Housing and the Business Cycle
Morris Davis and
Jonathan Heathcote
No 01-09, Working Papers from Duke University, Department of Economics
Abstract:
In the United States, the percentage standard deviation of residential investment is more than twice that of non-residential investment. GDP, consumption, and both types of investment all co-move positively. At the industry level, output and hours worked in construction are more than three times as volatile as in services, and output and hours co-move positively across sectors. We reproduce all these facts in a multi-sector growth model with the following characteristics: different final goods are produced using different proportions of the same set of intermediate inputs, construction is relatively labor intensive, residential investment is relatively construction intensive, and housing depreciates much more slowly than business capital. Previous empirical work exploring the determinants of residential investment is re-examined in light of the model's equilibrium relationship between residential investment, house prices, and the rental rate on capital.
JEL-codes: E2 E3 R3 (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-dge and nep-pke
References: Add references at CitEc
Citations: View citations in EconPapers (19)
Downloads: (external link)
http://www.econ.duke.edu/Papers/Abstracts01/abstract.01.09.html main text
Related works:
Chapter: housing and the business cycle (2010) 
Journal Article: HOUSING AND THE BUSINESS CYCLE (2005)
Working Paper: Housing and the business cycle (2004) 
Working Paper: Housing and the Business Cycle (2003) 
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:duk:dukeec:01-09
Access Statistics for this paper
More papers in Working Papers from Duke University, Department of Economics Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097.
Bibliographic data for series maintained by Department of Economics Webmaster ().