The Identification of Housing Bubbles in the U.S. and China and Lessons for Avoiding Them
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Authors
Zhang, Yiling
Issue Date
2009
Type
Thesis
Language
Keywords
Econometric , Granger causes , Housing bubble , Momentum , Psychological
Alternative Title
Abstract
A speculative housing bubble began to burst in United States in 2006 which resulted in a serious financial crisis. The crisis began in the subprime market but rapidly expanded to other sectors of the economy, causing global financial failures and a credit crunch. This study is focused on demonstrating that momentum housing bubbles occurred in both US and China in recent years. To find what Granger causes the momentum housing bubble in both econometric and psychological ways, the study conducts an econometric analysis using behavioral finance theories. Finally, the study concludes that the formation of momentum housing bubble resulted from the social contagion of herd thinking, and suggests ways to improve financial infrastructure to solve future problems.
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In Copyright(All Rights Reserved)