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12:30 - 13:45 12 January 2015

Housing over Time and over the Life Cycle: A Structural Estimation


IFS Seminar Room | Institute for Fiscal Studies (link Map)
7 Ridgmount Street | London | WC1E 7AE | United Kingdom

Open to: Academic | Student
Ticketing: Open

Speaker information

Fang (Annie) Yang, Louisiana State University

We estimate a structural model of optimal life-cycle housing and nonhousing consumption in the presence of labor income and house price uncertainties. The model postulates constant elasticity of substitution between housing service and nonhousing consumption, and explicitly incorporates a housing adjustment cost. Our estimation fits the cross-sectional and time-series household wealth and housing profiles from the Panel Study of Income Dynamics (1984 to 2005) reasonably well, and suggests an intra-temporal elasticity of substitution between housing and nonhousing consumption of 0.487. The low elasticity estimate is largely driven by moments conditional on state house prices and moments in the later half of the sample period and is robust to different assumptions of housing adjustment cost. We then conduct policy analyses where we let house price and income take values as those observed between 2006 and 2011.


Institute for Fiscal Studies
020 7291 4800


Seminar paper