Das House-Kapital: A Long Term Housing & Macro Model

March 30, 2017

Preview Citation

Format: Chicago

Volker Grossman, and Thomas Steger. Das House-Kapital: A Long Term Housing & Macro Model, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

There are, by now, several long term, time series data sets on important housing & macro variables, such as land prices, house prices, and the housing wealth-to-income ratio. However, an appropriate theory that can be employed to think about such data and associated research questions has been lacking. We present a new housing & macro model that is designed specifically to analyze the long term. As an illustrative application, we demonstrate that the calibrated model replicates, with remarkable accuracy, the historical evolution of housing wealth (relative to income) after World War II and suggests a further considerable increase in the future. The model also accounts for the close connection of house prices to land prices in the data. We also compare our framework to the canonical housing & macro model, typically employed to analyze business cycles, and highlight the main differences.

Subject: Financial institutions, Housing, Housing prices, Land prices, Money, National accounts, Numéraire, Prices, Stocks

Keywords: Housing, Housing prices, Housing stock, Housing Wealth, Land price, Land prices, Macro model, Macro Model, Non-Residential Wealth, Numéraire, Real estate, Services producer, Stocks, Wealth-to-Income Ratios, WP

Publication Details

Pages:

82
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/080
Stock No:

WPIEA2017080
ISBN:

9781475590302
ISSN:

1018-5941

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