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Tomohiro HIRANO (Royal Halloway) "Land Speculation and Wobbly Dynamics with Endogenous Phase Transitions"
Time: 12:15pm – 13:30 pm
Date: 29 Mars 2021
Tomohiro HIRANO (Royal Halloway) “Land Speculation and Wobbly Dynamics with Endogenous Phase Transitions”
Abstract : This paper constructs a dynamic macro model with capital and land to understand the effect of land speculation on global macro-dynamics from a new perspective. Through the interactions between capital and land prices, the economy goes through endogenous phase transitions, moving from a state with multiple equilibrium to one with a unique equilibrium back to one where there is multiple equilibrium, generating wobbly macro-dynamics with endogenous fluctuations in land prices and aggregate economic activities. The price of land and other key macro variables (wages, interest rates, output, consumption, wealth, capital stock) endogenously fluctuate without either converging or diverging. In some cases, a path that looks like it might be explosive can be an equilibrium path. Even if the price of land rises for an extended period of time, in a way which might seem unsustainable, once it exceeds a critical point, an endogenous phase transition occurs, leading to an endogenous crash.
Joint work : Joseph E. Stiglitz (Columbia University)