Government-made house price bubbles?: austerity, homeownership, rental, and credit liberalization policies and the "irrational exuberance" on housing markets

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Authors and Corporations:	Kholodilin, Konstantin (Author), Kohl, Sebastian (Author), Müller, Florian (Author)
Other Authors:	Kohl, Sebastian [Author] • Müller, Florian [Author]
Type of Resource:	E-Book
Language:	English
published:	Berlin DIW Berlin, German Institute for Economic Research 2023
Series:	Deutsches Institut für Wirtschaftsforschung: Discussion papers ; 2061
Subjects:	speculative house price bubbles rent control homeowner taxation explosive roots panel data logit model Graue Literatur speculative house price bubbles rent control homeowner taxation explosive roots panel data logit model
Source:	Verbunddaten SWB Lizenzfreie Online-Ressourcen

Description
Summary:	Housing bubbles and crashes are catastrophic events for economies, implying enormous destruction of housing wealth, financial default risks, construction unemployment, and business cycle downturns. This paper investigates whether governmental housing policies can affect economies’ propensity to build up speculative house price bubbles. Specifically, we focus on the liberalization effects of rent and credit regulation as well as homeownership and austerity policies. Drawing on a long-run time series from 16 countries since 1870, we identify speculative price bubbles through explosive root tests, corroborated by a narrative approach. Estimating logit models, we find that tighter rent and credit controls make bubbles less likely to emerge by dampening price increases, while certain homeownership and tenant subsidies and government austerity increase the likelihood of bubbles. The paper illustrates the logic of rent, credit, homeownership and austerity effects with two case studies.
Physical Description:	1 Online-Ressource (circa 84 Seiten); Illustrationen