A New Approach to Estimating the Production Function for Housing
- (pp. 905-24)
Abstract
Dating to the classic works of Alonso, Mills, and Muth, the production function for housing has played a central role in urban economics and local public finance. This paper provides a new flexible approach for estimating the housing production function which treats housing quantities and prices as latent variables. The empirical analysis is based on a comprehensive database of recently built properties in Allegheny County, Pennsylvania. We find that the new method proposed in this paper works well in the application and provides reasonable estimates for the underlying production function. (JEL C51, D24, R11, R31)Citation
Epple, Dennis, Brett Gordon, and Holger Sieg. 2010. "A New Approach to Estimating the Production Function for Housing." American Economic Review, 100 (3): 905-24. DOI: 10.1257/aer.100.3.905Additional Materials
JEL Classification
- C51 Model Construction and Estimation
- D24 Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
- R11 Regional Economic Activity: Growth, Development, and Changes
- R31 Housing Supply and Markets