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Land-price dynamics and macroeconomic fluctuations

Zheng Liu (), Pengfei Wang () and Tao Zha ()

No 2011-11, Working Paper from Federal Reserve Bank of Atlanta

Abstract: We argue that positive comovements between land prices and business investment are a driving force behind the broad impact of land-price dynamics on the macroeconomy. We develop an economic mechanism that captures the comovements by incorporating two key features into a DSGE model: we introduce land as a collateral asset in firms' credit constraints, and we identify a shock that drives most of the observed fluctuations in land prices. Our estimates imply that these two features combine to generate an empirically important mechanism that amplifies and propagates macroeconomic fluctuations through the joint dynamics of land prices and business investment.

New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge, nep-mac and nep-ure
Date: 2011
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Related works:
Journal Article: Land‐Price Dynamics and Macroeconomic Fluctuations (2013) Downloads
Working Paper: Land-Price Dynamics and Macroeconomic Fluctuations (2012) Downloads
Working Paper: Land-price dynamics and macroeconomic fluctuations (2011) Downloads
Working Paper: Land-price dynamics and macroeconomic fluctuations (2011) Downloads
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