Cars Hommes - Latest
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Detecting exuberance in house prices across Canadian cities
We introduce a model to detect periods of extrapolative house price expectations across Canadian cities. The House Price Exuberance Indicator can be updated on a quarterly basis to support the Bank of Canada’s broader assessment of housing market imbalances. -
Ten Isn’t Large! Group Size and Coordination in a Large-Scale Experiment
Economic activities typically involve coordination among a large number of agents. These agents have to anticipate what other agents think before making their own decisions. -
Are Long-Horizon Expectations (De-)Stabilizing? Theory and Experiments
Most models in finance assume that agents make trading plans over the infinite future. We consider instead that they are boundedly rational and may only form forecasts over a limited horizon. -
Inflation Targeting and Liquidity Traps Under Endogenous Credibility
Policy implications are derived for an inflation-targeting central bank, whose credibility is endogenous and depends on its past ability to achieve its targets. This is done in a New Keynesian framework with heterogeneous and boundedly rational expectations.