Working Paper: NBER ID: w19382
Authors: Zheng Liu; Jianjun Miao; Tao Zha
Abstract: We integrate the housing market and the labor market in a dynamic general equilibrium model with credit and search frictions. The model is confronted with the U.S. macroeconomic time series. Our estimated model can account for two prominent facts observed in the data. First, the land price and the unemployment rate tend to move in opposite directions over the business cycle. Second, a shock that moves the land price is capable of generating large volatility in unemployment. Our estimation indicates that a 10 percent drop in the land price leads to a 0.34 percentage point increase of the unemployment rate (relative to its steady state).
Keywords: land prices; unemployment; housing market; labor market; dynamic general equilibrium model
JEL Codes: E21; E27; E32; E44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Land Prices (R31) | Unemployment (J64) |
| Land Prices (R31) | Investment (G31) |
| Investment (G31) | Unemployment (J64) |
| Land Prices (R31) | Job Vacancies (J63) |
| Job Vacancies (J63) | Unemployment (J64) |
| Land Prices (R31) | Wage Rigidities (J31) |
| Wage Rigidities (J31) | Unemployment (J64) |