This paper uses a numerical simulation based on the Crank-Nicolson method to estimate the value of a fixed-rate mortgage (FRM) with embedded prepayment and non-defaultable options. We find that the value of the FRM will increase when interest rates decrease, increasing the incentive for...

In recent years, housing booms have caused ghost town phenomena in many cities such as Dublin, Madrid, Dubai, etc. This paper derives a theoretical model to illustrate how activities of producers and rent seekers affect housing price booms in city centers and surrounding areas due to...

This paper revisits the effectiveness of Chinese monetary policy from augments concerning rational expectations. To estimate the dynamics of expectations, we incorporate market regime switching into the estimation of the rational expectations element using a recursive solution method. When...