Dwelling Price Dynamics in Paris, France
AbstractUsing transaction level data for dwellings in Paris, France over the period 1986-92, we find evidence consistent with the hypothesis that economic fundamentals constrain movements in Parisian dwelling prices over longer term horizons. The conclusion is based on the results of two different procedures for estimating an error correction model of housing prices based on supply and demand fundamentals. The error correction models suggest that the speed of adjustment in the Paris dwelling market is about 30% per month. The paper also introduces a new econometric methodology that permits simultaneous estimation of the parameters of a dynamic hedonic price model, the price index, and the parameters of a structural model for housing prices. The new methodology is compared with the more traditional two-step procedure of first estimating a price index, and then using the estimated index in subsequent structural modeling.
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Bibliographic InfoPaper provided by Berkeley Program on Housing and Urban Policy in its series Berkeley Program on Housing and Urban Policy, Working Paper Series with number qt62m2s40t.
Date of creation: 01 Jul 1998
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