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The Formation of House Price Expectations in Canada: Evidence from a Randomized Information Experiment

Author

Listed:
  • Marc-André Gosselin
  • Mikael Khan
  • Matthieu Verstraete

Abstract

We conduct a randomized information experiment leveraging the Canadian Survey of Consumer Expectations. We provide causal evidence that respondents revise both their short and medium term expectations of future house price growth in a way that is consistent with observed short-term momentum in house prices. However, empirically, house price growth tends to revert to its mean in the medium term.

Suggested Citation

  • Marc-André Gosselin & Mikael Khan & Matthieu Verstraete, 2019. "The Formation of House Price Expectations in Canada: Evidence from a Randomized Information Experiment," Staff Analytical Notes 2019-24, Bank of Canada.
    • Handle: RePEc:bca:bocsan:19-24
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    File URL: https://www.bankofcanada.ca/2019/08/staff-analytical-note-2019-24/
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    More about this item

    Keywords

    Financial stability; Housing;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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