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Intrinsic Cycles of Land Price: A Simple Model

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  • Charles Ka Yui Leung
  • Nan-Kuang Chen

Abstract

The cyclicality and volatility of property prices have been extensively documented. Many explanations have been proposed. This paper builds a simple dynamic general equilibrium model in which these often cited channels are assumed away. Instead, the role of intertemporal elasticity of substitution is highlighted. In this model, the land price can exhibit price cycles. Moreover, the land price always fluctuates more than the aggregate output. The welfare of different cohorts depends crucially on the land price at the period they were born. The implications of these results are discussed.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

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  • Charles Ka Yui Leung & Nan-Kuang Chen, 2005. "Intrinsic Cycles of Land Price: A Simple Model," Discussion Papers 00005, Chinese University of Hong Kong, Department of Economics.
  • Handle: RePEc:chk:cuhkdc:00005
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    Cited by:

    1. Kwan, Yum K. & Leung, Charles Ka Yui & Dong, Jinyue, 2015. "Comparing consumption-based asset pricing models: The case of an Asian city," Journal of Housing Economics, Elsevier, vol. 28(C), pages 18-41.
    2. Dong He & Honglin Wang & Xiangrong Yu, 2015. "Interest Rate Determination in China: Past, Present, and Future," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 255-277, December.
    3. Eloisa T. Glindro & Tientip Subhanij & Jessica Szeto & Haibin Zhu, 2011. "Determinants of House Prices in Nine Asia-Pacific Economies," International Journal of Central Banking, International Journal of Central Banking, vol. 7(3), pages 163-204, September.
    4. repec:gam:jsusta:v:7:y:2015:i:12:p:16849-16865:d:60972 is not listed on IDEAS
    5. Yongchun Yang & Deli Zhang & Qingmin Meng & Corrin McCarn, 2015. "Urban Residential Land Use Reconstruction under Dual-Track Mechanism of Market Socialism in China: A Case Study of Chengdu," Sustainability, MDPI, Open Access Journal, vol. 7(12), pages 1-17, December.
    6. Nan-Kuang Chen & Charles Leung, 2008. "Asset Price Spillover, Collateral and Crises: with an Application to Property Market Policy," The Journal of Real Estate Finance and Economics, Springer, vol. 37(4), pages 351-385, November.
    7. Leung, Charles Ka Yui & Chow, Kenneth & Yiu, Matthew & Tam, Dickson, 2010. "House Market in Chinese Cities: Dynamic Modeling, In-Sampling Fitting and Out-of-Sample Forecasting," MPRA Paper 27367, University Library of Munich, Germany.
    8. Eloisa T Glindro & Tientip Subhanij & Jessica Szeto & Haibin Zhu, 2008. "Are Asia-Pacific Housing Prices Too High For Comfort?," Working Papers 2008-11, Monetary Policy Group, Bank of Thailand.
    9. Eloisa T Glindro & Tientip Subhanij & Jessica Szeto & Haibin Zhu, 2008. "Determinants of house prices in nine Asia-Pacific economies," BIS Working Papers 263, Bank for International Settlements.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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