Irreversibility, Uncertainty and Housing Investment

William Miles ()

The Journal of Real Estate Finance and Economics, 2009, vol. 38, issue 2, 173-182

Abstract: Housing represents a form of “irreversible” investment. Theoretically, increased uncertainty should lower housing investment. Empirically, finding a proxy for uncertainty has proven problematic. Some recent papers have investigated the effect of uncertainty on real estate investment, with varying proxies for uncertainty and mixed results. This paper employs a technique used in modern macroeconomic studies, the Generalized Autoregressive Conditional Heteroskedasticity-in-Mean model, which has been shown to correspond as closely as any known measure to theoretical concepts of uncertainty. Results indicate that uncertainty indeed has a negative impact on housing starts. Copyright Springer Science+Business Media, LLC 2009

Keywords: Housing; Investment; Irreversibility (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (20)

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DOI: 10.1007/s11146-007-9087-x

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