Housing Dynamics over the Business Cycle

Economics

Speaker:Roman Sustek, University of Southampton
Website: http://www.nber.org/papers/w18432
Date: Monday 28 January 2013
Time: 4:00pm - 5:30pm
Location: Syndicate Room B: Building One

Further details

Abstract:  Over the U.S. business cycle, fluctuations in residential investment are well known to systematically lead GDP. These dynamics are documented here to be specific to the U.S. and Canada. In other developed economies residential investment is broadly coincident with GDP. Nonresidential investment has the opposite dynamics, being coincident with or lagging GDP. These observations are in sharp contrast with the properties of nearly all business cycle models with disaggregated investment. Including mortgages and interest rate dynamics aligns the theory more closely with U.S. observations. Longer time to build in housing construction makes residential investment coincident with output.