Real Estate Bubbles and Contagion: Evidence from Selected European Countries

Bubbles in Real Estate Markets

The Political Causes of Real Estate Bubbles

A model which explains national-level house price appreciation through utility maximization by rational voters is developed and tested using a global sample of 40 democracies, in order to explain why some countries experienced house price bubbles in the past decade and others did not. In the model, a subsidy funded by a tax on all citizens can be provided to home buyers. The subsidy leads to an...

Non-linear causality between the stock and real estate markets of Western European countries: Evidence from rank tests

a r t i c l e i n f o JEL classification: C22 E44 G11 Keywords: Causality Rank test Threshold error-correction model (TECM) Wealth effect Credit price effect Using the non-parametric rank tests proposed by Breitung (2001), we set out in this study to determine whether any non-linear long-run equilibrium relationship exists between the stock and real estate markets of Western European countries....

Financial Bubbles, Real Estate bubbles, Derivative Bubbles, and the Financial and Economic Crisis

The financial crisis of 2008, which started with an initially well-defined epicenter focused on mortgage backed securities (MBS), has been cascading into a global economic recession, whose increasing severity and uncertain duration has led and is continuing to lead to massive losses and damage for billions of people. Heavy central bank interventions and government spending programs have been la...

Contagion Channels between Real Estate and Financial Markets∗

The recent crisis has demonstrated the close linkages between various asset classes within a country as well as the association between assets internationally. The aim of this research is to provide for a better understanding of some of these linkages by conducting an empirical investigation of the channels underlying the risk of contagion between real estate and financial markets in the United...