Open AccessHousing Prices, Residential and Nonresidential Investments and Macroeconomic Fluctuations
Author(s) -
Wei Ma,
Weiqun Li,
Keqin Qu,
John Oden
Publication year - 2017
Publication title -
research in business and management
Language(s) - English
Resource type - Journals
ISSN - 2330-8362
DOI - 10.5296/rbm.v4i2.11708
Subject(s) - business cycle , economics , renting , odds , investment (military) , monetary economics , house price , variety (cybernetics) , financial crisis , macroeconomics , engineering , politics , logistic regression , medicine , civil engineering , artificial intelligence , political science , law , computer science
During the recent financial crisis, the housing markets have played a notably important role in driving macroeconomic fluctuations. We investigate the correlation between housing dynamics and the business cycle for a variety of countries. Our empirical results exhibit the two daunting facts faced by lots of macroeconomic modelers: (i) house prices are highly volatile and closely correlated with the business cycle, which is at odds with the evidence that rental prices are relatively stable and almost uncorrelated with the business cycle; and (ii) residential investment leads the business cycle while nonresidential investment moves contemporaneously with the business cycle.