I want to connect Tourism, Real Estate and the probability of the next financial bubble in Portugal.
See if there is anything in Section 5 of the following for you:
https://www.researchgate.net/publication/4799636_Tweaking_the_DiPasquale-Wheaton_Model
Article Tweaking the DiPasquale-Wheaton Model
Dear Peter,
thank you for the article.
In Portugal, politicians and many academics are delighted by the substantial increase in tourist demand and its impact on exports and (supposed) increase in GDP. However, although they have done little for this increase (the reasons are more related to the increase in the relative safety perception of Portugal vis-à-vis its usual competitors and the entry of low-cost airlines in Portugal), few relate this expansion of demand (demand curve expands in quadrant 1) with the fact that it will be reflected (later on, particularly late) in the balance sheets of banks and investment funds.
This repercussion is amplified for two reasons: the lag of the construction and its reflection in the availability of new stock in the real economy and the fact that the tourism explosion is essentially occurring in the two metropolitan areas (Lisbon and Oporto) where by nature , the land supply is very rigid, raising prices to explosive levels that mask the (supposed) profitability of tourism investment, again reflecting the price of real estate assets (in addition to other disadvantages such as the loss of local identity, the creation of dual urban societies and the wrong signals given to the economy on the advantages of specialization in tourism and related activities, especially for a country like Portugal)
It is this passage from the second quadrant to the banking and/or financial system and back to the third quadrant (reflecting the prices and expectation of new construction) that I find it difficult to do theoretically.
Thanks a lot for the help and sorry my English
My best
Sérgio
Hi Sergio,
If I remember correctly, the link to the financial sector is in the NW quadrant. In my paper, I add some wrinkles to the NW quadrant related to the shape of the function there. You can estimate this function. Just for the heck of it, here is the citation again:
Article Tweaking the DiPasquale-Wheaton Model
Dear Peter Thank you for your concern, i will try to investigate the question, Lisbon and Oporto markets are melting and no one care about it relations with the financial sector! My best Sérgio
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