IDEAS home Printed from https://ideas.repec.org/a/mve/journl/v50y2024i2p21-60.html
   My bibliography  Save this article

The Impact of Fiscal Policy on Housing in the U.S

Author

Listed:
  • William Miles

    (Wichita State University)

Abstract

Theory and empirical evidence have provided contradictory predictions and findings on the impact of government spending on housing investment and home values. Previous empirical studies have employed vector-autoregressions. Given the deficiencies of VARs, we utilize local linear projections. In addition, we directly compare the impact of government spending on both housing investment (residential investment, permits, sales, housing starts) and non-residential investment. We find fiscal expansion leads to unambiguously greater crowding out of housing activity than for non-housing investment. Moreover, housing is more sensitive to monetary policy than non-residential investment. Thus, housing appears more sensitive to policy shocks than non-housing capital spending. In contrast to housing investment, home prices, while reacting negatively to government spending shocks, don’t exhibit the magnitude of the reaction of housing, or even non-housing investment. This likely reflects the sticky nature of house prices, with falling purchases leading to greater “time on market†more than falling prices.

Suggested Citation

  • William Miles, 2024. "The Impact of Fiscal Policy on Housing in the U.S," Journal of Economic Insight, Missouri Valley Economic Association, vol. 50(2), pages 21-60.
    • Handle: RePEc:mve:journl:v:50:y:2024:i:2:p:21-60
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mve:journl:v:50:y:2024:i:2:p:21-60. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cullen Goenner (email available below). General contact details of provider: https://edirc.repec.org/data/mveaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.