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In many countries, house price fluctuations which have been witnessed by the several booms and busts over the past two decades have been associated with financial instability. The degree to which such house price booms and busts have led to financial instability differs among countries because...
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ability to pay through a mortgage is a long-run house price fundamental and find convincing evidence by means of cointegration … incorporates the effect of a decreasing trend in interest rates, changes in mortgage interest deduction and the recent innovation … in mortgage products. We apply the model to the United States of America, United Kingdom, Belgium, the Netherlands …
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