Housing Dynamics over the Business Cycle

Finn Kydland, Peter Rupert () and Roman Sustek

University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

Abstract: Over the U.S. business cycle, fluctuations in residential investment are well known to systematically lead GDP. These dynamics are documented here to be specific to the U.S. and Canada. In other developed economies residential investment is broadly coincident with GDP. Nonresidential investment has the opposite dynamics, being coincident with or lagging GDP. These observations are in sharp contrast with the properties of nearly all business cycle models with disaggregated investment. Including mortgages and interest rate dynamics aligns the theory more closely with U.S. observations. Longer time to build in housing construction makes residential investment coincident with output.

Keywords: Social and Behavioral Sciences; residential investment; nonresidential investment; business cycle; mortgages; time to build (search for similar items in EconPapers)
Date: 2012-08-01
New Economics Papers: this item is included in nep-bec, nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Related works:
Working Paper: Housing Dynamics over the Business Cycle (2014)
Working Paper: Housing dynamics over the business cycle (2014)
Working Paper: Housing Dynamics over the Business Cycle (2012)
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