A Dynamic Model of Housing Supply

Alvin Murphy

American Economic Journal: Economic Policy, 2018, vol. 10, issue 4, 243-67

Abstract: This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs. The model is estimated using a unique dataset describing individual landowners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding where and when construction occurs. Pro-cyclical costs provide an incentive for some landowners to build before price peaks. Results also indicate that landowners actively "time" the market, which reduces the elasticity of supply.

JEL-codes: C51 D12 E32 R21 R23 R31 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/pol.20150297
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Citations: View citations in EconPapers (62)

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