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Estimating a stock-flow model for the Swiss housing market

  • Elizabeth Steiner

This paper analyses the development of housing market imbalances, housing prices and residential investment in Switzerland within a stock-flow framework. In the long run, the desired level of residential capital stock and the existing residential capital stock revert. Empirical results indicate, however, that housing demand can diverge from the existing supply for several years due to the slow adjustment of the residential capital stock to shocks. In the short run, the market therefore has to be cleared by price adjustments. And indeed, it can be shown empirically that changes in prices are significantly and strongly dependent on the level of stock imbalances. Furthermore, housing prices prove to be an important determinant of residential investment, which in turn drives the adjustment process of the residential capital stock towards its desired level.

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Paper provided by Swiss National Bank in its series Working Papers with number 2010-08.

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Length: 41 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:snb:snbwpa:2010-08
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  1. Jonathan McCarthy & Richard W. Peach, 2002. "Monetary policy transmission to residential investment," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 139-158.
  2. Karol Jan Borowiecki, 2009. "The Determinants of House Prices and Construction: An Empirical Investigation of the Swiss Housing Economy," International Real Estate Review, Asian Real Estate Society, vol. 12(3), pages 193-220.
  3. Stuart S. Rosenthal & John V. Duca & Stuart A. Gabriel, 1987. "Credit rationing and the demand for owner-occupied housing," Working Paper Series / Economic Activity Section 79, Board of Governors of the Federal Reserve System (U.S.).
  4. Raymond W. Goldsmith, 1981. "A Tentative Secular National Balance Sheet for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 117(II), pages 175-187, June.
  5. Barbara Rudolf & Mathias Zurlinden, 2008. "Measuring capital stocks and capital services in Switzerland," Working Papers 2008-11, Swiss National Bank.
  6. Matteo Iacoviello & Stefano Neri, 2008. "Housing market spillovers : evidence from an estimated DSGE model," Working Paper Research 145, National Bank of Belgium.
  7. Oecd, 2006. "Are House Prices Nearing a Peak?: A Probit Analysis for 17 OECD Countries," OECD Economics Department Working Papers 488, OECD Publishing.
  8. Frédérick Demers, 2005. "Modelling and Forecasting Housing Investment: The Case of Canada," Working Papers 05-41, Bank of Canada.
  9. Claudio Borio & Patrick McGuire, 2004. "Twin peaks in equity and housing prices?," BIS Quarterly Review, Bank for International Settlements, March.
  10. DiPasquale Denise & Wheaton William C., 1994. "Housing Market Dynamics and the Future of Housing Prices," Journal of Urban Economics, Elsevier, vol. 35(1), pages 1-27, January.
  11. Topel, Robert H & Rosen, Sherwin, 1988. "Housing Investment in the United States," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 718-40, August.
  12. Riddel, Mary, 2004. "Housing-market disequilibrium: an examination of housing-market price and stock dynamics 1967-1998," Journal of Housing Economics, Elsevier, vol. 13(2), pages 120-135, June.
  13. Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679, March.
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