Rational land and housing bubbles in infinite-horizon economies

Stefano Bosi (1) , Cuong Le Van (2, 3, 4) , Ngoc-Sang Pham (1, 5)

1 EPEE - Centre d'Etudes des Politiques Economiques
2 CES - Centre d'économie de la Sorbonne
3 IPAG Business School
4 PSE - Paris School of Economics
5 LEM - Lille économie management - UMR 9221

This paper considers rational land and housing bubbles in an infinite-horizon general equilibrium model. Their demands rest on two different grounds: the land is an input to produce while the house may be consumed. Our work differs from the existing literature in two respects. First, dividends on both these long-lived assets are endogenous and their sequences are computed. Second, we introduce and study different concepts of bubbles, including individual and strong bubbles.

Mots clés: infinite horizon; general equilibrium; land bubble; housing bubble

Domaines: Economies et finances

Stefano Bosi, Cuong Le Van, Ngoc-Sang Pham. Rational land and housing bubbles in infinite-horizon economies. 2016. ⟨halshs-01314609⟩