<abstract xmlns="http://www.w3.org/1999/xhtml"><p> It is very difficult to study phenomena in housing markets using conventional so-called neoclassical economics. The core problem stems from the highly unrealistic assumptions of neoclassical economics, such as homogeneous products, equilibrium markets, ceteris paribus clauses, deterministic and linear systems, rationality of economic agents, and the utility maximization principle. New Keynesian economics appears to be a more fruitful approach to housing markets since it presumes that products are differentiated, markets are in disequilibrium state and there exists imperfect competition in a marketplace. Furthermore, new Keynesian economics utilizes the concept of bounded rationality, which is a more realistic description of the actual behavior of economic agents than the theoretical notion of rationality in neoclassical economics.</p></abstract>

It is very difficult to study phenomena in housing markets using conventional so-called neoclassical economics. The core problem stems from the highly unrealistic assumptions of neoclassical economics, such as homogeneous products, equilibrium markets, ceteris paribus clauses, deterministic and linear systems, rationality of economic agents, and the utility maximization principle. New Keynesian economics appears to be a more fruitful approach to housing markets since it presumes that products are differentiated, markets are in disequilibrium state and there exists imperfect competition in a marketplace. Furthermore, new Keynesian economics utilizes the concept of bounded rationality, which is a more realistic description of the actual behavior of economic agents than the theoretical notion of rationality in neoclassical economics.

Urban Housing Policy Considerations: Perspectives from the Finnish Housing Market

PhD, Researcher, Kiinteistötutkimus M. Hannonen Inc

Journal of Heterodox Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

It is very difficult to study phenomena in housing markets using conventional so-called neoclassical economics. The core problem stems from the highly...

Urban Housing Policy Considerations: Perspectives from the Finnish Housing Market

Published Online: Apr 28, 2016

Page range: 114 - 130

DOI: https://doi.org/10.1515/jheec-2015-0007

Keywords
Housing policy, ethics, state intervention, Keynesian economics

© 2016

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Urban Housing Policy Considerations: Perspectives from the Finnish Housing Market

Published Online: Apr 28, 2016

Page range: 114 - 130

DOI: https://doi.org/10.1515/jheec-2015-0007

KeywordsHousing policy, ethics, state intervention, Keynesian economics

© 2016

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
Housing policy, ethics, state intervention, Keynesian economics