Why Are Housing and Services More Expensive in Rich Countries than in Poor Ones? A Model of Neighborhood Housing Effect and its Evidence

Huayi Yu (), Xiang Tang and Yinggang Zhou ()
Additional contact information
Huayi Yu: Renmin University of China
Xiang Tang: Peking University
Yinggang Zhou: Xiamen University

International Real Estate Review, 2020, vol. 23, issue 1, 1-36

Abstract: This paper examines why housing and services are more expensive in rich countries than in poor ones. We propose the Rich Neighborhood Housing Effect (RNHE), which explicitly allows for local labor force heterogeneity with a coherent supply- demand framework that incorporates demand-side factors such as the Linder effect. We also develop a contemporary RNHE model that predicts different behavior of the national price level between high-income and low-income countries. These predictions are confirmed by the panel data from 1990 to 2010 and simultaneous equation estimations. These results are compelling evidence in favor of the RNHE model over the Balassa-Samuelson model.

Keywords: Balassa-Samuelson Model; Rich Neighborhood Housing Effect; National Price Levels; Housing and Services; Linder Effect (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.gssinst.org/irer/wp-content/uploads/20 ... and-its-Evidence.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ire:issued:v:23:n:01:2020:p:1-36

Ordering information: This journal article can be ordered from
Global Social Science Institute, 9200 Corporate Blvd., Suite 420 Rockville, MD 20850
https://www.gssinst.org/gssinst/index.html

Access Statistics for this article

International Real Estate Review is currently edited by Professor Sing Tien Foo and Professor Ko Wang

More articles in International Real Estate Review from Global Social Science Institute Global Social Science Institute, 9200 Corporate Blvd., Suite 420 Rockville, MD 20850.
Bibliographic data for series maintained by IRER Graduate Assistant/Webmaster ().