Search frictions, housing prices and growth

Gaetano Lisi

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Rising house prices have a positive impact on real GDP through the consumption effect and the construction of new houses (housing investment). Basically, the strength of this positive effect relies on a large share of homeowners (especially regarding the consumption effect). At the same time, however, a greater share of homeowners could encourage unemployment (the so-called “Oswald hypothesis”), thus damaging economic growth. This theoretical paper includes the link between housing tenure and job-search intensity in the relation between housing prices and growth. The main finding of this work is that homeownership may either reinforce or resize the effect of housing prices on economic growth.

Keywords: housing prices; new construction; growth; homeownership; search frictions (search for similar items in EconPapers)
JEL-codes: J64 O18 R11 R21 R31 R32 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2019-07
New Economics Papers: this item is included in nep-ure
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http://www.ivie.es/downloads/docs/wpasad/wpasad-2019-02.pdf Fisrt version / Primera version, 2019 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2019-02

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