HKS Affiliated Authors
Fred and Eleanor Glimp Professor of Economics, FAS
Excerpt
Excerpt
Housing Dynamics: An Urban Approach. Edward Glaeser, May 2014, Paper. "A dynamic linear rational equilibrium model in the tradition of Alonso, Rosen and Roback is consistent with many outstanding stylized facts of housing markets. These include: (a) that the markets are local in nature; (b) that construction persistence is fully compatible with mean reversion in prices; and (c) that price changes are predictable. Calibration exercises to match moments of the real data have notable successes and failures. The volatility in local income processes as reflected in HMDA mortgage applicant data can account for much of the observed price..." Link