8), pages 902-920, December.
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    More about this item

    Keywords

    Price of housing; model of fundamentals; financial stability; Uruguay;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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