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Consequences of Housing Bubbles

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Housing Bubbles

Abstract

In this chapter, we describe the economic consequences of housing bubbles . During the boom, the rise in house prices results in an increase in consumption , borrowing and investment. These effects are reversed during the bust. The collapse of housing bubbles is conducive to financial crises, which tend to be longer and deeper than normal recessions. Finally, we discuss how housing bubbles can distort the optimal allocation of resources and reduce the aggregate productivity of the economy.

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Basco, S. (2018). Consequences of Housing Bubbles. In: Housing Bubbles. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-00587-0_5

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  • DOI: https://doi.org/10.1007/978-3-030-00587-0_5

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  • Publisher Name: Palgrave Pivot, Cham

  • Print ISBN: 978-3-030-00586-3

  • Online ISBN: 978-3-030-00587-0

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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