Integrating the housing market into an agent-based economic model

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 βeffects 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 econom

Agent-Based Macroeconomics

“…For the analysis of the effects of fiscal policy and sovereign debt, see Raberto et al (2014), Teglio et al (2018). For applications to the housing and mortgage markets, see Erlingsson et al (2013), Erlingsson et al (2014), Teglio et al (2014), Ozel et al (2016). For an application to the issues pertaining to energy, see Ponta et al (2018).…”

Housing Market Bubbles and Business Cycles in an Agent-Based Credit Economy

“…The housing market is mostly based on the model described in Erlingsson et al (2013). With respect to this previous model, the supply side of the market is enriched by new housing units produced by constructions firms.…”

Modeling Interdependent Socio-technical Networks via ABM - Smart Grid Case

“…A second relevant scientific domain is the sociology of the housing market, where methods are developed for analyzing housing price dynamics (Erlingsson et al, 2013), urban sprawl and individual choices about where to live, and the implications of these choices for residential patterns (Devisch et al, 2009). Individual choices respond to the relative attractiveness of residential areas, but they also change that attractiveness (Bruch and Mare, 2012).…”