Publications [#305299] of A. Craig Burnside

Journal Articles

1. Burnside, C; Eichenbaum, M; Rebelo, S, Understanding booms and busts in housing markets, NBER Working Paper 16734, Journal of Political Economy, vol. 124 no. 4 (August, 2016), pp. 1088-1147, University of Chicago Press, ISSN 1537-534X [repository], [doi]
   (last updated on 2026/01/15)

   Abstract:
   Some booms in housing prices are followed by busts. Others are not. It is generally difficult to find observable fundamentals that are useful for predicting whether a boom will turn into a bust or not. We develop a model consistent with these observations. Agents have heterogeneous expectations about long-run fundamentals but change their views because of “social dynamics.” Agents with tighter priors are more likely to convert others to their beliefs. Boom-bust episodes typically occur when skeptical agents happen to be correct. The booms that are not followed by busts typically occur when optimistic agents happen to be correct.