Glaeser, Edward LudwigNathanson, Charles Gordon2014-06-072014-06-062014Nathanson, Charles Gordon. 2014. Mean Reversion in Housing Markets. Doctoral dissertation, Harvard University.http://dissertations.umi.com/gsas.harvard:11404http://nrs.harvard.edu/urn-3:HUL.InstRepos:12274618Booms in house prices are usually followed by busts. This pattern is called "mean reversion." Mean reversion in housing markets has historically coincided with economic recessions across the world. Chapter 1 establishes mean reversion in U.S. data, and attempts to explain it using the dynamics of wages in cities. Chapter 2 takes a different approach. It models mean reversion resulting from speculation and uncertainty. This model explains why strong mean reversion in prices occurs in cities where it is easy to build houses, a phenomenon that Chapter 1 cannot explain. Chapter 3 takes the spirit of Chapter 2 and applies it to the optimal design of the income tax.en-USEconomicsFinanceEconomic theoryThesis or Dissertation2014-06-07