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Productivity and welfare in an overlapping generations model with housing

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  • Waters, George A.

Abstract

Productivity and welfare can have an inverse relationship. This paper describes an overlapping generations model where housing is the savings vehicle, and utility is provided by housing and a consumption good. If intratemporal substitution between the consumption good and housing is sufficiently inelastic, aggregate utility is decreasing in productivity. At higher levels of productivity, the relative scarcity of housing aggravates the problem of oversaving.

Suggested Citation

  • Waters, George A., 2020. "Productivity and welfare in an overlapping generations model with housing," Economics Letters, Elsevier, vol. 194(C).
    • Handle: RePEc:eee:ecolet:v:194:y:2020:i:c:s0165176520302378
    DOI: 10.1016/j.econlet.2020.109375
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    References listed on IDEAS

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    1. Piazzesi, M. & Schneider, M., 2016. "Housing and Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1547-1640, Elsevier.
    2. Marjorie Flavin & Shinobu Nakagawa, 2008. "A Model of Housing in the Presence of Adjustment Costs: A Structural Interpretation of Habit Persistence," American Economic Review, American Economic Association, vol. 98(1), pages 474-495, March.
    3. Henriksen, Espen & Spear, Stephen, 2012. "Endogenous market incompleteness without market frictions: Dynamic suboptimality of competitive equilibrium in multiperiod overlapping generations economies," Journal of Economic Theory, Elsevier, vol. 147(2), pages 426-449.
    4. J. B. Taylor & Harald Uhlig (ed.), 2016. "Handbook of Macroeconomics," Handbook of Macroeconomics, Elsevier, edition 1, volume 2, number 2.
    5. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, April.
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    Cited by:

    1. Yasutaka Ogawa & Jiro Yoshida, 2024. "Aging, Housing, and Macroeconomic Inefficiency," IMES Discussion Paper Series 24-E-04, Institute for Monetary and Economic Studies, Bank of Japan.

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