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 language | English (US) |
|---|---|
| Pages (from-to) | 243-267 |
| Number of pages | 25 |
| Journal | American Economic Journal: Economic Policy |
| Volume | 10 |
| Issue number | 4 |
| DOIs | |
| State | Published - Nov 1 2018 |
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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 journal › Article
}
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.
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U2 - 10.1257/pol.20150297
DO - 10.1257/pol.20150297
M3 - Article
VL - 10
SP - 243
EP - 267
JO - American Economic Journal: Economic Policy
JF - American Economic Journal: Economic Policy
SN - 1945-7731
IS - 4
ER -