Bubble Trouble - An inquiry into the theories of housing bubbles, modestly applied on Sweden

Abstract

How do we spot a housing bubble? Swedish house prices and household debt have in recent decades risen faster than ever before. This thesis discusses different models for assessing housing bubbles, including neoclassical, econometric and behavioral models. The models are applied to Swedish data, finding no conclusive results but enough evidence to recommend that policy-makers proceed under the assumption that there is indeed a housing bubble.