American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
A Dynamic Model of Housing Supply
American Economic Journal: Economic Policy
(pp. 243–67)
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.Citation
Murphy, Alvin. 2018. "A Dynamic Model of Housing Supply." American Economic Journal: Economic Policy 10 (4): 243–67. DOI: 10.1257/pol.20150297Additional Materials
JEL Classification
- C51 Model Construction and Estimation
- D12 Consumer Economics: Empirical Analysis
- E32 Business Fluctuations; Cycles
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R31 Housing Supply and Markets