Boom and Burst in Housing Market with Heterogeneous Agents

Alessandro Spelta (), Guido Ascari and Nicolò Pecora ()
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Alessandro Spelta: Department of Economics and Business, University of Pavia
Nicolò Pecora: Catholic university of Piacenza

No 177, Quaderni di Dipartimento from University of Pavia, Department of Economics and Quantitative Methods

Abstract: We study the housing market using a partial “dis”-equilibrium model in which the rational expectations hypothesis is relaxed in favor of an agent-based approach. The chartist-fundamentalist mechanism allows for the behavioral foundation of the expectations, the endogenous development of bubbles and contributes to replicate the recent house price dynamics. We also analyze the role of the interest rate during the boom and, anchoring the interest rate to the change in house price, we investigate the possibility to reduce the volatility and the distortion in the price dynamics.

Pages: 28 pages
Date: 2012-05
New Economics Papers: this item is included in nep-mac and nep-ure
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Citations: View citations in EconPapers (5)

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