Revisiting housing and the business cycle

Quoc Hung Nguyen

Journal of Housing Economics, 2018, vol. 41, issue C, 85-92

Abstract: This paper revisits the interactions between housing dynamics and the business cycle in a two-sector model developed and calibrated from the multi-sector neoclassical growth model originally envisioned by Davis and Heathcote in 2005. A two-sector model with housing sector specific capital and productivity shocks can successfully predict a correct positive correlation between housing prices and residential investment. The model can also replicate the fact observed in the United States that housing prices are more volatile than output.

Keywords: Business cycles; Comovement; Sector-specific capital (search for similar items in EconPapers)
JEL-codes: E13 E17 E22 E32 R31 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:41:y:2018:i:c:p:85-92

DOI: 10.1016/j.jhe.2018.05.004

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