Housing, Land Prices, and Growth
AbstractWe consider the effects of land for housing on the growth process within an overlapping generations model. Our original interest was to enquire whether the introduction of land into a growth model might account for a "virtuous" circle in which saving-up for land (or housing) generates growth and higher land prices, generating further increases in saving, and so on. Such an account is sometimes proposed for high saving rates in East Asia, where mortgage markets are limited or absent. Our analysis does not support such a story. The user cost of land reduces the resources available for consumption of reproducible goods, so that the introduction of intrinsically valuable land into a growth model lowers the equilibrium stock of capital and raises the equilibrium interest rate. On the asset side, the presence of land causes life-cycle savings to be reallocated away from productive capital towards land. The social optimum in such a model is for land to be nationalized and provided at zero rent. Land markets, far from generating saving and growth, are inimical to capital formation. Copyright 2001 by Kluwer Academic Publishers
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Journal of Economic Growth.
Volume (Year): 6 (2001)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=102931
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Charles Ka Yui Leung & Nan-Kuang Chen, 2005.
"Intrinsic Cycles of Land Price: A Simple Model,"
00005, Chinese University of Hong Kong, Department of Economics.
- Homburg, Stefan, 2014. "Overaccumulation, Public Debt, and the Importance of Land," Diskussionspapiere der Wirtschaftswissenschaftlichen FakultÃÂ¤t der Leibniz UniversitÃÂ¤t Hannover dp-525, Leibniz UniversitÃ¤t Hannover, Wirtschaftswissenschaftliche FakultÃ¤t.
- Gersbach, Hans & Siemers, Lars-H. R., 2010.
"Land Reforms And Economic Development,"
Cambridge University Press, vol. 14(04), pages 527-547, September.
- Claire Loupias & Bertrand Wigniolle, 2011.
"Population, land and growth,"
Documents de travail du Centre d'Economie de la Sorbonne
11010, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- Claire Loupias & Bertrand Wigniolle, 2013. "Population, land, and growth," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00823255, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.