- Why the Housing Sector Leads the Whole
Economy: The Importance of Collateral
Constraints and News Shocks
- Yu Ren, Yufei Yuan
- The Journal of Real Estate Finance and Economics Volume 48, Issue 2, pp 323-341
- 2311 20160221 () Views:24548
- This paper establishes a dynamic stochastic partial equilibrium
model for explaining residential investment dynamics in the United States,
focusing on the distinctive cyclical features of residential investment in that
it leads the whole economy. This paper is different from the existing literature
by adding three new features to the model: news shocks, collateral constraints
and agent heterogeneity. The partial equilibrium analysis where interest rates
are exogenously fixed shows that these assumptions are essential to generating
the dynamic pattern in which residential investment leads consumption and
GDP.
- JEL-Codes:
- Keywords: News shocks · Heterogeneous agents · Housing sector · Collateral constraints · Aggregate uncertainty
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