Integrating the housing market into an agent-based economic model

Einar Jon Erlingsson, Marco Raberto, Hlynur Stefansson, Jon Thor Sturluson

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

9 Citations (Scopus)

Abstract

In this paper, we develop an agent-based model of the housing market and integrate it into a larger agent-based artificial economy. The model is characterized by four types of agents: households, firms, banks and a central bank, which interact through different types of markets: a consumption goods market, a labor market, a housing market and a credit market. We model a wealth effect of housing wealth into households consumption budget as the main link between the housing market and the real economy. Banks will extend mortgages to households only if the expenditure on housing, as a proportion of total income, is lower than a given threshold (β). Different simulations are preformed to see how changing β effects the housing market and the real economy. We find that by lowering the constraint on bank lending, i.e. increasing β, housing prices boom, positively affecting the real economy.

Original languageEnglish
Title of host publicationManaging Market Complexity The Approach of Artificial Economics
EditorsAndrea Teglio, Miguel Gines-Vilar, Eva Camacho-Cuena, Simone Alfarano
Pages65-76
Number of pages12
DOIs
Publication statusPublished - 2012

Publication series

NameLecture Notes in Economics and Mathematical Systems
Volume662
ISSN (Print)0075-8442

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