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) |
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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 |
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)