To study the relationship between house price movements, housing construction, consumption, and international borrowing, they generalize the closed economy asset pricing models developed previously in Adam and Marcet (2010, 2011) and Adam, Marcet, and Nicolini (2010) along three dimensions. First, they consider a setting with two assets, namely a domestically traded risky asset-the housing stock -- and an internationally traded riskless bond. Second, they newly incorporate a borrowing constraint that limits household leverage and the overall amount of borrowing, following Kiyotaki and Moore (1997). Third, they consider a production economy with endogenous asset supply by explicitly incorporating a construction sector. Despite these extensions the model is relatively parsimonious.