10/10/2023 Konstantin Kholodilin – TCD Department of Economics Seminar Series

Date: 10/10/2023
Category: ,
Speaker: Konstantin Kholodilin
Institution: German Institute for Economic Research
Format: In Person


Abstract: Housing bubbles and crashes are catastrophic events for economies and imply enormous destruction of housing wealth, financial default risks, construction unemployment and business cycle downturns. This paper investigates whether governmental housing policies and regulation can affect economies’ propensity to build up speculative house price bubbles. In particular, we focus on the liberalization effects of rent and credit  regulation as well as homeownership and austerity policies. Drawing on long-run time series from 16 countries since 1902, we identify speculative prices bubbles through explosive root tests, corroborated by a narrative approach. Estimating logit models, we find that tighter rent and credit controls and more housing construction make bubbles less likely to emerge by dampening price increases, while certain homeownership subsidies and government austerity increase the likelihood of bubbles. The paper illustrates the logic of rent, credit, homeownership and austerity effects with two case studies.


Konstantin Kholodilin is a senior researcher at the German Institute for Economic Research (DIW Berlin).