Abstract

Most models of aggregate housing demand have used cross-sectional estimates to determine variations in demand over the life course and the effects of forecastable changes in population age structure. However, the potential for bias in longitudinal inferences derived from cross-sectional estimates has long been recognized. This note proposes a specification that eliminates such bias by defining a cohort-linked cross section (CLCS) schedule of housing demand from cross sections in successive periods. Estimates using the CLCS specification are found to be more stable over time than comparable cross section-based estimates. They also imply substantially higher levels of future housing demand, relative to the past, than projections based on a purely cross-sectional specification.

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