The Implications of Speculative Behavior in the Housing Market

Faculty Advisor

Gerstenfeld, Arthur

Faculty Advisor

Radzicki, Michael J

Project Center

Hong Kong, China


By looking at the current economic situation, the paper will explore the chain of events that occurred and stories of Americans that suffered from the turmoil. And then, the paper will discuss Hyman P. Minsky's Financial Instability Hypothesis, and how it could have justified the current crisis. The paper will use a methodology named causal-loop diagram to justify the argument that the system of housing market was inherent to instability, and the presence of speculative behavior in the market had caused such instability to become more severe and destructive. At last, the paper will make suggestions on what methodology the U.S. policy makers can use in dealing with the system's instability


Worcester Polytechnic Institute

Date Accepted

March 2009

Project Type

Interactive Qualifying Project



Advisor Department


Advisor Department

Social Science and Policy Studies

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