Land-price dynamics and macroeconomic fluctuations with nonseparable preferences
Liutang Gong (),
Fuyang Zhao and
Heng-Fu Zou ()
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Fuyang Zhao: Guanghua School of Management and LMEQF, Peking University
No 605, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics
In this paper, we introduce a complementary relationship between consumption and labor hours by revising the household's period utility function in Liu et al. (2013). The revision concomitantly allows for a finite Frisch elasticity of labor supply and a stronger consumption smoothing motive. We find that, in general, the estimation of Liu et al. (2013) is quite robust. In addition, the propagation mechanism of the credit constraint triggered by a housing demand shock still persists. However, the amplification effect of the credit constraint triggered by the housing demand shock on key macroeconomic variables is greatly muted. We also find that, except for land price fluctuations, the housing demand shock cannot act as the primary force to drive the fluctuations in other macroeconomic variables.
Keywords: Collateral constraint; Housing demand shock; Nonseparable preferences; Macroeconomic fluctuations (search for similar items in EconPapers)
JEL-codes: E5 F3 F4 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-cna, nep-mac, nep-upt and nep-ure
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Journal Article: Land-price dynamics and macroeconomic fluctuations with nonseparable preferences (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:605
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