Suchergebnisse

The article underlines the latest trends in real estate prices in Russia, which helps to record the increasing negative effect of real estate risks on various groups of economic agents. The consequences of negative dynamics in mean real estate market prices could be relaxed by real estate derivatives market construction, which has been unclaimed yet by the market participants due to favorable economic conditions. The article provides the ground for the necessity of real estate risk hedging for various groups of economic agents, viability of real estate derivatives utilization for the purposes of hedging and their application to further financial innovations.

We show that the financial accelerator may be very large in a liquidity trap. We study a sticky price model with real estate and a financial friction specified as a collateral constraint. Expectations can lead the economy to a self-fulfilling liquidity trap equilibrium where the lower bound on the nominal interest rate binds. We model these equilibria as stochastic sunspots. As in the Great Depression, a liquidity trap entails house price depreciation and potentially large output losses. Higher leverage implies much larger output losses but at the same time rules out the existence of short-lived liquidity traps.