IDEAS home Printed from https://ideas.repec.org/p/keo/dpaper/dp2025-011.html
   My bibliography  Save this paper

Credit expansion and boom-bust cycle of housing prices

Author

Listed:
  • Masaya Sakuragawa

    (Faculty of Economics, Keio University)

  • Satoshi Tobe

    (School of Policy Studies, Kwansei Gakuin University)

Abstract

This paper empirically investigates if there is a causal relation from credit expansion to housing prices, using a data set of an unbalanced panel that covers 20 developed countries from 1980 to 2019, which includes many episodes of boom and bust of housing prices. The estimates based on the local projections with instrumental variables (LP-IV) show that an exogeneous increase in credit supply leads to a boom of housing prices at short horizons, and to a bust at longer horizons. The boom lasts for two and a quarter years, turns into a bust in three years after the initial shock, and then the bust lasts for three and a half years. Our results favor the Kindleberger–Minsky view that the combination of expectation errors and the credit-supply shock leads to financial crises. We also study the cumulative effects, differential effects of current account position, and effects of a longer credit expansion.

Suggested Citation

  • Masaya Sakuragawa & Satoshi Tobe, 2025. "Credit expansion and boom-bust cycle of housing prices," Keio-IES Discussion Paper Series DP2025-011, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:dp2025-011
    as

    Download full text from publisher

    File URL: https://ies.keio.ac.jp/upload/DPDP2025-011_EN.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:keo:dpaper:dp2025-011. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Institute for Economics Studies, Keio University (email available below). General contact details of provider: https://edirc.repec.org/data/iekeijp.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.