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Growth, cycles, and residential investment

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  • Santetti, Marcio
  • Nikiforos, Michalis
  • von Arnim, Rudiger

Abstract

The empirical literature on models of cyclical growth and distribution has not investigated the differential roles of residential vs. nonresidential investment. These flows are similar in that they are largely undertaken by profit-seeking corporations, but differ greatly in that residential (nonresidential) investment is a leading (lagging) indicator of the business cycle. We estimate two Structural Vector Autoregressive (SVAR) models of the cyclical components of US post-WWII time series with restrictions motivated by neo-Goodwinian theory. The 4D model includes utilization rate, accumulation rate, employment rate and labor share. The 5D model disaggregates investment into residential and nonresidential flows. Results (i) support profit-led demand and profit- squeeze distribution, and (ii) confirm that residential investment leads the cycle, whereas nonresidential investment lags it.

Suggested Citation

  • Santetti, Marcio & Nikiforos, Michalis & von Arnim, Rudiger, 2024. "Growth, cycles, and residential investment," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 313-327.
    • Handle: RePEc:eee:streco:v:69:y:2024:i:c:p:313-327
    DOI: 10.1016/j.strueco.2023.12.011
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    More about this item

    Keywords

    Cyclical growth; Residential investment; Labor share of income; Neo-Goodwinian model;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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