Nonlinear Delay Difference Equations for Housing Dynamics Assuming Heterogeneous BackwardOLooking Expectations

LEUNG Andrew Y T; XU Jia-na; TSUI Wing-shum

Volume 28 Issue 6

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Article Navigation > Applied Mathematics and Mechanics > 2007 > 28(6): 699-712

LEUNG Andrew Y T, XU Jia-na, TSUI Wing-shum. Nonlinear Delay Difference Equations for Housing Dynamics Assuming Heterogeneous BackwardOLooking Expectations[J]. Applied Mathematics and Mechanics, 2007, 28(6): 699-712.

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Nonlinear Delay Difference Equations for Housing Dynamics Assuming Heterogeneous BackwardOLooking Expectations

Building and Construction, City University of Hong Kong, P. R. China

Received Date: 2005-11-02
Rev Recd Date: 2007-02-17
Publish Date: 2007-06-15

Abstract

Abstract

This paper aims to analyze the housing price dynamics after an unanticipated economic shock,which was believed to have similar properties with the backward-looking expectation models. The analysis of the housing price dynamics was based on the cobweb model with a simple user cost affected demand and a stockOflow supply assumption.Several n thOorder delay rational difference equations were set up to illustrate the properties of housing dynamics phenomena,such as the equilibrium or oscillations,overshoot or undershoot and convergent or divergent,for a kind of heterogeneous backward-looking expectation models.The results show that demand elasticity is less than supply elasticity is not a necessary condition for the occurrence of oscillation.The housing price dynamics will vary substantially with the heterogeneous backward-looking expectation assumption and some other endogenous factors.
- housing price dynamics,
- delay rational difference equations,
- equilibrium and oscillations,
- convergent and divergent

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References

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