Housing Boom and Bust Cycles
This paper describes a quantitative model developed to understand the key determinats of house prices boom-and-bust cycles. The key driving forces behind the boom are residential investment, immigration, current account deficits, relaxation of downpayment constraints, and the elimination of land regulation. Housing supply is comprised by the stock of housing and new construction. The baseline economy considers the housing boom in Spain because its peak surpased the magnitude in the United States by 15 percent. A calibrated version of the model for the Spanish economy replicates the pre-boom aggregates. The model predicts that a change in observed fundamentals can rationalize at least 84 percent of the recent boom in the value of housing capital. Without large current account deficits and demographic changes the size of the housing boom should have been much smaller. With respect to the housing bust, the model suggests that the combination of increasing mortgage rates, unemployment, and low productivity can have large effects in the value of housing capital. Some conservative predictions quantify adjustments that range between 24 and 29 percent. The paper explores the boom-bust cycles in other economies such as the United States and Japan.
|Date of creation:||2010|
|Contact details of provider:|| Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/
More information through EDIRC
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.:
- Libertad Gonzalez & Francesc Ortega, 2013.
"Immigration And Housing Booms: Evidence From Spain,"
Journal of Regional Science,
Wiley Blackwell, vol. 53(1), pages 37-59, 02.
- Libertad Gonzalez & Francesc Ortega, 2009. "Immigration and Housing Booms: Evidence from Spain," CReAM Discussion Paper Series 0919, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Gonzalez, Libertad & Ortega, Francesc, 2009. "Immigration and Housing Booms: Evidence from Spain," IZA Discussion Papers 4333, Institute for the Study of Labor (IZA).
- Libertad González Luna & Francesc Ortega, 2009. "Immigration and housing booms: Evidence from Spain," Economics Working Papers 1167, Department of Economics and Business, Universitat Pompeu Fabra.
- Rosen, Harvey S & Rosen, Kenneth T, 1980. "Federal Taxes and Homeownership: Evidence from Time Series," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 59-75, February.
- Gervais, Martin, 2002. "Housing taxation and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 49(7), pages 1461-1489, October.
- Martin Gervais, 1998. "Housing Taxation and Capital Accumulation," UWO Department of Economics Working Papers 9807, University of Western Ontario, Department of Economics.
- Nobuhiro Kiyotaki & Alexander Michaelides & Kalin Nikolov, 2011. "Winners and Losers in Housing Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 255-296, 03.
- Nobuhiro Kiyotaki & Alexander Michaelides & Kalin Nikolov, 2007. " Winners and Losers in Housing Markets," CDMA Conference Paper Series 0705, Centre for Dynamic Macroeconomic Analysis.
- Kiyotaki, Nobuhiro & Michaelides, Alexander & Nikolov, Kalin, 2010. "Winners and Losers in Housing Markets," CEPR Discussion Papers 7953, C.E.P.R. Discussion Papers.
- Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2009. "Accounting For Changes In The Homeownership Rate," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(3), pages 677-726, 08.
- Yoshiro Miwa & Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2004. "Accounting for Changes in the Homeownership Rate," CIRJE F-Series CIRJE-F-312, CIRJE, Faculty of Economics, University of Tokyo.
- Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2007. "Accounting for changes in the homeownership rate," FRB Atlanta Working Paper 2007-21, Federal Reserve Bank of Atlanta.
- Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2007. "Accounting for changes in the homeownership rate," Working Papers 2007-034, Federal Reserve Bank of St. Louis.
- Matthew Chambers & Carlos Garriga, 2005. "Accounting for Changes in the Homeownership Rate," Computing in Economics and Finance 2005 304, Society for Computational Economics.
- Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 2005. "Metropolitan-Specific Estimates of the Price Elasticity of Supply of Housing, and Their Sources," American Economic Review, American Economic Association, vol. 95(2), pages 334-339, May.
- Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 1999. "Metropolitan-Specific Estimates of the Price Elasticity of Supply of Housing, and Their Sources," Wisconsin-Madison CULER working papers 99-16, University of Wisconsin Center for Urban Land Economic Research.
- Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
- N. Gregory Mankiw & David N. Weil, 1988. "The Baby Boom, The Baby Bust, and the Housing Market," NBER Working Papers 2794, National Bureau of Economic Research, Inc.
- Stijn Van Nieuwerburgh & Pierre-Olivier Weill, 2010. "Why Has House Price Dispersion Gone Up?," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1567-1606.
- Stijn Van Nieuwerburgh & Pierre-Olivier Weill, 2006. "Why Has House Price Dispersion Gone Up?," NBER Working Papers 12538, National Bureau of Economic Research, Inc.
- Chambers, Matthew & Garriga, Carlos & Schlagenhauf, Don E., 2009. "Housing policy and the progressivity of income taxation," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1116-1134, November.
- Uriel Jiménez Ezequiel (ed.), 2009. "El stock de capital en viviendas en España y su distribución territorial (1990-2007)," Books, Fundacion BBVA / BBVA Foundation, edition 0, number 201194. Full references (including those not matched with items on IDEAS)