What can an open-economy DSGE model tell us about Hong Kong's housing market?

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Title: What can an open-economy DSGE model tell us about Hong Kong's housing market?
Author: Funke, Michael ; Paetz, Michael
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 19/2010
Year of publication: 2010
Publication date: 22.11.2010
Published in: Published also in Journal of Housing Economics, Volume 22, Issue 1, March 2013, Pages 62-76 as "Housing prices and the business cycle: An empirical application to Hong Kong".
Available for replication in the Macroeconomic Model Data Base (http://www.macromodelbase.com/) that provides various tools for systematic DSGE model comparison and replication.
Pages: 45 s.
Keywords: suhdanteet; mallit; avoin talous; asuntomarkkinat; Kiina; asunnot; luotot; hinnat; Bofit-kokoelma; DSGE; Hong Kong
Abstract: This paper develops an open-economy DSGE model with a housing-market sector and a borrowing constraint. Contrary to standard conventions, domestic households are allowed to invest in foreign housing and vice versa. Using Bayesian methods, the model is applied to data for Hong Kong. The results show that Hong Kong s housing market is quite open to foreign investment, and perhaps more significantly, that variations in the loan-to-value ratio and housing preference shocks largely explain business cycle volatility.
Rights: https://helda.helsinki.fi/bof/copyright


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