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Revisiting housing and the business cycle

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  • Nguyen, Quoc Hung

Abstract

This paper revisits the interactions between housing dynamics and the business cycle in a two-sector model developed and calibrated from the multi-sector neoclassical growth model originally envisioned by Davis and Heathcote in 2005. A two-sector model with housing sector specific capital and productivity shocks can successfully predict a correct positive correlation between housing prices and residential investment. The model can also replicate the fact observed in the United States that housing prices are more volatile than output.

Suggested Citation

  • Nguyen, Quoc Hung, 2018. "Revisiting housing and the business cycle," Journal of Housing Economics, Elsevier, vol. 41(C), pages 85-92.
    • Handle: RePEc:eee:jhouse:v:41:y:2018:i:c:p:85-92
    DOI: 10.1016/j.jhe.2018.05.004
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    References listed on IDEAS

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    Cited by:

    1. Fehrle, Daniel & Heiberger, Christopher, 2024. "The return on everything and the business cycle in production economies," Economic Modelling, Elsevier, vol. 136(C).
    2. Ryan Chahrour & Gaetano Gaballo, 2021. "Learning from House Prices: Amplification and Business Fluctuations [House Price Booms and the Current Account]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(4), pages 1720-1759.
    3. Zhou, Qian & Shao, Qinglong & Zhang, Xiaoling & Chen, Jie, 2020. "Do housing prices promote total factor productivity? Evidence from spatial panel data models in explaining the mediating role of population density," Land Use Policy, Elsevier, vol. 91(C).

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    More about this item

    Keywords

    Business cycles; Comovement; Sector-specific capital;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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