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| Benjamin Eden |
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| ''Real interest policy and the housing cycle'' |
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| I use a model of rational bubbles to discuss the effects of government loans and its real interest policy on the possibility of cycles. Cycles occur when the government is willing to lend to the young generation. Cycles do not occur if the government does not lend and the interest rate is sufficiently high. The level of interest required to discourage cycles (in the no lending case) is high when the rate of technological change in the non-housing sector is high relative to the rate of technological change in the housing sector. |
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| Keywords: Housing-cycles, Interest Rate, Bubbles, Government loans |
JEL: E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General |
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| Manuscript Received : Feb 05 2019 | | Manuscript Accepted : Mar 25 2019 |
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