Working Paper: NBER ID: w15971
Authors: Casey B. Mulligan
Abstract: Information technology has already transformed some areas of our lives, and has the prospect for transforming other sectors. This paper is about economic behaviors that anticipate technical progress, and how they may describe the housing price and construction boom of 2000-2006 and the bust thereafter. Specifically, I note that only a minority of housing output remains as an operating surplus for the structures' owners. It follows the prospect of productivity shocks to the mortgage and real estate industries have the potential to both move housing prices and non-residential consumption in the same direction, and that demand impulses are magnified in their effects on housing prices. A bust occurs when those impulses are realized later, or in a lesser magnitude, than originally anticipated. This view has testable implications for vacancy rates, net operating surplus, aggregate consumption patterns, net investment rates, and non-residential construction - all of which confirm the theory.
Keywords: No keywords provided
JEL Codes: E32; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Anticipation of future productivity shocks in the mortgage and real estate industries (D84) | Housing prices (R31) |
| Anticipation of future productivity shocks in the mortgage and real estate industries (D84) | Nonresidential consumption (R33) |
| Housing prices (R31) | Housing bust (R31) |
| Anticipation of future productivity shocks in the mortgage and real estate industries (D84) | Overbuilding (L74) |
| Housing boom from 2000 to 2006 (R31) | Positive net housing investment (E22) |