Understanding booms and busts in housing markets
By: Craig Burnside, Martin Eichenbaum, Sergio Rebelo
Contributors: Eichenbaum, Martin S.; Rebelo, Sergio; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16734; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16734.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "Some booms in housing prices are followed by busts.  Others are not.  In either case it is difficult to find observable fundamentals that are correlated with price movements.  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 meet randomly.  Those with tighter priors are more likely to convert others to their beliefs.  The model generates a "fad": the fraction of the population with a particular view rises and then falls.  Depending on which agent is correct about fundamentals, these fads generate boom-busts or protracted booms"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 4/28/2011.

Includes bibliographical references.

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