Demographic Cycle, Migration and Housing Investment: A Causal Examination

72 Pages Posted: 19 Apr 2016

See all articles by Eric Monnet

Eric Monnet

Banque de France; Paris School of Economics (PSE)

Clara Wolf

SciencesPo

Date Written: April 2016

Abstract

We study residential investment over GDP in 20 OECD countries since 1980, and show that it is closely associated with the growth dynamics of population aged 20-49. We develop a new method to uncover the causal effect of the growth of the 20-49 age group. Using past demographic data as an instrument to avoid potential endogeneity between migration and the housing cycle, we find that a 1% increase in the population aged 20-49 increases the residential investment rate by 1.3 pp. Demographic changes are a better predictor of the residential investment rate than any macroeconomic or financial variable we control for.

Keywords: business cycle, housing, demography, migration

JEL Classification: E32, J11, R21

Suggested Citation

Monnet, Eric and Wolf, Clara, Demographic Cycle, Migration and Housing Investment: A Causal Examination (April 2016). Available at SSRN: https://ssrn.com/abstract=2766361 or http://dx.doi.org/10.2139/ssrn.2766361

Eric Monnet (Contact Author)

Banque de France ( email )

Paris
France

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Clara Wolf

SciencesPo ( email )

Rue de l'Université 13
Paris
France

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