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Boom and Burst in Housing Market with Heterogeneous Agents

Author

Listed:
  • Alessandro Spelta

    (Department of Economics and Business, University of Pavia)

  • Guido Ascari

    (Department of Economics and Business, University of Pavia)

  • Nicolò Pecora

    (Catholic university of Piacenza)

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.

Suggested Citation

  • Alessandro Spelta & Guido Ascari & Nicolò Pecora, 2012. "Boom and Burst in Housing Market with Heterogeneous Agents," Quaderni di Dipartimento 177, University of Pavia, Department of Economics and Quantitative Methods.
    • Handle: RePEc:pav:wpaper:177
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    References listed on IDEAS

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    Cited by:

    1. Calvert Jump, Robert & Hommes, Cars & Levine, Paul, 2019. "Learning, heterogeneity, and complexity in the New Keynesian model," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 446-470.
    2. Cars Hommes & Robert Calvert Jump & Paul Levine, 2017. "Internal rationalityuyuyuy, heterogeneity and complexity in the New Keynesian model," Working Papers 20171706, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    3. Nicolò Pecora & Alessandro Spelta, 2013. "Macroeconomic Stability and Heterogeneous Expectations," DEM Working Papers Series 037, University of Pavia, Department of Economics and Management.
    4. Alexey Vasilenko, 2017. "Should Monetary Authorities Prick Asset Price Bubbles? Evidence from a New Keynesian Model with an Agent-Based Financial Market," HSE Working papers WP BRP 182/EC/2017, National Research University Higher School of Economics.

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