A dynamic model of housing supply

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs. The model is estimated using a unique dataset describing individual landowners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding where and when construction occurs. Pro-cyclical costs provide an incentive for some landowners to build before price peaks. Results also indicate that landowners actively "time" the market, which reduces the elasticity of supply.

Original languageEnglish (US)
Pages (from-to)243-267
Number of pages25
JournalAmerican Economic Journal: Economic Policy
Volume10
Issue number4
DOIs
StatePublished - Nov 1 2018

Fingerprint

Housing supply
Costs
Incentives
Futures prices
Microeconometrics
Elasticity

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

A dynamic model of housing supply. / Murphy, Alvin.

In: American Economic Journal: Economic Policy, Vol. 10, No. 4, 01.11.2018, p. 243-267.

Research output: Contribution to journalArticle

@article{8b458e39abce493aa3de0e879c89d6cb,
title = "A dynamic model of housing supply",
abstract = "This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs. The model is estimated using a unique dataset describing individual landowners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding where and when construction occurs. Pro-cyclical costs provide an incentive for some landowners to build before price peaks. Results also indicate that landowners actively {"}time{"} the market, which reduces the elasticity of supply.",
author = "Alvin Murphy",
year = "2018",
month = "11",
day = "1",
doi = "10.1257/pol.20150297",
language = "English (US)",
volume = "10",
pages = "243--267",
journal = "American Economic Journal: Economic Policy",
issn = "1945-7731",
publisher = "American Economic Association",
number = "4",

}

TY - JOUR

T1 - A dynamic model of housing supply

AU - Murphy, Alvin

PY - 2018/11/1

Y1 - 2018/11/1

N2 - This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs. The model is estimated using a unique dataset describing individual landowners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding where and when construction occurs. Pro-cyclical costs provide an incentive for some landowners to build before price peaks. Results also indicate that landowners actively "time" the market, which reduces the elasticity of supply.

AB - This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs. The model is estimated using a unique dataset describing individual landowners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding where and when construction occurs. Pro-cyclical costs provide an incentive for some landowners to build before price peaks. Results also indicate that landowners actively "time" the market, which reduces the elasticity of supply.

UR - http://www.scopus.com/inward/record.url?scp=85057756926&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85057756926&partnerID=8YFLogxK

U2 - 10.1257/pol.20150297

DO - 10.1257/pol.20150297

M3 - Article

AN - SCOPUS:85057756926

VL - 10

SP - 243

EP - 267

JO - American Economic Journal: Economic Policy

JF - American Economic Journal: Economic Policy

SN - 1945-7731

IS - 4

ER -