A Simple Model for Speculative Bubble in Tehran Housing Market

Subject Areas : Labor and Demographic Economics

Habib Morovat ¹ , Javid Bahrami ²

1 - دانشجوی دکتری اقتصاد دانشگاه علامه طباطبایی
2 - استادیار اقتصاد دانشگاه علامه طباطبایی

Received: 2015-04-16 Accepted : 2015-04-16 Published : 2015-04-01

Keywords: Speculation, Heterogeneous Expectations, Tehran Housing Market,

Abstract :

In this paper, a simple model of a speculative housing market will be developed in which the demand for houses is influenced by expectations about future housing prices. Agents rely on extrapolative and regressive forecasting rules to form their expectations. The relative importance of these competing views evolves over time, subject to market circumstances. It will be represented that the relative price elasticity of the demand of different views has important role in making speculative bubbles of Tehran housing market. The results indicate that the weight of agents by extrapolative demand (chartists) is more than 90% during last two decades.

References:

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