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An Estimation of Long-Term Housing Demand in North Korea Based on Mankiw-Weil Model

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  • Jooyung Lee

    (Bank of Korea (CERDI))

Abstract

This paper estimates long-term housing demand and the related housing construction investment in North Korea. First, demographically-driven housing demand is estimated based on the Mankiw-Weil model. We then calculate the demographics-driven aggregate housing demand in North Korea. According to these estimates, the pace of increase in demographically-driven housing demand shows a gradual slowdown, from an annual average of 0.61% to 0.88% between 2001 and 2020, to 0.29% between 2021 and 2030. This paper next forecasts housing demand in North Korea based on the assumption that the country will pursue external openness on a full scale from 2021, and that this will lead to a considerable growth in income. If external openness leads to increases in individual demand, then an additional 0.37%p (in the slight increase scenario) to 1.58%p (in the sharp increase scenario) in the annual rate of growth in total housing demand is likely, compared to the baseline scenario.

Suggested Citation

  • Jooyung Lee, 2019. "An Estimation of Long-Term Housing Demand in North Korea Based on Mankiw-Weil Model," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 44(4), pages 68-133, December.
    • Handle: RePEc:jed:journl:v:44:y:2019:i:4:p:98-133
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    References listed on IDEAS

    as
    1. James M. Poterba, 1991. "House Price Dynamics: The Role of Tax Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 143-204.
    2. Jiyoung Choi, 2015. "Demographic Structural Change in North Korea and Its Implications (in Korean)," Working Papers 2015-18, Economic Research Institute, Bank of Korea.
    3. Engelhardt, Gary V. & Poterba, James M., 1991. "House prices and demographic change: Canadian evidence," Regional Science and Urban Economics, Elsevier, vol. 21(4), pages 539-546, December.
    4. Swan, Craig, 1995. "Demography and the demand for housing A reinterpretation of the Mankiw-Weil demand variable," Regional Science and Urban Economics, Elsevier, vol. 25(1), pages 41-58, February.
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    More about this item

    Keywords

    Demographically-Driven Housing Demand; Mankiw-Weil Model; External Openness; Housing Construction Investment;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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