Hirano & Stiglitz (2025): Growth and Fluctuations in Economies with Land Speculation

Summary

"Growth and Fluctuations Economies with Land Speculation," by Tomohiro Hirano and Joseph E. Stiglitz, NBER Working Paper 33589 (March 2025). This paper extends the Hirano-Stiglitz research program by building an overlapping-generations model that combines rational expectations, land as a non-produced asset, credit constraints, and endogenous technological advancement in a single tractable two-state-variable framework — bringing together elements the program's earlier papers had mostly treated separately (land and phase transitions in the 2022 wobbly-dynamics paper; credit and sectoral composition in the 2024 credit paper).

Findings

• Multiple equilibrium states can emerge, with which equilibrium is possible contingent on asset valuations — generating many rational-expectations trajectories, though bounded within calculable ranges (the same "wobbly" logic as the 2022 papers, now embedded in a growth model with endogenous technology).
• Technological improvement is not unambiguously good news for stability. Even though it boosts short-term output, technological improvement can render the equilibrium unstable and precarious, potentially leading to stagnation with lower long-term GDP than would otherwise have occurred — a genuinely counterintuitive result given the standard presumption that productivity growth is straightforwardly stabilizing.
• Land specifically widens the range of possible fluctuations. Adding land to the model "substantially expands the scope for fluctuations," with rational-expectations trajectories potentially exhibiting oscillations, episodic unemployment, and inefficient capital allocation — this is the paper that gives an explicit, direct answer to how much land itself (as opposed to the general wobbly-dynamics mechanism) adds to instability, extending the 2022 companion papers' land-free baseline.
• Accommodative policy can be counterproductive when credit constraints bind. When credit constraints are binding, expansionary monetary and fiscal policy can paradoxically reduce growth, by channeling resources toward speculative land purchases rather than productive capital formation — the paper states this pattern is "consistent with observed economic patterns," i.e. the authors read this as matching real-world episodes, not merely a theoretical curiosity.
• Addresses the r < g land-price puzzle directly. Like the credit paper, this paper takes on the theoretical puzzle of how land prices remain bounded even when interest rates fall below the growth rate, within its more general two-state-variable framework.

Relation to the Georgist Case

This is the program's most policy-relevant paper for contemporary monetary-policy debates: its central warning — that "accommodative" policy can backfire specifically because it fuels land speculation rather than productive investment when credit constraints bind — is a formal-theoretic version of the same concern behind the wiki's finance-and-land-credit outcome page and is directly relevant to debates over central-bank responses to housing-driven inflation or financial instability. The land-widens-fluctuations finding is also the clearest single data point in the whole program for how much land specifically (versus the general capital-accumulation mechanism) contributes to macro instability.

Nuances and Limits

• Abstract-level scan. The full NBER PDF returned a 403 on every fetch method tried this session; this page is built entirely from the published abstract. No claim below the abstract level (specific parameter conditions, proofs, or numerical magnitudes) is made.
• Working paper. Not yet peer-reviewed.

Bears On

• Outcome: The growth of modern banking is largely mortgage credit against land — this paper's monetary-policy-fuels-land-speculation mechanism is the formal-theoretic counterpart to that page's empirical evidence.
• Research: Hirano & Stiglitz: The Wobbly Economy — this paper's land-free baseline for comparison.
• Research: Hirano & Stiglitz: Credit, Land Speculation, and Growth — the companion paper on sectoral credit composition.

See Also

• Joseph Stiglitz · Tomohiro Hirano
• Hirano & Stiglitz: Henry George, Land Speculation, and Economic Growth
• Hirano & Stiglitz: Land Speculation and Wobbly Dynamics
• The growth of modern banking is largely mortgage credit against land

Sources

1. Tomohiro Hirano & Joseph E. Stiglitz (2025), "Growth and Fluctuations Economies with Land Speculation," NBER Working Paper 33589 (March 2025). nber.org/papers/w33589 — abstract fetched and read 2026-08-18; full PDF blocked (403) on every fetch method tried. Used for the model's combination of rational expectations, land, credit constraints, and endogenous technology, the multiple-equilibria finding, the technology-can-destabilize result, the land-widens-fluctuations finding, and the accommodative-policy-can-reduce-growth result (B-claim; abstract-level scan only).