Was there a bubble in the Icelandic housing market in 2007?

On Tuesday 14 October at 15:00 a seminar on this topic will be held in the Central Bank of Iceland, Sölvhóll conference room.

Presenter is Lúðvík Elíasson, economist in the Financial Stability Department of the Central Bank.

He will present results from the re-estimation of a model of the housing market in Iceland which he and Thorarinn G. Petursson, Chief Economist of the Bank developed in 2004. In this re-estimation he uses data for the period 2004-2007 when the market was very bullish and also for the collapse that followed. The research question is: If the market exhibited characteristics of an asset bubble, it is shown that relatively small changes in the model make it possible to explain most of the developments in the market during the period before the collapse of the banks.