Can the Common-Factor Hypothesis Explain the Observed Housing Wealth Effect?

Narayan Bulusu, Jefferson Duarte and Carles Vergara-Alert

Staff Working Papers from Bank of Canada

Abstract: The common-factor hypothesis is one possible explanation for the housing wealth effect. Under this hypothesis, house price appreciation is related to changes in consumption as long as the available proxies for the common driver of housing and non-housing demand are noisy and housing supply is not perfectly elastic.

Keywords: Economic models; Housing (search for similar items in EconPapers)
JEL-codes: E2 E21 R3 R31 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:16-62

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