Abstract
This paper provides a novel macroeconomic model that is specifically designed to investigate the evolution of housing wealth. To capture the importance of land as an input factor for housing production and for the evolution of wealth in a growing economy, the analysis builds on three premises: (1) the overall land endowment is fixed; (2) the production of new houses requires land as an essential input, whereas replacement investment does not; (3) land employed for real estate development must be permanently withdrawn from alternative uses. The calibrated model replicates the historical evolution of housing wealth after Word War II remarkably accurately and accounts for the close connection of house prices to land prices in the data. It suggests a considerable further increase in housing wealth, relative to income, that is associated with a future surge in land prices and house prices. The model also provides new insights into the dynamics of non-residential wealth. JEL-Codes: E100, E200, O400.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
