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An alternative method for identifying booms and busts in the Euro area housing market

This article develops a model-based method to detect booms and busts in the Euro area housing market. A model is constructed and tested, whereby the user cost rate, a demographic variable, unemployment rate, disposable income, debt-to-income ratio and housing stock are fundamental variables... Full description

1st Person: Gerdesmeier, Dieter
Additional Persons: Lenarčič, Andreja; Roffia, Barbara
Source: in Applied economics Vol. 47, No. 5 (2015), p. 499-518
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Type of Publication: Article
Language: English
Published: 2015
Online: Volltext
http://www.tandfonline.com/doi/abs/10.1080/00036846.2014.975328
http://search.proquest.com/docview/1638710416
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Summary: This article develops a model-based method to detect booms and busts in the Euro area housing market. A model is constructed and tested, whereby the user cost rate, a demographic variable, unemployment rate, disposable income, debt-to-income ratio and housing stock are fundamental variables significantly explaining house price (HP) developments. Booms/busts are identified as episodes when the HP index exceeds the levels implied by those economic fundamentals. Furthermore, a cross-check with boom/bust episodes based on other methods is carried out to substantiate the results, while the ability of the model in predicting booms/busts in real time is also tested.
Item Description: Copyright: © 2014 European Central Bank. Published by Taylor & Francis 2014
ISSN: 0003-6846

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