Rethinking Housing Bubbles

Download or read book Rethinking Housing Bubbles written by Steven D. Gjerstad and published by Cambridge University Press. This book was released on 2014-05-12 with total page 309 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this highly original piece of work, Steven D. Gjerstad and Nobel Laureate Vernon L. Smith analyze the role of housing and its associated mortgage financing as a key element of economic cycles. The authors combine data from both laboratory and real markets to provide insight into the bubble propensity of real-world economic actors and use novel historical analysis on the Great Recession, the Great Depression, and all of the post-World War II recessions to establish the critical roles of housing, private-capital investment, and household and private institutional balance sheets in economic cycles. They develop a model that incorporates household balance sheets and bank balance sheets and offers insights based on this analysis concerning policy going forward, effectively changing the way economists think about economic cycles.