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The real estate cycle and the economy: consequences of the Massachusetts boom of 1984-87

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  • Karl E. Case

Abstract

The economy of Massachusetts is in a deep recession. What makes the downturn all the more painful is that it comes on the heels of a period of unprecedented prosperity. What happened? How could a state go from having the lowest unemployment rate in the United States to having the second highest in the space of less than four years? ; Some claim that the current recession is a natural and inevitable downturn after a prolonged expansion and that the region soon will return to a reasonable growth path. Others claim that the state is likely to experience a prolonged period of decline. The thesis of this article is that the dramatic real estate cycle, which began with a housing price boom between 1984 and 1987, was an important element that not only contributed to but also very significantly amplified the economic fortunes and misfortunes of the Commonwealth and the region.

Suggested Citation

  • Karl E. Case, 1991. "The real estate cycle and the economy: consequences of the Massachusetts boom of 1984-87," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 37-46.
    • Handle: RePEc:fip:fedbne:y:1991:i:sep:p:37-46
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    Cited by:

    1. Vighneswara Swamy, 2019. "Wealth Effects and Macroeconomic Dynamics," Economics Bulletin, AccessEcon, vol. 39(3), pages 1755-1773.
    2. Xie, Zixiong & Chen, Shyh-Wei & Wu, An-Chi, 2019. "Asymmetric adjustment, non-linearity and housing price bubbles: New international evidence," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    3. Case, Karl E. & Mayer, Christopher J., 1996. "Housing price dynamics within a metropolitan area," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 387-407, June.
    4. Tom Nicholas & Anna Scherbina, 2013. "Real Estate Prices During the Roaring Twenties and the Great Depression," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 41(2), pages 278-309, June.
    5. Swamy, Vighneswara, 2017. "Wealth Effects and Macroeconomic Dynamics – Evidence from Indian Economy," MPRA Paper 76836, University Library of Munich, Germany.
    6. Lisa Morris Grobar, 1996. "Comparing The New England And Southern California Regional Recessions," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 71-84, July.
    7. Benoit Faye & Éric Le Fur, 2010. "L'étude du lien entre cycle et saisonnalité sur un marché immobilier résidentiel. Le cas de l'habitat ancien à Bordeaux," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(5), pages 937-965.
    8. Shi, Shuping, 2017. "Speculative bubbles or market fundamentals? An investigation of US regional housing markets," Economic Modelling, Elsevier, vol. 66(C), pages 101-111.

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