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Understanding Booms and Busts in Housing Markets / Craig Burnside, Martin Eichenbaum, Sergio Rebelo.
- Format:
- Book
- Author/Creator:
- Burnside, Craig.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16734.
- NBER working paper series no. w16734
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2011.
- Summary:
- Some booms in housing prices are followed by busts. Others are not. It is generally difficult to find observable fundamentals that are useful for predicting whether a boom will turn into a bust or not. We develop a model consistent with these observations. Agents have heterogeneous expectations about long-run fundamentals but change their views because of "social dynamics." Agents with tighter priors are more likely to convert others to their beliefs. Boom-bust episodes typically occur when skeptical agents happen to be correct. The booms that are not followed by busts typically occur when optimistic agents happen to be correct.
- Notes:
- Print version record
- January 2011.
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