Based on a behavioral stock-flow housing market model in which the expectation formation behavior of boundedly rational and heterogeneous investors may generate endogenous boom-bust cycles, we explore whether central banks can stabilize housing markets via the interest rate. Using a mix of...

How can mortgages be redesigned to reduce housing market volatility, consumption volatility, and default? How does mortgage design interact with monetary policy? We answer these questions using a quantitative equilibrium life cycle model with aggregate shocks, long-term mortgages, and an...

Borrowers in states with non-recourse mortgage law face limited liability on their mortgage loans. We show that non-recourse law causes larger swings in housing prices by encouraging speculative investments when housing markets are in a boom cycle. We find that mortgage lending pricing does not...

How can mortgages be redesigned to reduce housing market volatility, consumption volatility, and default? How does mortgage design interact with monetary policy? We answer these questions using a quantitative equilibrium life cycle model with aggregate shocks, long-term mortgages, and an...

This paper aims to test the effect of real interest rate on housing return, by using the differencing model for eliminating the effects of other factors. Even though the relationship has been tested before, but it is hard to eliminate other factors when studying the effect of real interest rate...

We introduce mortgages into a dynamic equilibrium, directed search model of the housing market. Mortgage rates play their natural role in our model by affecting the share of per-period income that a homeowner spends on mortgage payment rather than consumption. We estimate the model using...