Growth, cycles, and residential investment

Marcio Santetti, Michalis Nikiforos and Rudiger von Arnim

Structural Change and Economic Dynamics, 2024, vol. 69, issue C, 313-327

Abstract: The empirical literature on models of cyclical growth and distribution has not investigated the differential roles of residential vs. nonresidential investment. These flows are similar in that they are largely undertaken by profit-seeking corporations, but differ greatly in that residential (nonresidential) investment is a leading (lagging) indicator of the business cycle. We estimate two Structural Vector Autoregressive (SVAR) models of the cyclical components of US post-WWII time series with restrictions motivated by neo-Goodwinian theory. The 4D model includes utilization rate, accumulation rate, employment rate and labor share. The 5D model disaggregates investment into residential and nonresidential flows. Results (i) support profit-led demand and profit- squeeze distribution, and (ii) confirm that residential investment leads the cycle, whereas nonresidential investment lags it.

Keywords: Cyclical growth; Residential investment; Labor share of income; Neo-Goodwinian model (search for similar items in EconPapers)
JEL-codes: E12 E22 E24 E25 E32 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:69:y:2024:i:c:p:313-327

DOI: 10.1016/j.strueco.2023.12.011

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