IDEAS home Printed from https://ideas.repec.org/p/uts/wpaper/97.html
   My bibliography  Save this paper

Towards Applied Disequilibrium Growth Theory: V Housing Investment Cycles, Private Debt Accumulation and Deflation

Author

Listed:

Abstract

In this paper we reconsider a general disequilibrium model of an applied orientation, exhibiting a detailed modelling of the private housing sector, which we have developed in a series of working papers starting from the Murphy model for the Australian economy. This modelling approach is complete with respect to budget equations and stock-flow interactions and can be reduced to a somewhat simplified 18D core model, the dynamics of which was intensively studied in the earlier work. In the present paper we modify this type of model towards the explicit consideration of debtor and creditor households which extends the dynamics of the core model by 1 to 19D by the addition of the dynamics of the debt to capital ratio of indebted households. Various subdynamics of these 19D dynamics are investigated theoretically and illustrated numerically. The basic findings are that there is convergence to the balanced growth path of the model for sluggish disequilibrium adjustment processes, that persistent investment cycles in the housing sector can be generated for certain higher adjustment speeds by way of Hopf-bifurcations in particular. Furthermore processes of debt deflation my trigger monotonic depressions that get more and more severe when the real debt of debtor households is systematically increased by deflationary spirals in the goods manufacturing sector in particular.

Suggested Citation

  • Carl Chiarella & Peter Flaschel, 2003. "Towards Applied Disequilibrium Growth Theory: V Housing Investment Cycles, Private Debt Accumulation and Deflation," Working Paper Series 97, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
  • Handle: RePEc:uts:wpaper:97
    as

    Download full text from publisher

    File URL: http://www.finance.uts.edu.au/research/wpapers/wp97.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gene M. Grossman (ed.), 1996. "Economic Growth," Books, Edward Elgar Publishing, volume 0, number 553.
    2. Chiarella,Carl & Flaschel,Peter, 2011. "The Dynamics of Keynesian Monetary Growth," Cambridge Books, Cambridge University Press, number 9780521180184, October.
    3. Gabriel, Stuart A. & Nothaft, Frank E., 2001. "Rental Housing Markets, the Incidence and Duration of Vacancy, and the Natural Vacancy Rate," Journal of Urban Economics, Elsevier, vol. 49(1), pages 121-149, January.
    4. Carl Chiarella & Peter Flaschel & Gangolf Groh & Carsten Köper & Willi Semmler, 1999. "Towards Applied Disequilibrium Growth Theory: VII Intensive Form and Steady State Calculation in the Case of Substitution," Working Paper Series 99, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    5. Carl Chiarella & Peter Flaschel, 1999. "Towards Applied Disequilibrium Growth Theory: II Intensive Form and Steady State Analysis of the Model," Working Paper Series 94, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    6. Robert Becker & Edwin Burmeister (ed.), 1990. "Growth Theory," Books, Edward Elgar Publishing, volume 0, number 534.
    7. Laxton, Douglas & Rose, David & Tambakis, Demosthenes, 1999. "The U.S. Phillips curve: The case for asymmetry," Journal of Economic Dynamics and Control, Elsevier, vol. 23(9-10), pages 1459-1485, September.
    8. Carl Chiarella & Peter Flaschel & Gangolf Groh & Carsten Köper & Willi Semmler, 1999. "Towards Applied Disequilibrium Growth Theory: VI Substitution, Money-Holdings, Wealth-Effects and Further Extensions," Working Paper Series 98, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    9. Carl Chiarella & Peter Flaschel & Willi Semmler, 2001. "The macrodynamics of debt deflation," Chapters,in: Financial Fragility and Investment in the Capitalist Economy, chapter 7 Edward Elgar Publishing.
    10. Carl Chiarella & Peter Flaschel, 1999. "Towards Applied Disequilibrium Growth Theory: I The Starting Model," Working Paper Series 93, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    11. Carl Chiarella & Peter Flaschel & Peiyuan Zhu, 2003. "Towards Applied Disequilibrium Growth Theory: IV Numerical Investigations of the Core 18D Model," Working Paper Series 96, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    12. Carl Chiarella & Peter Flaschel & Willi Semmler, 2000. "Price Flexibility and Debt Dynamics in a High Order AS-AD Model," Working Paper Series 109, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    13. Ray C. Fair, 2000. "Testing the NAIRU Model for the United States," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 64-71, February.
    14. Carl Chiarella & Peter Flaschel, 1999. "Towards Applied Disequilibrium Growth Theory: III Basic Partial Feedback Structures and Stability Issues," Working Paper Series 95, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    15. Rosen, Kenneth T & Smith, Lawrence B, 1983. "The Price-Adjustment Process for Rental Housing and the Natural Vacancy Rate," American Economic Review, American Economic Association, vol. 73(4), pages 779-786, September.
    16. Hendershott, Patric H., 1996. "Rental Adjustment and Valuation in Overbuilt Markets: Evidence from the Sydney Office Market," Journal of Urban Economics, Elsevier, vol. 39(1), pages 51-67, January.
    17. Donald A. Walker (ed.), 2000. "Equilibrium," Books, Edward Elgar Publishing, volume 0, number 1585.
    18. Shilling, James D. & Sirmans, C. F. & Corgel, John B., 1987. "Price adjustment process for rental office space," Journal of Urban Economics, Elsevier, vol. 22(1), pages 90-100, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carl Chiarella & Peter Flaschel & Gangolf Groh & Carsten Köper & Willi Semmler, 1999. "Towards Applied Disequilibrium Growth Theory: VII Intensive Form and Steady State Calculation in the Case of Substitution," Working Paper Series 99, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    2. Carl Chiarella & Peter Flaschel & Gangolf Groh & Carsten Köper & Willi Semmler, 1999. "Towards Applied Disequilibrium Growth Theory: VI Substitution, Money-Holdings, Wealth-Effects and Further Extensions," Working Paper Series 98, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    3. Carl Chiarella & Peter Flaschel, 1999. "Towards Applied Disequilibrium Growth Theory: II Intensive Form and Steady State Analysis of the Model," Working Paper Series 94, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    4. Carl Chiarella & Peter Flaschel, 1999. "Towards Applied Disequilibrium Growth Theory: I The Starting Model," Working Paper Series 93, Finance Discipline Group, UTS Business School, University of Technology, Sydney.

    More about this item

    Keywords

    structural macroeconomic models; housing; stability; investment cycles; debt accumulation; deflation;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:uts:wpaper:97. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Duncan Ford) or (Marina Grazioli). General contact details of provider: http://edirc.repec.org/data/sfutsau.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.