This paper provides a theory of credit-driven housing bubbles in an infinite-horizon production economy. Entrepreneurs face idiosyncratic investment tax distortions and credit constraints. Housing is an illiquid asset and also serves as collateral for borrowing. A housing bubble can form because houses command a liquidity premium. The housing bubble can provide liquidity and relax credit constr...

This is an interesting paper on a timely topic. As the authors argue, the recent global financial crisis has its roots in increased mortgage delinquencies caused by the bursting of the housing bubble in the United States. By what mechanism does such an increase in mortgage delinquencies affect the rest of the economy? And how should policy react to it? To address these issues, the authors devel...

Central questions raised by recent experience are “why do housing prices fluctuate?” and “what should central banks do about it?” For member states of a currency union, such as Spain or Texas, independent monetary policy cannot be conducted, so that it is important to inquire whether fluctuating housing prices make currency union participation undesirable. In this timely paper, Oriol Aspachs-Br...

I show that investment in housing plays a crucial role in explaining the patterns of cross sectional variation in the composition of wealth and the level of stockholdings observed in portfolio composition data. Due to investment in housing, younger and poorer investors have limited ̄nancial wealth to invest in stocks, which reduces the bene ̄ts of equity market participation. House price risk cr...

Although it has been suggested that structural adjustment policies have slowed Third World urban growth and have stimulated a spatial deconcentration of economic activity, this paper argues that African cities continue to grow and mainly through peri-urban development. This investment comes mainly from domestic sources and migrants’ remittances, and tends to be in consumption rather than produc...

It is widely accepted that aggregate housing prices are predictable, but that excess returns to investors are precluded by the transactions costs of buying and selling property. We examine this issue using a unique data set—all private condominium transactions in Singapore during an eleven-year period. We model directly the price discovery process for individual dwellings. Our empirical results...

In this paper we exploit a natural experiment to study the effects of granting formal property rights on health. Titling could improve health outcomes trough various channels: housing investment, income or family cohesion. We found that titling diminishes the probability of suffering of several chronic diseases (hypertension, diabetes, sinusitis and rheumatism) but could not find supporting evi...