8In more detail, building on the literature on consumption disaster risk, Glover, Heathcote, Krueger, and Ríos-Rull (2017) adopted a setup in which the aggregate shock includes a Great-Depression-like state. Related work attempted to capture the dynamics of house prices during the last boom and (deep) bust. For example, Kaplan, Mitman, and Violante (2017) show that changes in beliefs about future housing demand can match the volatile dynamics of house prices and house price–rent ratios; but invoking unobservable changes in opinions about the future demand for assets is only a small step from explicitly assuming that asset prices are exogenous. Garriga and Hedlund (2018) argue that an endogenous decline in housing liquidity (induced by directed search to buy houses) ampliﬁes recessions by contracting credit and depressing consumption. The debate on the role of beliefs about house prices, changes in credit supply or mortgage market arrangements includes important contributions of Favilukis, Ludvigson, and Van Nieuwerburgh (2017), Kaplan, Mitman, and Violante (2017), Justiniano, Primiceri, and Tambalotti (forthcoming), and Garriga and Hedlund (2018).