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Expectation Shock, House Price Movements and Economy Fluctuation
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TitleExpectation Shock, House Price Movements and Economy Fluctuation  
AuthorWang Pin and Hou Chengqi  
OrganizationZhongnan University of Economics and Law;Wuhan University; 
Key Wordsexpectation shock; house price; house transaction cost; house user cost; economy fluctuation 
AbstractThis article introduces expectation shocks on house transaction cost and house price in a dynamic stochastic general equilibrium model where households consist of a patient one and an impatient one and production sectors consist of a consumer goods sector and a real estate sector, and studies the influence of expectation on house price and macroeconomy. We find that, (1) rise of current house price increases house user cost, but expected rise of future house price decreases it, so expected sharply rise of future house price will cause the phenomenon of “more rise, more buy”; (2) if the government takes contractionary policy of real estate industry such as increasing house transaction cost because of rapid rise of house price, but the public expect expansionary policy of real estate industry will be implemented because of bust of macroeconomy, then this expectation will make current contractionary policy ineffective; (3) correct expectation of the public can improve the effect of industrial policy in real estate sector, but incorrect expectation will cause reverse correction of the policy and increase fluctuation of macroeconomy. 
Serial NumberWP1164 
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