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Winners and Losers in Housing Markets
Author(s) -
KIYOTAKI NOBUHIRO,
MICHAELIDES ALEXANDER,
NIKOLOV KALIN
Publication year - 2011
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2011.00374.x
Subject(s) - redistribution (election) , economics , production (economics) , productivity , capital (architecture) , present value , value (mathematics) , net worth , market economy , monetary economics , labour economics , natural resource economics , business , microeconomics , macroeconomics , finance , history , debt , archaeology , machine learning , politics , political science , computer science , law
This paper is a quantitatively oriented theoretical study into the interaction between housing prices, aggregate production, and household behavior over a lifetime. We develop a life‐cycle model of a production economy in which land and capital are used to build residential and commercial real estates. We find that in an economy where the share of land in the value of real estates is large, housing prices react more to an exogenous change in expected productivity or the world interest rate, causing a large redistribution between net buyers and net sellers of houses. Changing financing constraints, however, has limited effects on housing prices.