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Article dans une revue Economic Theory Année : 2023

Rational housing demand bubble

Résumé

We provide a unified framework with demand for housing over the life cycle and financial frictions to analyze the existence and macroeconomic effects of rational housing bubbles. We distinguish a housing price bubble, defined as the difference between the housing market price and its fundamental value, from a housing demand bubble, which corresponds to a situation where a pure speculative housing demand exists. In an overlapping generation exchange economy, we show that no housing price bubble occurs. However, a housing demand bubble may occur, generating a boom in housing prices and a drop in the interest rate, when households face a binding borrowing constraint. The multiplicity of steady states and endogenous fluctuations can occur when credit market imperfections are moderate. These fluctuations involve transitions between equilibria with and without a housing demand bubble that generate large fluctuations in housing prices consistent with observed patterns. We finally extend the basic framework to a production economy and we show that a housing demand bubble increases housing prices, which can still be characterized by large fluctuations.
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Dates et versions

halshs-04120338, version 1 (13-12-2023)

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Lise Clain‐chamosset‐yvrard, Xavier Raurich, Thomas Seegmuller. Rational housing demand bubble. Economic Theory, In press, ⟨10.1007/s00199-023-01501-4⟩. ⟨halshs-04120338⟩
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