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Demographic Cycle, Migration and Housing Investment: a Causal Examination

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  • E. Monnet
  • C. Wolf

Abstract

We study residential investment over GDP in 20 OECD countries since 1980, and show that it is closely associated with the growth dynamics of population aged 20-49. We develop a new method to uncover the causal effect of the growth of the 20-49 age group. Using past demographic data as an instrument to avoid potential endogeneity between migration and the housing cycle, we find that a 1% increase in the population aged 20-49 increases the residential investment rate by 1.3 pp. Demographic changes are a better predictor of the residential investment rate than any macroeconomic or financial variable we control for.

Suggested Citation

  • E. Monnet & C. Wolf, 2016. "Demographic Cycle, Migration and Housing Investment: a Causal Examination," Working papers 591, Banque de France.
    • Handle: RePEc:bfr:banfra:591
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    Cited by:

    1. Yasmine Essafi & Raphaël Languillon & Arnaud Simon, 2017. "The Relation between Aging and Housing Prices A Key Indicator for the French Spatial Wealth Reshaping [La relation Vieillissement-Prix immobiliers : un indicateur clé pour la réorganisation spatial," Working Papers halshs-01654445, HAL.
    2. Hippolyte d’Albis & Élodie Djemaï, 2018. "Évolutions démographiques et marché de l’immobilier neuf," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(1), pages 129-180.
    3. Jean-Benoît Eymeoud, 2018. "Housing and Discrimination in Economics: an Empirical Approach using Big Data and Natural Experiments," Sciences Po publications info:hdl:2441/6afik52jg80, Sciences Po.
    4. Éric Monnet & Clara Wolf, 2017. "Is demographics the housing cycle?," Rue de la Banque, Banque de France, issue 41, april..
    5. Valérie Chauvin & John Muellbauer, 2018. "Consumption, household portfolios and the housing market in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 500-501-5, pages 157-178.
    6. repec:hal:spmain:info:hdl:2441/6afik52jg80mqni27nbeb4p76 is not listed on IDEAS
    7. E. Monnet & C. Thubin, 2017. "Construction crises and business cycle: consequences for GDP forecasts," Rue de la Banque, Banque de France, issue 39, february..

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    More about this item

    Keywords

    business cycle; housing; demography; migration.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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