Template-Type: ReDIF-Paper 1.0
Author-Name: Luisa Lambertini 
Author-X-Name-First: Luisa
Author-X-Name-Last: Lambertini
Author-Email: luisa.lambertini@epfl.ch
Author-Workplace-Name: Chair of International Finance, Ecole Polytechnique Federale de Lausanne (EPFL), Switzerland
Author-Name: Caterina Mendicino
Author-X-Name-First: Caterina
Author-X-Name-Last: Mendicino
Author-Name: Maria Teresa Punzi
Author-X-Name-First: Maria Teresa
Author-X-Name-Last: Punzi
Title: Expectations-Driven Cycles in the Housing Market
Abstract: This paper analyzes housing market boom-bust cycles driven by changes in households' expectations. We explore the role of expectations on productivity and other shocks originating from the housing market, the credit market and the conduct of monetary policy. We find that expectations related to different sectors of the economy can generate booms in the housing market in accordance with empirical findings. Only expectations of future expansionary monetary policy that are not fulfilled can generate a macroeconomic recession. Regarding the credit market, increased access to credit generates boom-bust cycles only if it is expected to be reversed in the near future.
Length: 64 pages		
Creation-Date: 2010-01
Revision-Date:2010-10
Publication-Status: 
File-URL: http://infoscience.epfl.ch/record/151490/files/CFP2010_01.pdf
Number:
Classification-JEL: E32, E44, E52
Keywords: boom-bust cycles, credit frictions, housing market
Handle: RePEc:cif:wpaper:201001