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The Macroeconomics of Real Estate

Author

Listed:
  • Harald Uhlig

    (The University of Chicago)

  • Stefan Ried

    (Humboldt-Universitaet zu Berlin)

Abstract

Is it possible to explain the house price to GDP ratio and the house price to stock price ratio as being generally constant, deviating from its respective mean only because of shocks to productivity? We build a two-sector RBC model for residential and non-residential capital with adjustment costs to capital in both sectors. We show that an anticipated future shock to productivity growth in the non-residential sector leads to a large increase in house prices in the present. We use this property of the model to explain the current house price behavior in the U.S., the U.K., Japan and Germany.

Suggested Citation

  • Harald Uhlig & Stefan Ried, 2009. "The Macroeconomics of Real Estate," 2009 Meeting Papers 429, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:429
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    References listed on IDEAS

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