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Subsidized and Unsubsidized Housing Stocks 1935 to 1987: Crowding Out and Cointegration

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  • Murray, Michael P

Abstract

Crowding out arises in many economic contexts, from the macro concern that deficit spending might crowd out investment to the micro concern that increased employment of women might result in fewer jobs for men. Here I ask whether subsidized housing crowds out unsubsidized housing in the United States, applying the econometric tools of cointegration analysis. Such crowding out proves to require stringent restrictions on the coefficients of the cointegrating relationships that link housing stocks with one another and with other economic variables. These restrictions also apply to testing for other crowding out phenomena. I find that public housing has steadily added to the total stock of housing since its inception in 1935. In contrast, I find that moderate-income, conventionally financed, subsidized housing, such as the Section 235 and 236 programs that accounted for more than 1.5 million new units between 1960 and 1987, most likely adds little or nothing to the total housing stock. These findings speak against recent proposals to provide subsidies to developers who build dwellings for moderate income Americans but offer qualified encouragement to those who advocate expansion of the conventional public housing program. Copyright 1999 by Kluwer Academic Publishers

Suggested Citation

  • Murray, Michael P, 1999. "Subsidized and Unsubsidized Housing Stocks 1935 to 1987: Crowding Out and Cointegration," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 107-124, January.
  • Handle: RePEc:kap:jrefec:v:18:y:1999:i:1:p:107-24
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    Cited by:

    1. Sock-Yong Phang, 2010. "Affordable homeownership policy: Implications for housing markets," International Journal of Housing Markets and Analysis, Emerald Group Publishing, vol. 3(1), pages 38-52, March.
    2. Cunha, Jesse & De Giorgi, Giacomo & Jayachandran, Seema, 2011. "The Price Effects of Cash Versus In-Kind Transfers," CEPR Discussion Papers 8581, C.E.P.R. Discussion Papers.
    3. Eriksen, Michael D. & Rosenthal, Stuart S., 2010. "Crowd out effects of place-based subsidized rental housing: New evidence from the LIHTC program," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 953-966, December.
    4. Susin, Scott, 2002. "Rent vouchers and the price of low-income housing," Journal of Public Economics, Elsevier, vol. 83(1), pages 109-152, January.
    5. Laferrere, Anne & Le Blanc, David, 2004. "How do housing allowances affect rents? An empirical analysis of the French case," Journal of Housing Economics, Elsevier, vol. 13(1), pages 36-67, March.
    6. McDonald, John F. & McMillen, Daniel P., 2000. "Residential Building Permits in Urban Counties: 1990-1997," Journal of Housing Economics, Elsevier, vol. 9(3), pages 175-186, September.
    7. Lee, Chul-In, 2007. "Does provision of public rental housing crowd out private housing investment? A panel VAR approach," Journal of Housing Economics, Elsevier, vol. 16(1), pages 1-20, March.
    8. Wigren, Rune & Wilhelmsson, Mats, 2007. "Construction investments and economic growth in Western Europe," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 439-451.
    9. Gabriel, Stuart A. & Rosenthal, Stuart S., 2010. "Do the GSEs expand the supply of mortgage credit? New evidence of crowd out in the secondary mortgage market," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 975-986, December.
    10. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-383, June.
    11. Freedman, Matthew & Owens, Emily G., 2011. "Low-income housing development and crime," Journal of Urban Economics, Elsevier, vol. 70(2-3), pages 115-131, September.
    12. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, Elsevier.
    13. Malpezzi, Stephen & Vandell, Kerry, 2002. "Does the low-income housing tax credit increase the supply of housing?," Journal of Housing Economics, Elsevier, vol. 11(4), pages 360-380, December.
    14. Chen, Jie & Nong, Huifu, 2016. "The heterogeneity of market supply effects of public housing provision: Empirical evidence from China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 115-127.
    15. Sinai, Todd & Waldfogel, Joel, 2005. "Do low-income housing subsidies increase the occupied housing stock?," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2137-2164, December.
    16. He, Yinghua & O'Flaherty, Brendan & Rosenheck, Robert A., 2010. "Is shared housing a way to reduce homelessness? The effect of household arrangements on formerly homeless people," Journal of Housing Economics, Elsevier, vol. 19(1), pages 1-12, March.
    17. Nordvik, Viggo, 2006. "Selective housing policy in local housing markets and the supply of housing," Journal of Housing Economics, Elsevier, vol. 15(4), pages 279-292, December.

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