Please use this identifier to cite or link to this item:
Grossmann, Volker
Steger, Thomas
Year of Publication: 
Series/Report no.: 
CESifo Working Paper 5844
This paper provides a novel macroeconomic model that is specifically designed to investigate the evolution of housing wealth. To capture the importance of land as an input factor for housing production and for the evolution of wealth in a growing economy, the analysis builds on three premises: (1) the overall land endowment is fixed; (2) the production of new houses requires land as an essential input, whereas replacement investment does not; (3) land employed for real estate development must be permanently withdrawn from alternative uses. The calibrated model replicates the historical evolution of housing wealth after Word War II remarkably accurately and accounts for the close connection of house prices to land prices in the data. It suggests a considerable further increase in housing wealth, relative to income, that is associated with a future surge in land prices and house prices. The model also provides new insights into the dynamics of non-residential wealth.
wealth-to-income ratios
housing wealth
non-residential wealth
house prices
land prices
Document Type: 
Working Paper

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.