”bubbles”. In this paper, we provide a model-free test of rational bubbles and we apply it to the U.S. housing market. Based on … the current account identity, we argue that there exists a rational housing bubble when an increase in the current account … deficit raises house prices and they are exacerbated in housing supply inelastic municipalities. We empirically apply this …

This paper models the housing sector, mortgages and endogenous default in a DSGE setting with nominal and real … housing demand shock. Next we use our estimated model to evaluate a policy that reduces the principal of underwater mortgages …