Overoptimism and house price bubbles

Real-Time Warning Signs of Emerging and Collapsing Chinese House Price Bubbles

A previous version of the paper has been published as Bank of Finland BOFIT Discussion Paper No. 27-2012. The views expressed in the paper are those of the authors and do not necessarily reflect the views of the Bank of Finland. The recent increase in Chinese house prices has led to concerns that China is vulnerable to asset price shocks. In this paper, we apply recently developed recursive uni...

Ethnic diversity deflates price bubbles.

Markets are central to modern society, so their failures can be devastating. Here, we examine a prominent failure: price bubbles. Bubbles emerge when traders err collectively in pricing, causing misfit between market prices and the true values of assets. The causes of such collective errors remain elusive. We propose that bubbles are affected by ethnic homogeneity in the market and can be thwar...

Understanding House-Price Dynamics

*The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. or most homeowners, housing is the single most important component of their nonpension wealth. Therefore, a change in house prices greatly affects the total wealth of many households. Furthermore, movements in house prices can af...

House Price Index Methodologies

Asset-price Bubbles and Monetary Policy

for helpful discussions and comments, and to Pam Dillon and Paula Drew for assistance in preparing this document. The views expressed are those of the authors and should not be attributed to the Reserve Bank of Australia.