Property markets and policies in an intertemporal general equilibrium model

Abstract

This paper presents a theoretical simulation model to examine the interaction between property markets and the rest of the economy. The model is a rational expectation, intertemporal general equilibrium model, with multiple sectors and real estate markets. The model emphasizes the interdependence between sectors as well as the government’s role in the property markets. It is demonstrated that a resource boom in a durable nontradable sector can improve the current account balance of the home economy in the short run. Secondly, when there is production interdependency between sectors, resource booms in one sector does not necessarily cause contraction in other sectors. Show more