@article {678919,
	title = {The 2000s Housing Cycle With 2020 Hindsight: A Neo-Kindlebergerian View},
	journal = {Review of Economic Studies},
	volume = {9},
	number = {2},
	year = {2024},
	note = {
	Replication package:\&nbsp;https://zenodo.org/record/7545542$\#$.Y8cCi3bMJaQ

},
	pages = {785{\textendash}816},
	abstract = {With {\textquoteleft}{\textquoteleft}2020 hindsight,{\textquoteright}{\textquoteright} the 2000s housing cycle is not a boom-bust but a boom-bust-rebound. Using a spatial equilibrium regression in which house prices are determined by income, amenities, urbanization, and supply, we show that long-run city-level fundamentals predict not only 1997-2019 price and rent growth but also the amplitude of the boom-bust-rebound. This evidence motivates our model of a cycle rooted in fundamentals. Households learn about fundamentals by observing {\textquoteleft}{\textquoteleft}dividends{\textquoteright}{\textquoteright} but become over-optimistic in the boom due to diagnostic expectations. A bust ensues when beliefs start to correct, \&nbsp;exacerbated by a price-foreclosure spiral that drives prices below their long-run level. The rebound follows as prices converge to a path commensurate with higher fundamental growth. The estimated model explains the boom-bust-rebound with a single shock and accounts quantitatively for the dynamics of prices, rents, and foreclosures in cities with the largest cycles. We draw implications for asset cycles more generally.},
	url = {https://academic.oup.com/restud/article-abstract/91/2/785/7127722},
	author = {Gabriel Chodorow-Reich and Adam Guren and Timothy McQuade}
}
