Systemic Stability of Housing and Mortgage Market: From the observable to the unobservable

MPRA Paper from University Library of Munich, Germany

Abstract: Motivated by the revealed preference approach to consumer theory, this study constructs a dynamic theoretical model which infers the unobservable household behavior from the observable patterns of housing and mortgage market activities. The model emphasizes the role of asymmetric responses of sellers in different phases of a housing market cycle in generating certain price and volume patterns. Such role has so far largely been ignored in both theoretical and empirical studies of housing markets. The model also establishes, theoretically, multiple channels via which housing and mortgage markets interact and via which speculative forces are propagated. In addition, it generates a testable result regarding the stability of the system formed by the two markets, which may be extended by endogenizing some important policy instruments.

Keywords: systemic stability; speculation; asymmetric seller response; feedback loop (search for similar items in EconPapers)
JEL-codes: D53 D82 D84 E32 G01 R21 R31 (search for similar items in EconPapers)
Date: 2010-07-06
New Economics Papers: this item is included in nep-ure
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https://mpra.ub.uni-muenchen.de/24371/1/MPRA_paper_24371.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:23708

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