Das House-Kapital: A Theory of Wealth-to-Income Ratios

Arbeitspapier

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input, whereas replacement investment does not; (3) land employed for real estate development must be permanently withdrawn from alternative uses.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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5844

Classification and Topics

• Classification: Wirtschaft ; General Aggregative Models: General ; Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data) ; Economic Growth and Aggregate Productivity: General
• Subject: wealth-to-income ratios ; housing wealth ; non-residential wealth ; house prices ; land prices

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grossmann, Volker ; Steger, Thomas
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/130474
• Last update: 10.03.2025, 11:43 AM CET