BEP 2026 01, Aleksandar Vasilev, "A Real-Business-Cycle Setup with Housing: Lessons for Bulgaria (1999-2024)" (pdf)

(Full Text)

Abstract:

Housing stock, and the accumulation of utility-enhancing housing capital are introduced as an additional mechanism into a real-business-cycle setup augmented with a detailed government sector. The model is calibrated to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2024). The quantitative importance of the presence of housing capital accumulation is investigated for the propagation of cyclical

fluctuations in Bulgaria. In particular, allowing for housing considerations in the setup improves the model vis-a-vis data by increasing the variability of employment and decreasing the variability of consumption and investment.

However, those improvements are at the cost of decreasing the volatility of wages. The model severely over-predicts variability of housing investment, and wrongly concludes that it is counter-cyclical. Still, the model with housing is a clear improvement relative to the standard RBC setup.

Keywords: business cycles, housing, Bulgaria

JEL Classification Codes: E24, E32

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Издаваната от Стопанския факултет и Центъра за икономически теории и стопански политики към СУ "Св. Климент Охридски" поредица от дискусионни материали (working paper series) Bulgarian Economic Papers (bep.bg) е индексирана от EconPapers на RePEc (Research Papers in Economics) и CEEOL (Central and Eastern European Online Library).

В поредицата (ISSN: 2367-7082) се приемат текстове в областта на икономиката и стопанското управление с фокус върху проблеми на Югоизточна Европа и бившите стопанства в преход, без да се изключват глобални проблеми на икономическата теория и практика. Изследванията могат да имат емпиричен характер или да развиват и прилагат теоретични модели.