Winners and Losers in Housing Markets

56 Pages Posted: 18 Feb 2009

See all articles by Nobuhiro Kiyotaki

Nobuhiro Kiyotaki

Princeton University - Department of Economics

Kalin Nikolov

European Central Bank (ECB)

Alexander Michaelides

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: December 31, 2008

Abstract

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.

Keywords: Real estates, Land, Housing Prices, Life cycle, Collateral constraints

JEL Classification: E20, G10, R20, R30

Suggested Citation

Kiyotaki, Nobuhiro and Nikolov, Kalin and Michaelides, Alexander, Winners and Losers in Housing Markets (December 31, 2008). Available at SSRN: https://ssrn.com/abstract=1341606 or http://dx.doi.org/10.2139/ssrn.1341606

Nobuhiro Kiyotaki

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Kalin Nikolov

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Alexander Michaelides (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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