This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Economic Policy
  4. November 2018
  5. A Dynamic Model of Housing Supply

A Dynamic Model of Housing Supply

  • Alvin Murphy
American Economic Journal: Economic Policy
vol. 10, no. 4, November 2018
(pp. 243-67)
Download Full Text PDF

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.20150297

Additional 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
There are no comments for this article.
Login to Comment